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Exploring Hospital Chargemaster Management Best Practices

Accurate codes and prices and automation are hospital chargemaster management best practices that will help hospitals weather new price transparency rules.

Jacqueline LaPointe
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Published: 11 Jul 2019

Recent healthcare price transparency rules have pulled back the veil on the hospital chargemaster, calling into question hospital chargemaster management best practices.

Once considered a trade secret by most, the hospital chargemaster is an internal list of charges for all the billable services and items rendered by providers at the organization. Therefore, maintaining an updated and accurate chargemaster is key to revenue integrity.

Failing to regularly evaluate and revise the list of charges can lead to underpayments, compliance violations, and potential claw backs from payers for overcharges.

While the hospital chargemaster is at the heart of the revenue cycle, the vital organ has been kept safely behind closed doors. Charges are a starting point, used primarily by hospital leaders to negotiate rates with private payers. Patients rarely pay the full chargemaster price after accounting for health plan discounts.

But the Trump Administration’s recent push to increase healthcare price transparency, especially in the hospital setting, has leaders sharing their once heavily-guarded chargemasters with the public. The administration started in 2019 by requiring hospitals to post their chargemasters in a machine-readable format on their websites. Now, the administration is hoping to get hospitals to publicize their negotiated rates through a new executive order.

With hospital chargemasters taking center stage, revenue cycle leaders should be reexamining how they manage the chargemaster to not only ensure money is not left on the exam room table, but also to ensure they have competitive and compliant charges.

To explore hospital chargemaster best practices, RevCycleIntelligence.com spoke with Rita Sullivan, a nurse and auditor, and the current manager of revenue integrity at Valley Presbyterian Hospital in Van Nuys, California.

Covering hospital chargemaster management basics

Updating codes and determining charges set the foundation for hospital chargemaster management, Sullivan said.

Codes

Hospital leaders should start by comparing their internal list of codes for billable services with those used by payers for claims reimbursement.

“You need to take your chargemaster file, dump the data into your system, and compare the information to current codes because the first thing you want to do is make sure your billing codes are correct,” she said. “From there, you can analyze and see what you have. But getting the codes correct is step one. Doesn't matter what you charge, if you're charging all the wrong codes.”

Codes used for reimbursement are constantly changing. For example, in order to accurately reflect the current practice of medicine, the American Medical Association (AMA) frequently updates the Current Procedural Terminology code set, which are widely used by private payers for payment.

Failing to match CPT, ICD-10, and other widely-adopted code sets to internal charge capture codes leads to missed payment for services rendered.

Revenue cycle leaders should also verify that codes not only match with established code sets, but their descriptions are easy to understand for clinician use.

“You have to keep up with the chargemaster and that becomes a matter of auditing to make sure that the descriptions are easy to find,” Sullivan stated. “Here we have 30 characters, that's it. If you look at the CPT code book, there are some pages where a code’s description is a page and a half.”

“You have to match descriptions to your clinical systems,” she emphasized.

Charges

Once revenue cycle leaders update codes in the chargemaster, they should determine how much to charge for each service, Sullivan advised.

“That’s where you need someone with a background like mine, who can talk with the clinical folks about what are they doing and then determine whether its chargeable,” she said.

After identifying all chargeable services, revenue cycle leaders should see how much their local competitors are charging for the same service to create a competitive and fair price.

“If you have a tool, you can look it up fairly easily and compare what are other hospitals are charging for the same services,” she said. However, she warned that comparing charges with other local hospitals can be “dicey, especially out here because we have places like Cedars-Sinai which is off the normal scale with charges compared to hospitals like ourselves.”

Revenue cycle leaders should take caution and develop their own markup formula that makes sense for their facility, Sullivan stressed.

Leaders should also look out for pricing differences between sites, the revenue integrity manager added.

“Not all prices are equal. If we have off-site clinics, the overhead is not the same. You want to price services, so the charges make sense for where you are,” she stated.

Getting clinicians on board

While maintaining accurate codes and charges are the backbone of hospital chargemaster management, revenue cycle leaders must connect with the clinical side to ensure effective use of the chargemaster.

