Charge entry is the administrative process that translates medical services into billable transactions within a healthcare organization’s financial system. This action is the fundamental starting point of revenue generation for hospitals and physician practices following a patient encounter. It involves accurately recording information from the clinical record to create a financial charge on the patient’s account. The accurate and timely execution of charge entry forms the bridge between the care provided by a clinician and the final reimbursement received from an insurance payer.
Core Function in Healthcare Billing
Charge entry is the foundational activity that determines a healthcare provider’s financial health. This process is positioned directly after the medical services have been coded and immediately before the claim is generated for submission. If a service is missed, or a charge is entered incorrectly, it results in lost revenue for the provider, a phenomenon known as revenue leakage. Errors can also lead to claim denials from insurance companies, which force the billing department to spend time and resources on costly rework.
Accurate charge entry minimizes the likelihood of these denials, ensuring that claims are “clean” and processed efficiently by payers. A clean claim has all the necessary information and coding to be paid upon first submission, which significantly speeds up the reimbursement timeline. Optimizing this process is therefore directly tied to improving the facility’s cash flow and maintaining financial stability.
Essential Data Components
For any medical service to be successfully billed and reimbursed, a specific set of standardized data components must be accurately captured during the charge entry process. These components communicate the what and the why of the patient encounter to the payer. The service or procedure performed is described using Current Procedural Terminology (CPT) codes, which are five-digit numerical codes created and maintained by the American Medical Association. A corresponding diagnosis code is also mandatory to explain the patient’s condition and the medical necessity for the service provided.
This diagnosis is recorded using the International Classification of Diseases, 10th Revision (ICD-10) codes, which are alphanumeric codes used globally to classify diseases and health problems. Payers require that the ICD-10 code logically supports the CPT code; for example, a code for a broken bone must accompany the CPT code for casting that bone. Modifiers are two-digit characters added to the CPT code to provide additional context about the service without changing the code’s definition. The correct application of these modifiers is often the difference between a paid claim and an immediate denial.
The Step-by-Step Capture Process
The charge entry workflow begins with the source documentation created during the patient encounter. This documentation may take the form of an electronic physician’s note, a paper superbill, or an encounter form listing common services. Billing specialists or charge entry personnel extract the relevant data, including the date of service, the rendering physician, the facility location, and the specific codes that were used. They must verify that the codes assigned by the medical coder are supported by the clinical notes to ensure compliance and accuracy.
Once validated, the charge information is manually or electronically keyed into the healthcare organization’s practice management or billing software. The final output of the charge entry process is the creation of a draft claim file, which is the standardized document sent to the insurance payer. For professional services, this is typically the CMS-1500 form, and for facility services, it is the UB-04 form.
Technology and Quality Assurance
Modern charge entry relies heavily on technology to manage the sheer volume and complexity of billing data. Electronic Health Record (EHR) systems and integrated Practice Management (PM) software automate the transfer of documentation into the billing module, significantly reducing manual data entry. These systems also facilitate a critical quality assurance step known as “charge scrubbing” or “charge review.”
Charge scrubbing is an automated process that reviews the entered charges for potential errors before the claim is formally compiled and submitted. The software uses a set of built-in rules and payer-specific edits to check for common mistakes, such as missing modifiers, incompatible diagnosis-to-procedure code pairings, or services that are not medically necessary for the diagnosis. If a conflict is detected, the charge is flagged for review and correction by a specialist.