“We have to charge everybody more because we give away millions upon millions of free charity care!” says the hospital administrator. “Just look at what we charged off last year, over $1 billion! But we don’t mind because our policies are compassion based.“
“But almost no one ever pays chargemaster rates!” says the attorney. “Isn’t that true?“
“Objection!” screams the opposing side. “The plaintiff’s attorney is trying to sway the jury!’
The article below brings up a good point, one that is often misunderstood by the general public – “When these expenses are reported at the charge master level, expenses can be paradoxically overstated, potentially making a hospital’s financial position look worse than it actually is.”
CHARGE MASTER: Medical Bills Paradox
November 20, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Dr. David Edward Marcinko MBA MEd CMP™
CHARGE MASTER MEDICAL BILLS
Classic Definition: A comprehensive review of a physician, clinic, facility, medical provider or hospital’s charges to ensure Medicare billing compliance through complete and accurate HCPCS/CPT and UB-92 revenue code assignments for all items including supplies and pharmaceuticals. The charge master captures the costs of each procedure, service, supply, prescription drug, and diagnostic test provided at the hospital, as well as any fees associated with services, such as equipment fees and room charges
Modern Circumstance: A charge master quizlet (charge description master [CDM]) document that contains a computer-generated list of procedures, services, and supplies with charges for each. Charge master rates are essentially the health care market equivalent of Manufacturer’s Suggested Retail Price (MSRP) in the car buying market. Poor charge master maintenance can lead to overpayments or underpayments. It can also lead to claim rejections from insurance companies, poor patient experience, or compliance violations.
Paradox Examples:
- Superbills: An encounter form that is the financial record source document used by healthcare providers and other personnel to record treated diagnoses and services rendered to the patient during the current encounter. It is also called a superbill.
- Payment rates: Almost no one actually pays the publicized charge master rates. The vast majority of health care consumers are represented by a payer of some kind, such as a commercial health insurance company, Medicaid, or Medicare. Commercial insurers negotiate the actual prices they pay during the process of contracting with providers. Medicare and Medicaid establish their own payment levels independent of hospitals’ charge master lists – Medicare through the federal government and Medicaid through state governments.
- Cash pay: The sad irony of the charge master is that the uninsured are the most likely to be billed charge master rates because they are not represented by a third-party payer.
- Problematic features: Other items also impede the ability of payers to have a comprehensive and accurate understanding of hospitals’ financial positions. For example, nonprofit hospitals are required to report charity care, bad debt expenses, community benefit initiatives, and uncompensated care. When these expenses are reported at the charge master level, When these expenses are reported at the charge master level, expenses can be paradoxically overstated, potentially making a hospital’s financial position look worse than it actually is.
ATTENTION HOSPITAL FRIENDS: WE WELCOME YOUR COMMENTS AND WILL POST THEM HERE. WE BELIEVE THERE ARE TWO SIDES TO A STORY. WE WOULD LIKE TO HEAR YOURS.
Reading assignment for tomorrow: Chargemaster Duns Dead Person $181,102.03
