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

Nonimplantable DME includes traditional items, such as crutches, canes, walkers, or wheelchairs. These items must withstand repeated use, serve a medical purpose, and be used in the beneficiary's home. Typically, Level II HCPCS E-codes are used, and coding and billing for these items must be sent to one of four regional DMERCs on the CMS-1500.

This dichotomy of coding and billing for DME items represents a challenge for chargemaster coordinators in terms of establishing the charge-master so that charging for DME items does occur and that the charges drive the proper billing process, which may involve the generation of the CMS-1500 claim form using the hospital's DME provider identification number. (See the CMS Form 855-S by which billing privileges for DME can be obtained.) Chargemaster coordinators need to accurately identify items being dispensed by the hospital and ensure proper revenue code alignment.

Prosthetics and orthotics also can challenge chargemaster coordinators. For larger hospitals involved with this type of DME, the challenges are greater. The classification of certain services, such as parenteral and enteral nutrition therapy, as a prosthetic DME can add further confusion. (Separate billing for PEN therapy typically occurs in the nursing facility setting.)

Observation services. Observation is an outpatient service that involves holding a patient pending a decision as to whether the patient should be admitted. Medicare does not generally pay separately for observation services. Limited exceptions to this general rule apply to three types of cases presenting through the ED: congestive heart failure, chest pain, and asthma. Other third-party payers vary significantly in how they address coverage and payment issues surrounding observation services. For instance, Medicare allows observation services for up to 48 hours, while many other third-party payers allow this type of service for only up to 24 hours.

Significant issues also surround the movement of a patient from inpatient status to outpatient status. See, for instance, the recent CMS Transmittal 299 (Sept. 10, 2004, CMS Publication 100-4, Medicare Claims Processing Manual) for use of Condition Code 44. Distinguishing recovery services from observation services for postoperative care is also an ongoing charge capture issue relating back to the chargemaster.

Chargemaster personnel find themselves in the midst of all the controversy surrounding observation services. Even if there is no separate payment, these services should be charged and, as appropriate, coded. Hospitals also need to fastidiously capture services that are provided while patients are in observation status, such as injection, IV therapy, and bedside procedures. On a long-term basis, the only way in which proper payment will be received for observation services is for hospitals to properly code and bill for these services with appropriate substantiating documentation.

A Vital Link

The chargemaster is a vital element in the revenue cycle, the payment cycle, and billing and claims filing in general. Developing and maintaining the chargemaster addresses both revenue generation and conformance with an array of compliance requirements.