How Chargemaster Maintenance Can Contribute to Price Transparency

July 9, 2018 1:36 pm

Each revenue-generating department should be responsible for its own charge capture. This increases compliance while reducing lost revenue.

Information buried within the chargemaster doesn’t usually see the light of day. Organizations are required to provide patients with a list of standard charges only when asked. However, that may soon change. CMS recently announced in its FY19 Inpatient Prospective Payment System (IPPS) proposed rule that it will require organizations to publish their standard charges online. Once this data becomes public, hospital finance departments must be able to explain it to consumers.

The push for price transparency means consumers are more aware of hospital charges than ever before, said Robert M. Gilbert, FHFMA, COC, a senior manager of healthcare consulting at Baker Newman Noyes who spoke about chargemaster best practices at AAPC’s HEALTHCON event held April 8-11 in Orlando, Florida.

Take a Holistic Approach

Maintaining an accurate chargemaster requires a multi-disciplinary team with representation from finance, patient financial services, health information management, compliance, and—most importantly—each ancillary department (e.g., lab, radiology, pharmacy), Gilbert said. Ancillary department cooperation is critical because of the variety of systems that feed into the chargemaster, he added.

The chargemaster team has several functions, one of which is to develop the following internal best practices.

Promote patient-friendly billing. Take advantage of technical and billable descriptions in the chargemaster, Gilbert said. For example, include ”polysomnography” on the technical line that organizations use internally and “sleep study” on the billable line that organizations include on patient bills.

Use caution when hard-coding. Hard-code modifiers and CPT codes only when they’re assigned or performed the same way 100 percent of the time, Gilbert. said

Keep payer contracts in mind. For example, some payers pay for revenue code 280 (oncology) but not revenue code 335 (chemotherapy) and vice versa, Gilbert said. “If you have a contract that carves out a specific revenue code—and you’re putting most of your charges under the code that’s non-paid—you could be losing out on revenue,” he added.

Use the “user-defined” field, when available. The user-defined field is a blank field in the patient accounting system that can be leveraged for a materials item number. For example, mapping item numbers for supplies from the materials management master file into this field helps organizations easily and efficiently update supply prices that change frequently throughout the year, Gilbert said.

Create a policy for routine versus non-routine supplies. Organizations can’t separately bill for supplies that are used or considered an integral part of treatment, Gilbert said. Examples include IV tubes, gauze, gloves, needles, and bed pans.

Web extra: Chargemaster and Charge Reconciliation Annual Signoff

Access a checklist for chargemaster and reconciliation at

Non-routine supplies, on the other hand, are billable to the patient, he said. These include supplies that are medically necessary, ordered by a physician, and documented in the record. They’re also used specifically for and by the patient, not commonly furnished as part of the medical procedure or treatment, and not commonly available for patient use in the medical department or setting. One example is a specialty catheter that’s needed because of a patient’s unique anatomy.

Organizations should be particularly mindful of operating room documentation, Gilbert said. For example, some nurses may not realize that charges are generated as they document. Best practice is to use a separate paper or electronic supply sheet (with manual or electronic signature) to capture items used during the procedure. Also, some surgeons want to open all supplies at the onset of a procedure, but the organization can only charge for supplies that are actually used on the patient, Gilbert said. Ask nurses to attest via signature that all items were used. If health plans watch this closely, they can take money back.

Ensure clear and justified pricing. Gilbert suggests considering these questions:

  • Is your price defendable? Some organizations perform market analyses to ensure their prices are fair, Gilbert said. “These analyses have limitations, but they’re a good start,” he added. “Other organizations that have cost accounting systems are trying to better align their prices to the actual cost of services.”
  • Is your price consistent? For example, do left and right hip X-rays cost the same?
  • Is your price logical? For example, how does the price of a CT scan without contrast compare to a CT scan with and without contrast? The latter should be priced higher because it’s technically two different scans.
  • How does the price compare with your fee schedules? Are you leaving money on the table?

Get Ancillary Departments on Board

Another responsibility of the chargemaster team is to create a process for department-level charge reconciliation. Each revenue-generating department should be responsible for its own charge capture, Gilbert said. This helps ensure that these departments don’t unintentionally commit fraud or lose revenue.

First, appoint someone within each department to reconcile charges daily, he said, and identify a backup person in case this individual is out of the office. Best practice is to reconcile every charge unless there is an extremely high volume (e.g., lab charges), in which case a statistically significant sample is appropriate. Then, compare the department schedule of services with what staff entered into the ordering system. Did these charges ultimately transfer to patients’ accounts for billing? The schedule should mirror the charges billed to patients, Gilbert said.

Keep a central repository of any errors uncovered, Gilbert said. The following should be recorded:

  • A description of the error
  • How the organization discovered it
  • How quickly the organization corrected it
  • Whether any revenue was refunded
  • A rationale behind why the organization did or didn’t file any corrected claims

“If the OIG [Office of Inspector General] comes knocking on your door about a big error, having a database like this to show what you’re doing proactively to be as compliant as possible is a good thing,” Gilbert said.

“Test each department annually to see if their process is working,” he said. “I’ve also seen hospitals set a schedule of departments and rotate them throughout the year.” When testing the reconciliation process, the chargemaster manager or an internal auditor should ask these questions:

  • Did clinical users enter charges and orders correctly?
  • Did all of the charges on the itemized bill and UB-04 billing form map to a valid order?
  • Did we miss any charges? “Sometimes when I talk to departments to see what new procedures and services they’re offering, they don’t realize they can charge for these items,” Gilbert said.
  • Did the map between the chargemaster and ancillary charging system work properly, and did charges transfer correctly to the patient accounting system? “I’ve seen instances where someone thinks they’re charging a CBC (complete blood count), but were actually charging a big expensive genetics test,” Gilbert said.
  • Did explode sets function properly, when applicable? Explode sets are charges that generate other charges automatically. “These can be really powerful, but they need to be reviewed consistently,” Gilbert said. He said he’s aware of one facility with a chargemaster line item for a CT kidney stone study that was an explode set of two CT scans. Even though providers only performed one scan, they were inadvertently charging for two, resulting in an eventual $250,000 payback to Medicare.
  • Did billing change anything before the claim went out the door?

Each fall, the chargemaster team should also educate ancillary staff about the new CPT and HCPCS codes that affect their departments as of Jan. 1, he said. Provide each clinical department with relevant new, revised, and deleted CPT codes. Then, ask each department to answer the following questions:

  • Are there any codes and corresponding charges that should be deleted? For example, are any CPT or HCPCS codes no longer valid? Are there any replacements for these codes, and if so, are they relevant to our facility? Can we delete any items that haven’t been used in more than three years or that represent no/low utilization?
  • What new CPT or HCPCS codes and corresponding charges should we enter based on the services our department performs?
  • Should we revise any charges based on new CPT or HCPCS code descriptions? Does our department perform the service as described by the revised code?

Give each department a deadline to review its ancillary system, and ask departments to sign off on their annual reviews.

A holistic approach to chargemaster maintenance ensures the accuracy of any charge data that hospitals must release to the public. This holistic approach requires buy-in from multiple departments throughout an organization as well as ongoing maintenance and monitoring.

Lisa A. Eramo is a freelance writer based in Rhode Island.

Interviewed for this article:

Robert Gilbert is a senior manager of healthcare consulting at Baker Newman Noyes and is a member and past president of HFMA’s New Hampshire-Vermont Chapter.


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