“We have MEDITECH as an EHR, so only the finance folks put charges onto claims,” Sullivan explained. “Everyone else has another system they use on the clinical side that dumps their charges in a file to be processed every midnight. And each department has a different way. You have to work it out with them to determine how to make sure the chargemaster works everyone.”

At Valley Presbyterian Hospital, Sullivan encourages clinicians to access the chargemaster and interact with it to identify service charges and codes. That way, clinicians can start a conversation about adding or revising a code without having to wait until the revenue cycle team notices a coding and payment deficiency.

Talking to clinicians about the chargemaster can also prompt them to accurately charge for patient services in the EHR.

For example, nurses are critical to delivering clinical services, but a major source of revenue for the nursing department is room charges, Sullivan explained. Helping nurses understand the importance of capturing accurate room charges can help keep the hospital’s bottom line healthy.

To ensure clinical and financial staff understand the chargemaster, Sullivan meets with every new hire at Valley Presbyterian Hospital.

“When we hire new people, they have to sit with me. That wasn’t the case at other places I've worked. But it’s important to start at the bottom to make sure new providers are picking the right charges and that they're posting the right charges,” she said. “They need to be paying attention to all this and other chargemaster duties all the way up through compliance.”

Updating codes, accurately pricing, and connecting with clinicians are all major hospital charging best practices. But implementing the best practices is daunting task that is made even more burdensome by manual processes.

While managing the chargemaster is possible to do through manual workflows, the process would take forever, Sullivan stated. Automation is critical to taking hospital chargemaster management to the next level.

Hospital chargemaster management automation

Implementing a hospital chargemaster management solution can reduce the resources needed to maintain an accurate chargemaster and decrease the chances of human error when updating and adding codes and charges, Sullivan explained.

For example, she said, “If you're lucky, your software will show you whether your codes are current or not, or if they have been deleted and what the replacement might be.”

Automated solutions can also assist revenue cycle leaders with running reports to inform hospital departments about code updates and streamline new code or code update requests, getting the approved codes and final prices into the EHR quicker.

However, hospital chargemaster automation is oftentimes at the back of hospital leader minds. Many hospitals simply rely on their EHR system to automate parts of chargemaster management. And major EHR systems including Epic, Cerner, and MEDITECH all have some level of chargemaster management capabilities.

However, the market for less “out-of-the-box” hospital chargemaster solutions is growing. Vendors like Change Healthcare, nThrive, and Vitalware are now offering chargemaster management solutions independent of, but still integrated with, an EHR or patient accounting system.

The more tailored solutions are also gaining recognition among hospitals. Market research firm KLAS even recently named Vitalware’s VitalCDM, Craneware’s Chargemaster Toolkit, and nThrive’s CDM Master as the top hospital chargemaster management solutions in 2019.

With a growing hospital chargemaster management solution market, revenue cycle leaders should look for enhanced reporting capabilities, Sullivan advised.

“For example, if I want to compare charge amounts from my facility to several others, I can do that. I can pull charges from a whole bunch of other hospitals and see what they charge for it. Some solutions limit you. You can only compare one or two other hospitals, which is a pain to do over and over. You want to be able to see the data all at once,” she said regarding Valley Presbyterian Hospital’s solution from Vitalware.

Additionally, Sullivan stressed that hospitals should consider customer support when selecting a vendor.

“The biggest thing is that our tool has is a person named Michelle who I can call if I have a problem. I don't have to go through a help desk, open a ticket, or anything. That takes time, and you want help now,” she said. “Getting somebody on the phone who understands what you're saying the first time is important.”

Armed with an automated solution and best practices, hospitals can prepare themselves to overcome common hospital chargemaster management challenges, including price transparency.

“An automated chargemaster solution can help if you know what you're looking for,” Sullivan said about price transparency. “If a patient calls you inquiring about a specific service, then you can go right to it and fine what the patient is likely to pay.”

The hospital chargemaster is a major topic in the healthcare industry right now in light of new rules and regulations. The spotlight should encourage revenue cycle leaders to go back and ensure their hospital is using best practices to charge patients. Ensuring accurate pricing will be key to helping patients understand healthcare costs.

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