Updated August 2024

Charge Lag & Reconciliation in Medical Billing: The Bottom Line

Understanding operational terms like charge lag and reconciliation is crucial for ensuring the financial health of medical practices. Both elements play pivotal roles in the revenue cycle management (RCM) process, influencing the efficiency of hospital billing and medical billing services. 

But before we dive into charge lag and reconciliation in the revenue cycle process, we need to first understand the basic life of a claim. In its simplest form, the life of a claim goes:

1. ‍Charge capture - a provider sees a patient and records the services rendered.‍
2. Coding - The charges are reviewed for accuracy prior to sending out the “clean claim.” Note, missing documentation or physician queries can lead to coding lag.‍
3. Claim submission - The clean claim is sent to the patient’s insurance company.  Any edits with the payer or additional claim edits can also delay claim submission. ‍
4. Payment posting - Payment is received from the payer, which can also include denials or requests for additional information. ‍
5. Collections - The remaining balance owed by the patient is collected.

Completing that first step in an efficient, timely manner with minimal to no charge lag is key to a healthy revenue cycle.

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What is Charge Lag?

A common term in hospital billing and medical billing services, charge lag is calculated by the number of days from the date a healthcare service is provided to the date the charge for that service is entered into the billing system.

Ideally, charges should be entered within 24 hours of the date of service, but that’s not always the case. In fact, one survey revealed only 32% of respondents indicated their charges are captured in 24 hours, while 35% said it takes 3-7 days, and 6% reported taking more than a week.

This delay can significantly impact the practice’s cash flow and revenue cycle management.

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The Negative Impacts of Charge Lag

Any delay in completing the first step in the life of a claim can significantly delay everything that comes after it. Therefore, charge lag ultimately leads to delays in reimbursements, (a.k.a., it takes longer to get paid). For example, if charges aren't captured within 24 hours, it can cause delays in claim submission, which then causes delays in reimbursement from insurance, especially if there are any follow-up and/or additional requests from the payer.

Timely Filing Impacted by Charge Lag

Many payers have strict deadlines for when claims and/or additional information must be submitted after the date of service, which can lead to underpayments or denials if a charge lag is significant. This can result in appeals and unnecessary follow-up, which can be incredibly time-consuming and costly.

For instance, if a provider bills a 99291 for initial critical care, payers may request to review medical records to finish processing the claim. But if the charge lag was high to begin with it could result in the inability to get documentation submitted in time.

At that point, payers can change the code to 99233, which is a subsequent inpatient code. This can be the difference between being paid $104 instead of $220, which is more than a 50% reduction. Or the claim could also deny altogether for untimely filing with zero reimbursements; all caused by the initial charge lag.

Depending on the insurance company, timely filing can be as little as 60 days from the date of service.

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Common Causes of Charge Lag in Healthcare

Charge lag can stem from several sources, each contributing to delays in the billing process. Some of the most common causes include:

• Manual Charge Entry: Relying on paper-based systems or manual entry of charges can introduce delays, as the information must be collected, organized, and then manually entered into a billing system.
• Incomplete Documentation: Incomplete or inaccurate documentation of services rendered can lead to delays as additional time is needed to verify and complete the charge information.
• Communication Gaps: Miscommunication between clinical staff who provide the services and administrative staff responsible for billing can result in missed or delayed charge entries.
• Complex Medical Services: Complex or multifaceted medical services may require more detailed documentation and verification, leading to longer processing times.

Charge reconciliation helps avoid delays and denials in the claims process.

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What is Charge Reconciliation?

Charge reconciliation is an important process within a healthcare organization's revenue cycle to ensure consistent, timely, and accurate charge capture and resolution of pending charges. This critical step in medical billing services involves reviewing and verifying the charges entered against the patient's medical record and the services documented by healthcare providers.

Charge reconciliation aims to identify and correct any discrepancies, missed charges, or errors to ensure every service provided to a patient is accurately documented and billed, and the practice is appropriately reimbursed for all services rendered. Completing regular charge reconciliation helps identify root cause issues that can lead to delays in reimbursements and denials.

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Best Practices for Charge Reconciliation

Good charge reconciliation can reduce charge lag and increase revenues overall. Here are a few tips to set you up for success:

• Establish a standard of acceptable lag limit when entering charges
• Reconcile frequently and track missing charges
• Maintain and track the charge lag report
• Educate providers on missing charges that are identified.

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How Modern Charge Capture Can Help with Reconciliation

Modern charge capture technologies offer a solution to many of the challenges associated with charge lag and reconciliation. By leveraging these advanced tools, healthcare practices can streamline their billing processes and improve financial outcomes. Here's how:

• Automation and Efficiency: Modern charge capture systems automate the process of entering charges, reducing the reliance on manual data entry and minimizing the potential for errors. This automation helps in significantly reducing charge lag.
• Real-Time Documentation: With mobile charge capture solutions, healthcare providers can document charges at the point of care, ensuring that all services are captured accurately and in real-time. This immediacy aids in closing the gap caused by charge lag.
• Integration with EHR Systems: Many modern charge capture systems are integrated with Electronic Health Records (EHRs), facilitating seamless data transfer and documentation. This integration supports thorough and accurate charge reconciliation by ensuring that all documented services are matched with corresponding charges.
• Analytics and Reporting: Advanced charge capture solutions provide analytics and reporting capabilities that allow practices to monitor and analyze charge entry and reconciliation processes. These insights can help identify patterns in charge lag and areas for improvement in the reconciliation process.

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How pMD^® Can Help

At pMD, you’ll find the leading modern charge capture solution and all the reporting tools needed to help audit, reconcile and educate. You will also find an RCM services partner committed to helping small practices streamline and optimize the patient care episode and the revenue cycle.

Whether it's through providing specialist expertise, offering outsourcing solutions, or delivering integrated billing services, our focus is to enable medical practices to concentrate more on patient care and less on billing complexities. We can help your practice consolidate vendors, reduce costs, streamline workflows, improve patient care and satisfaction, and collect maximum reimbursement more quickly.

Contact pMD^® now for a no-commitment financial impact analysis by our team of healthcare RCM experts, free of charge!

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