The Chargemaster: What your Shopping Public Needs to Know
The Chargemaster: What your Shopping Public Needs to Know
Will the 2019 CMS requirements for publishing your Charge Master prices confuse patients? …Most likely…
In addition to complying with publication rules it’s important to consider the public relations aspects of publishing your prices. Despite how abstract the Charge Master and hospital pricing may be it’s time to consider educating your patients.
Many hospitals are developing patient information documents to help explain hospital charges. This H&A article (part of our CDM Transparency series) provides various details your team may want to include in a “Charge Master & Hospital Pricing Overview” reference source to help educate and inform your patients.
Explaining the Charge Master
What is a Charge Master file?
A Charge Master file (sometimes referred to as Charge Description Master, CDM, or Chargemaster) is a hospital information system file that is used to process data for billing and related hospital business transactions.
The file is a detailed list of items and services that can be billed by our hospital to you, your insurance, or to other organizations. The Charge Master file contains clinical and technical terminology and serves numerous purposes for hospital financial operations.
Since the medical care you receive is unique to your clinical needs, a variety of items and services within this file may be ordered by your physician, performed by our departments, or used in the course of your care.
The Charge Master file includes an inventory of what we refer to as “charge items”. Those items represent hospital services and chargeable items that our hospital provides for patient care. Charge items include multiple data fields (defined in the next section).
Are there rules and regulations about the Charge Master?
We follow defined government requirements in populating and maintaining our Charge Master file. The Charge Master is overseen by multiple hospital staff and committees including Finance, Revenue Integrity, and Compliance.
We are publishing this file to comply with Medicare regulatory requirements. Note that the CDM file displayed through our website contains only some of the many data elements used to make our financial systems operate.
Some charges follow the structure and, roughly, the definition of national coding systems adopted by the government for hospital billing as mandated by HIPAA laws. Where there is flexibility in the structure of charges, we create prices and charge structures that best represent the service provided and associated costs.
We populate the CDM in a manner that most effectively and efficiently supports recording those items and processing them through our accounting and billing system functionality. Finally, charges are billed according to specific payment system rules and regulations.
Why is the file different from what I viewed previously?
The Charge Master is a constantly-changing hospital master file.
Our hospital systems are populated with certain government-mandated payment system data fields. Our Charge Master may be updated as payment system data changes which occurs quarterly. It may also be updated if the rules surrounding insurance payment systems, claims processes, charge capture, or reportable charge data change. Likewise, as the inventory of charge items or services change, we update the file as well.
Additionally, healthcare costs constantly change. Some Charge Master prices will likely be updated frequently while others will only be revised periodically. Because some prices are calculated based on cost formulas, some rates you see in our public CDM data may not be the exact rate as our public view file.
Charge Master updates are an ongoing process for our facility. Despite all of these changes, we strive to keep the content, data and prices in our public CDM as current as possible.
Why is it different from other hospital files?
Because of all the moving parts and unique content, there are no ‘standardized’ Charge Master files in our industry. The hospital file you are viewing will vary from other hospitals’ files in content, descriptions, data structure, and possibly the published data fields. The CDM is built according to unique data specifications of our hospital information systems vendor, so it will not be exactly the same as another hospital’s Charge Master file if viewed in full.
Hospital services can be defined, structured, or priced in various manners. This may be driven by the associated billing codes required by law for standardized hospital insurance claim transactions. Alternatively, some hospital charges have similar wording nation-wide in absence of any regulatory requirements.
Many charges have clinical and technical terms. If you see a charge item that has a price or description that you do not understand or that appears differently in other hospital files, please contact us for clarification.
Patient Information about Charge Master Prices
The posted prices in our CDM accessed through this website are current as of the date shown. Prices may change as costs change. We strive to keep this information as current as possible on our website. Our prices represent the itemized rate that is established for each chargeable item. This value is the same rate for all patients regardless of insurance. (Add additional verbiage if your hospital charges differently for inpatient, outpatient, and other service areas.)
Through the payment setting and insurance contracting processes, insurance companies and healthcare providers often negotiate rate discounts, alternative payment methods, and other various coverage and payment terms. Because of this, the total billed charges you see on your Explanation of Benefits or other insurance communications often reflect those negotiated rates.
Services you receive for care typically include a variety of line item charges. This makes the Charge Master a difficult file for interpreting your expected costs of services.
It should be noted that hospital prices (often referred to as “charges” or “standard charges” within the CDM file) are different from retail pricing you may pay for items found at a local retail store. Likewise, hospital prices often vary from reference laboratories, physician offices, imaging centers, retail and mail order pharmacies, ambulatory surgery centers, urgent care clinics or even other hospitals. Costs, overhead and various other factors are used to develop the prices that that allow us to operate as a non-profit health care provider in the community.
