In the United States, the chargemaster, also known as charge master, or charge description master (CDM), is a comprehensive listing of items billable to a hospital patient or a patient's health insurance provider. In practice, it usually contains highly inflated prices at several times that of actual costs to the hospital. The chargemaster typically serves as the starting point for negotiations with patients and health insurance providers of what amount of money will actually be paid to the hospital. It is described as "the central mechanism of the revenue cycle" of a hospital.
The chargemaster may be alternatively referred to as the "charge master", "hospital chargemaster", or the "charge description master" (CDM). It is a comprehensive listing of items billable to a hospital patient or a patient's health insurance provider. It is described as "the central mechanism of the revenue cycle" of a hospital. Chargemasters include thousands of hospital services, medical procedures, equipment fees, drugs, supplies, and diagnostic evaluations such as imaging and blood tests. Each item in the chargemaster is assigned a unique identifier code and a set price that are used to generate patient bills. Every hospital system maintains its own chargemaster. Traditionally, hospitals regarded their chargemaster, alongside the medical codes that catalogue the billing items, as a trade secret that is central to their business, and state laws and courts have historically accepted the view that these are proprietary information.
The procedure of developing, maintaining, and monitoring the chargemaster and its pricing scheme often necessitates multiple hospital employees working under the supervision of a "chargemaster coordinator", a "charge master manager", or others in the health care system's operations or administrative support areas frequently called a "charge master team". Ultimate responsibility for ensuring accuracy of the chargemaster rests with each hospital's chief financial officer, compliance officer, and hospital Board. Approximately forty percent of hospitals pay outside companies to help create and then adapt their chargemasters on a yearly basis. According to Essentials of Managed Health Care, as of 2012 the chargemaster file typically included between 20,000 and 50,000 price definitions. The Lewin Group analyzed utilization of the chargemaster and found that a low proportion of hospitals carried out regular reviews of their chargemaster implementation. Costs for patients maintained on the chargemaster differ greatly from hospital to hospital.
Authors J. Patrick Rooney and Dan Perrin note in their book America's Health Care Crisis Solved, "Charge-master rates, in reality, serve as nothing more than the starting point for negotiations" with the payer. The impact of the chargemaster is such that those with good insurance or better access to means to afford quality healthcare pay the least for that care, whereas conversely uninsured, and others who pay out-of-pocket for healthcare pay the full chargemaster listed price for the same services.
Existing legislation and regulationsEdit
Federally all hospitals are now required to post their chargemaster on the hospital website.
Hospital price transparency helps Americans know the cost of a hospital item or service before receiving it. Starting January 1, 2021, each hospital operating in the United States will be required to provide clear, accessible pricing information online about the items and services they provide in two ways.
In California, a regulation known as the "Payers' Bill of Rights" (which is unique to the state) requires all hospitals to provide their chargemaster to the state, which then posts them online for the public.
The chargemaster procedure is generally only regulated in Maryland; author Peter Reid Kongstvedt notes in Essentials of Managed Care, "Of particular importance, other than in Maryland, hospitals are generally free to charge whatever they want in their chargemaster."
Chargemasters gained national attention in early 2013, when in short succession, there were two important publications made. First, there was a Time magazine cover story published February 20, 2013, titled "Bitter Pill: Why Medical Bills Are Killing Us", in which reporter Steven Brill examined the overlooked role that chargemasters played in the American health care system's cost crisis, asserting that they routinely listed extremely high prices "devoid of any calculation related to cost", and were generally regarded as "fiction" in the healthcare industry, despite their significant role in setting prices for both insured and uninsured patients alike. Then, a couple months later, the Centers for Medicare and Medicaid Services published inpatient prices for hospitals across the country in a publicly available format.
"The 'full charges' reflected on hospital Charge Masters are unconscionable", wrote George A. Nation III in a 2005 piece for the Kentucky Law Journal. Health care economist scholar Uwe Reinhardt noted in a 2006 article for Health Affairs that the approach to chargemasters by hospitals would have to be modified to become more transparent, in order to encourage a form of consumer-driven health care to help improve the system. University of California, Berkeley professor of health economics James C. Robinson pointed out prior criticism of the chargemaster, "Much ink has been spilt bemoaning that incomprehensible foundation of hospital cost accounting and prices, the redoubtable chargemaster." Robinson called for greater transparency as well as increased price standardization as steps to help remedy the situation.
In a 2007 article for Health Affairs, Gerard F. Anderson observed, "Without knowing what services they will use in advance, it is impossible for patients to comparison shop." Anderson also noted the esoteric nature of the language on the chargemaster made it difficult for patients and anyone other than hospital administrators to understand. Anderson emphasized the difficulty of patients' ability to interpret the chargemaster in a subsequent 2012 article: "Furthermore, most of the items on the charge master file are written in code so that only the hospital administrators and a few experts in the field can interpret their meanings."
