Annual CDM Update Tasks Your Team Can Easily Miss

On January 1st, hospital and other healthcare provider claims fall under new coding and payment rules. We’ve compiled a checklist of several key tasks to help ensure complete implementation of the 1st quarter CDM updates. These tips are also important for smaller 2nd – 4th quarterly updates.

First Quarter Essentials for Chargemaster Updates

The critical January updates impacting Charge Master management include:

  • Posting and update of the chargemaster (or otherwise labeled charging masterfiles) and prices for DRGs in compliance with current CMS and State mandates
    • Changes due to the Presidential Executive Order of April 2019 are expected and may cause new posting requirements. See the order located here, and see our added insight on the Order. e (opens in a new tab
  • Performance of first quarter data updates
      • HCPCS Additions, HCPCS Deletions, HCPCS Description Changes, Payment Systems’ changes (such as OPPS Status Indicator Changes)
      • CMS or AMA corrections since initial yearly (or quarterly) data releases
      • Regulatory and payment system updates in Final Rules for the new year (see our educational program content)
      • Reimbursement changes
  • Auditing for CDM data that could create potential claims issues
      • Invalid CPT-4®/HCPCS codes
      • Medicare overrides
      • Charge items or charge practices impacted by 1Q OCE Edits (including NCCI, MUEs, and other OCE indicators)
      • Modifiers
  • Identification of Revenue /Reimbursement Opportunities
      • Inaccurately-assigned CPT-4®/HCPCS codes
      • Missing add on codes
      • Inappropriate code pairs (ex. Skin Substitutes, Device/Procedure, Imaging Guidance, etc.)
      • Unassigned paid codes by OPPS SI or by department-specific exception reports (codes not in your CDM that should be considered for new charge development)
      • Pricing against cost times markup
      • Pricing against Fee Schedules (below the Medicare rates or below Fee Schedule rates times a multiplier)
      • Pricing against OPPS (below OPPS or below OPPS rates times a multiplier)
      • Pricing varying significantly from your competitive or comparative markets (for codes in your CDM, codes from HIM, or codes for potentially new services)
      • CDM rate updates (Quarterly as well as corrections files from Medicare/other payers)
  • Compliance Risks
      • Invalid CPT/HCPCS level II codes assigned to charges, charged to the patient, and billed to payers reimbursing by code-based payment systems
      • Item/Service represented through the charge descriptor not reflected by description of the assigned CPT-4®/HCPCS code
      • Charges that are structured, charged on patient accounts, and billed differently than associated coding standards
      • Charge items with associated Medicare Pricing, Payment, or Status Indicators representing potential risk if not overridden/billed correctly (OPPS SI E1, E2, M, B, Y, etc.)
      • Charging for items designated by CMS as “Inpatient-Only” on outpatient claims
      • Charging for non-billable items & services ased on payer, contractual or CMS definitions
      • Failing to completely identify and report Self-Administrable Drug Medicare Payment prohibition for outpatient claims (unless integral to procedure)
      • Erroneous pharmacy billing (waste, billing units, code errors, etc.)
      • Inaccurate coding for implanted devices or lack of processes complying with CMS rules (device credits, replacement devices, investigational product regulations, device-procedure billing edits, etc.)
      • Medicare preventive services billing errors (wrong CPT/HCPCS coding, patient deductible/co-pay errors, etc.)
      • Inaccurately overriding CCI edits
      • Payer-specific or Medicare CERT, OIG, RAC, and other charge-related audit targets

    Annual 1st Qtr Charge Data ‘Red Flags’

    CDM Teams will want to monitor claims to identify and quickly resolve billing errors related to charge data. This is especially important with charges that should have been updated for the first of the year. Monitoring could include biller feedback or error logs, claims edit error reports, third party software audit routines, or payer claims processing messages.

    Each new year, proactive hospitals monitor these key areas:

    • CDM updates noted in ChargeAssist® or other CDM tools
    •  Information Systems issues:
        • Patient Accounting / Claims applications are not reporting the new year’s CDM or CPT-4®/HCPCS codes correctly on claims
        • 1Q updates were not implemented in Charging Masterfiles
        • 1Q codes (CPT-4® & HCPCS Level II) not updated timely (thus impacting Charge Master update work)
        • One or more hospital information system masterfiles not synched with the CDM
        • Other masterfiles beyond charging masterfile is not current to 1Q data standards
        • Charging system override functions/files/fields not accurately populated (ex. wrong code field reporting on claims for certain payers, confusion of physician vs hospital charge items, etc.)
        • Claims editing software showing errors for 1Q updated data
        • Pharmacy or other charging files supported outside of the Charge Management Team not updated
        • Retention (and potential use of) inactive charge items or outdated CPT-4®/HCPCS codes
      • Claims errors due to incorrect units of service reporting (MUE edit limits, incorrect time increment for a charge, drug billing unit discrepancies against HCPCS coding descriptors, etc.)
      • Payers not accepting the new year’s coding
      • Insurance preferences for HCPCS overrides (Medicare HCPCS Level II codes that are used instead of CPT-4®)
      • Various payers’ acceptance and reporting requirements for available modifiers or codes

      Priority Documents

      Important documents are noted below that our customers reference for 1st Quarter updates:

      • Transmittals or CMS Medlearn Matters articles for January  payment system updates including:
        • OPPS
        • IPPS
        • MPFS
        • CLFS
        • DMEPOS
        • Other payment systems applicable to your organization
        • OCE edits
        • Also consider other applicable transmittals for specific Medicare payment systems such as Indian Health, RHC/FQHC, Home Health, Hospice, etc.
      • Other CMS publications (available in ChargeAssist®):
        • CMS Corrections Notices
        • AMA CPT-4® Errata and Technical Corrections
        • Payment System Corrections
        • NCCI Manual and correlating edits
      • Other ChargeAssist and Holliday & Associates content:
        • H&A Annual CDM Updates Educational Program manual, worksheets, slides, and streaming video lessons
        • Final Rule bookmarked display copy documents prepared by H&A (use for reference to rule language for policies, procedures, or CDM and claims data decisions)
        • Process Recommendations & Performance Tools
        • OIG and other auditing bodies’ audit workplans, reports, and communications

All of these changes can be more easily reviewed, assessed and implemented with a robust chargemaster tool. If your team needs help with evaluating the success of the new year’s CDM updates or overall data quality, call the author, Rosemary Holliday, Managing Partner Holliday & Associates to discuss a customized approach. (800) 831-3323 ext 1.

For related information to content within this post, see:

Annual Update Processes: Build a Work Plan that Really Works

If you don’t currently have a Charge Master tool, many of the CMS OPPS guidelines are published here on the CMS website:


Holliday & Associates offers ChargeAssist®; an HFMA Peer Reviewed™ Charge Master auditing and resource tool for easily auditing, collaborating, and maintaining Charge Master files. We also provide Charge Management Team and Charge Master Coordinator Educational Programs as well as customized CDM Reviews by a team of credentialed clinical, coding and technical auditors.

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