Succeed with Internal Pricing Analysis:

Part 1. Have a Plan & Set Parameters

“Succeed with Internal Pricing Analysis” Series Overview: In this three-part series, we will share strategic planning ideas, identify fundamental audit protocols to consider when defining your pricing analysis, and outline specific risks to avoid when performing internalized pricing studies. This article focuses on project planning and establishing audit parameters; and is designed to help our customers successfully integrate the use of ChargeAssist® Pricing Studies modules into the organization’s overall Charge Management program.

Why Have a Plan?

If your team is considering in-house analysis of pricing (either with ChargeAssist® or through other methods), there are certain basic project management concepts that ensure more efficient, effective, and realistic internalized studies. In working with hospitals of varied sizes, we find that organizations with an organized, well-articulated approach for pricing updates are considerably more thorough, analytical, and efficient. They are proactive in identifying anomalies, and strategic in how they maintain their prices. By following a defined plan of action, we’ve seen that the functionality in ChargeAssist® can be easily integrated into customers’ pricing programs to support the goals of more strategic and defensible pricing.

Pricing Analysis Workplan

The ChargeAssist® Pricing Studies modules are a ‘no extra cost’ functionality available to subscribers. Hospitals wishing to perform in-house pricing assessments may need to define their plans first. Similar to engaged consulting projects of any type, internal team-based Charge Management projects are most effective when they are well-coordinated.

Several project-oriented suggestions include:

  • Confirm and document the planned scope of the pricing analysis
  • List the organization’s desired auditing and analysis methodology (see Part 2 article for auditing tips), and prioritize tasks
  • Determine timelines for the analysis activities
  • Assign the work team and identify the participants’ roles and responsibilities
  • Confirm any contingent tasks; for example:
    • Ensure that the audit file (Charge Master, Bill item audit file, EAP, etc.) is extracted accurately
    • Verify that only active charge items are in the file, and inactivate unused cost centers or obsolete charge items
    • Address previously identified charge integrity issues (from CDM Reviews or through use of ChargeAssist® audit modules)
    • Update Charge Master data to ensure all CPT-4® / HCPCS Level II codes are accurate (critical for mapping charges to market competitors and payment systems)

Pricing Analysis Parameters

  • Identify charge items for analysis:
    • Confirm whether the analysis is for one or multiple health system entities
    • Identify the source datafiles and associated masterfile data elements required for analysis
    • Define whether your evaluation will be for all charge items or for only targeted charges; for example:
      • Targeted charges based on a threshold percent of annual gross charges (ex. charge items representing the top 80% of a cost center’s gross charges)
      • Most frequently performed procedures (based on utilization statistics)
      • Cost center-specific targeted areas
      • Specific CPT-4® / HCPCS Level II code ranges
    • Determine whether your team will review prices for services that are not hard-coded in your charge master file (coded by coders or through other methods)
    • Confirm whether your team may want to review room rates against the market
    • Decide whether it would be helpful to review facility charges for top DRGs to market competitors
    • Define the organization’s primary pricing decision-makers and how final changes will be authorized
    • Confirm whether there are organizational pricing update limitations (ex. only raising total charges by X %)
    • Determine which software applications are to be utilized for the pricing analysis data and modeling (eg. ChargeAssist®)


 To recap, the two primary steps for an organized approach to internal pricing analysis are: 1) developing an internal work plan, and 2) establishing assessment parameters. Beginning with an organized approach will ensure a more organized, proactive approach to pricing work. Parts 2 and 3 of this series build on this platform and contain other suggestions for further developing and refining your organization’s program.

As with other Charge Management activities, the groundwork established for your internal Pricing Analysis and Updates will be beneficial year in and year out, saving significant costs in the long run.

To read the next articles in this series, please click below:

Succeed with Internal Pricing Analysis: Part 2. Fundamental Audit Protocols
Succeed with Internal Pricing Analysis: Part 3. Avoid Pricing Analysis Pitfalls

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 CDM Coordinator Education and CDM Reviews by a team of credentialed clinical, coding and technical auditors.

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