Master your chargemaster: is your hospital's chargemaster friend or foe? It's a vital element in the revenue cycle, but it can present challenges

Healthcare Financial Management, Sept, 2005 by Duane C. Abbey, Jodee E. Collins

Also, the chargemaster itself is being changed more frequently. Hospitals often make updates monthly and sometimes more frequently. If a hospital is to have the ability to go back in time to faithfully re-create claims and itemized statements, each point in time or time period in which the chargemaster is changed needs to be archived. In other words, to re-create a claim from one year ago, the billing system needs to find a snapshot of the chargemaster at that point in time and generate the claim based upon the chargemaster content then. Without the ability to faithfully re-create claims, hospitals may not know the exact form of the claims that were filed for a specific period. The chargemaster is not the only part of the billing system that may need to be archived. Many hospitals now have claims scrubber systems or back-end systems that may provide additional editing and may even change information that appears on the claim form. Again, to re-create claims for a given period, the logic that was present in the back-end scrubber will have to be archived.

Special Situations

Every service area, to some extent, can be considered a special situation and may require a slightly different flow through the chargemaster to produce a good, clean, complete claim.

Transplant services. Transplant services are a specialty area for the provision of these services and for special processes used to obtain appropriate payment. Large hospitals, particularly academic hospitals, perform various types of transplants, including kidneys and hearts. Simply put, the Medicare program pays for the procedure and for the acquisition of the transplanted organ.

For transplant services, the chargemaster needs to carefully interface with the service area to identify costs and capture charges. Also, the chargemaster interface to the cost-reporting process must identify the appropriate costs and develop charges. Because healthcare financial managers need to develop an averaged cost that drives the charge and its associated payment, hospitals performing these types of services must coordinate several items. To develop the appropriate averaged cost, the hospital must carefully identify every cost related to the procurement. Service area, chargemaster, and cost reporting personnel should participate in this process.

ED. Evaluation and management services and surgical services are provided and many diagnostic services are ordered through the ED. Also, ED patients may be discharged home, sent to observation, or admitted to the hospital. Careful consideration should be given to how the chargemaster is organized, charges are captured, and associated billing and claims filing take place.

Medicare's new hospital outpatient prospective payment system, which is basically APCs, probably affects the ED more than any other hospital department. Hospital chargemaster personnel should study coding, billing, and documentation flow as they relate to APCs. Capturing services such as injections, intravenous therapy, immunizations, and surgical procedures can enhance payment significantly.