In addition to itemized charges, our hospital also provides a reference of average charges by DRG. Diagnosis Related Groups are the method Medicare pays for inpatient care to most hospitals. This is historic average charge data based on Medicare insurance claims, and posted as stipulated by Medicare guidelines. (include this if you are paid under IPPS/ If CAH, this is not required)
Despite the requirements to post the above information, neither the Charge Master file nor the average charge by DRG are ideal for helping you confirm your out of pocket costs based on your insurance coverage or financial situation. We encourage you to call our business office at ______________ or use our cost estimator tool located here: _____.
If you have questions or concerns about the price for any charge item or your overall billed charges, please contact our offices at____________. We have payment programs and financial assistance experts available if you are unable to pay your bill.
Explaining more than just prices (internal information for your team to review)
Introductory Explanations (or ‘Disclaimers’)
A hospital or health system’s reputation is critical as a highly-regulated business and employer in your community. Mission has always been at the forefront. We believe that your image should not suffer because of expanded pricing transparency mandates. If your Charge Master has been maintained and pricing is based on a rational, defensible basis, your organization’s community image should not suffer. However, most hospital executives and industry experts are concerned about the potential for patient confusion in providing a listing of charge items without clarifications or background information for appropriate interpretation.
Most hospitals have decided that some explanatory verbiage is needed for the web page the public and your patients may view. To help with introductory text, we have compiled several examples currently posted on the web to help explain Charge Master and pricing data to your patients:
As written by a CFO in a recent open letter to their patients:
“…every healthcare organization has contractual agreements with various payers, and not all agreements pay the same amount. Not only that, but to further complicate the issue, each patient’s policy with their insurer will involve different levels of deductibles, co-payments, and co-insurance levels based on what their company’s plan is with the payer. It can be very complicated to understand the payment structure that is created by this triangle of contracts and relationships. To further add to the challenge, every patient is unique even in instances where the same procedure is performed.”
One hospital includes the definition of Chargemaster in this way on their website:
“Charges are the dollar amount a provider sets for services rendered before negotiated rates and discounts…. Please note that standard charges are not always reflective of the price you will pay for the services provided…”
Here is another disclaimer statement found on a hospital website:
“…Disclaimer: In compliance with Centers for Medicare and Medicaid Services (CMS), this price list is provided containing our hospital standard charges. Standard charges are the same for all patients, but a patient’s responsibility may vary, depending on payment plans negotiated with individual health insurers. Uninsured or underinsured patients should consult with our registration and billing staff to determine whether they qualify for discounts. These prices are correct as of ….”
This disclaimer is for a multi-hospital system that tells the viewer up front to contact their offices on their “Chargemaster Pricing Information” web page:
“Healthcare costs are confusing. We take away the worry with a personalized quote for your care. Contact ______________today. We will walk you through your insurance benefits, explain any co-payments or deductibles you might have, and give you a personal quote for your upcoming visit. If you do not have insurance, we can explain the costs and payment options associated with your care.”
This facility also lists an explanation of the data they have posted for their multiple hospitals:
“The documents below list the prices at each XXX hospital as of Jan. 1, 2019….We want you to fully understand what both you and your insurance company will pay for your care. However, the chargemaster and DRG documents contain a lot of information and can be difficult to read. So please contact the ______ staff at your hospital to get a personal quote and answers to all your questions.”
One hospital website found says the following about ‘standard charges’:
“…Standard charges shown in the attached file do not necessarily reflect what a patient may pay. Government insurance plans such as Medicare and Medicaid do not pay the chargemaster rates, but rather have their own set rates which hospitals are obligated to accept. Commercial insurance payments are based on contract negotiations with managed care payers and may or may not reflect the standard charges. Patients without commercial insurance or not covered by a government health care plan should contact the hospital prior to a procedure to discuss charges, alternative pricing, and payment terms…”
Further patient educational materials and tools to support charge research and out of pocket costs will also improve the public’s reception.
How much will the patient pay?
To summarize the above-noted explanations and disclaimers, the amount the patient is expected to pay is the key point that needs to be clear to avoid confusion.
One way to state this is noted below:
“Your total billed charges vary based on services you receive, supplies, devices, and drugs used, and the level of care you receive. Hospital’s charges are structured in industry-standard ways with prices typically established based on a cost based methodology. If you are looking for a price estimate for a service, please contact our ____________ at ____________. We can help with more details related to your insurance coverage and what your payment obligations will be. If you do not have insurance coverage, we can help you with financial assistance guidance.”
Another summary note could be:
It’s important to recognize that the Charge Master is not the ideal way to shop for medical services and may cause confusion because of its medical/clinical orientation and usage. Again, if you have questions about your potential costs for a procedure, please contact our ____________ at ____________.
Look to professional associations as well as your peers for more ideas. Helpful resources are included in the “Patient Friendly Billing” initiative established several years ago by the Healthcare Financial Management Association (HFMA). (See their article, Understanding Healthcare Prices: A Consumer Guide, available through HFMA’s website.)
Hospitals will likely vary in the detail and scope of patient communications relative to pricing transparency and Charge Master publication. We hope the sections above are helpful. If your organization needs help with the ChargeAssist® CDM Public Portal, making decisions about public-view Charge Master data, or patient communication documents, feel free to contact our offices.
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.