- ^ Rosenberg, Tina (July 31, 2013). "Revealing a Health Care Secret: The Price". The New York Times. Retrieved August 1, 2013.
- ^ Rosenthal, Elisabeth (June 2, 2013). "The $2.7 Trillion Medical Bill – Colonoscopies Explain Why U.S. Leads the World in Health Expenditures". The New York Times. Retrieved August 1, 2013.
- ^ a b c d Brill, Steven (February 20, 2013). "Bitter Pill: Why Medical Bills Are Killing Us". Time. Time Warner. Archived from the original on February 26, 2013. Retrieved March 4, 2013.
- ^ Peden, Ann (2011). Comparative Health Information Management. Delmar Cengage Learning. pp. 41–43. ISBN 978-1111125622.
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- ^ a b c d e State of California Office of Statewide Health Planning and Development (August 8, 2012). "Healthcare Information Division: Annual Financial Data – General Information About the Hospital Chargemaster Program". OSHPD – HID. State of California. Retrieved March 4, 2013.
- ^ Herman, Bob (October 3, 2012). "5 Things Hospitals Should Know About Their Chargemaster and ICD-10". Becker's Hospital Review. ASC Communications. Retrieved March 4, 2013.
- ^ Rosenthal, Elisabeth (2017-03-29). "Those Indecipherable Medical Bills? They're One Reason Health Care Costs So Much". The New York Times. ISSN 0362-4331. Retrieved 2017-04-03.
- ^ "Hospital Price Transparency". Centers for Medicare and Medicaid services. Retrieved 21 May 2022.
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- ^ Kongstvedt, Peter. "Errata Sheet for The Essentials of Managed Health Care, Sixth Edition, Jones & Bartlett" (PDF).
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- ^ Rooney, J. Patrick; Perrin, Dan (2008). America's Health Care Crisis Solved: Money-Saving Solutions, Coverage for Everyone. Wiley. pp. 137–139. ISBN 978-0470275726.
- ^ Henderson, James W. (2008). Health Economics & Policy. South-Western College Pub. pp. 269–271. ISBN 978-0324645187.
- ^ Kongstvedt, Peter (2009). Managed Care: What It Is and How It Works. Jones & Bartlett Publishers. p. 212. ISBN 978-0763759117.
- ^ "Hospital Price Transparency | CMS".
- ^ Herman, Bob (July 16, 2012). "Report: Surgery Prices Vary Wildly at California Hospitals". Becker's Hospital Review. ASC Communications. Retrieved March 4, 2013.
- ^ Young, Jeffrey; Kirkham, Chris (2013-05-08). "Hospital Prices No Longer Secret As New Data Reveals Bewildering System, Staggering Cost Differences". Huffington Post. Retrieved 2013-06-24.
- ^ Nation III, George A. (2005). "Obscene Contracts: The Doctrine of Unconscionability and Hospital Billing of the Uninsured". Kentucky Law Journal. University of Kentucky College of Law. 94: 101.
- ^ Reinhardt, Uwe (January 2006). "The Pricing Of U.S. Hospital Services: Chaos Behind A Veil Of Secrecy". Health Affairs. 25 (1): 57–69. doi:10.1377/hlthaff.25.1.57. PMID 16403745.
- ^ a b Robinson, James C. (2007). "Price Transparency Begins at Home" (PDF). Frontiers of Health Services Management. American College of Healthcare Executives. 23 (3): 25–28. doi:10.1097/01974520-200701000-00004. PMID 17405389. S2CID 14263360.
- ^ a b Anderson, Gerard F. (May 2007). "From 'Soak The Rich' To 'Soak The Poor': Recent Trends In Hospital Pricing". Health Affairs. Project HOPE: The People-to-People Health Foundation, Inc. 26 (3): 780–789. doi:10.1377/hlthaff.26.3.780. PMID 17485757.
- ^ Anderson, Gerard; Chalkidou, Kalipso; Herring, Bradley (September 2012). "High US Health-Care Spending and the Importance of Provider Payment Rates". Forum for Health Economics & Policy. 15 (3): 1–22. doi:10.1515/fhep-2012-0007. ISSN 1558-9544. PMID 31419860. S2CID 154853606.
- Brill, Steven (February 20, 2013). "Bitter Pill: Why Medical Bills Are Killing Us". Time. Time Warner. Archived from the original on February 26, 2013. Retrieved March 7, 2013.
- Brill, Steven (March 5, 2013). "Coming up with 'A Bitter Pill'". "Stories I'd like to see" blog. Thomson Reuters. Archived from the original on March 7, 2013. Retrieved March 25, 2013. Alternate link, Columbia Journalism Review.
- Database of hospital chargemasters in California, Office of Statewide Health Planning and Development, State of California
- Medicare Provider Charge Data, Centers for Medicare & Medicaid Services