Optimizing Your Hospital’s Charge Master

In healthcare revenue cycle management, it can be easy to let things fall through the cracks, especially when it comes to the hospital’s charge master. However, optimizing this critical file plays an outsized role in ensuring financial stability and maximizing revenue.

The charge master, often referred to as the hospital’s “price list,” is a comprehensive database containing all the billable services, procedures, and products a hospital provides to its patients. It includes detailed information such as service descriptions, procedure codes (CPT, HCPCS), revenue codes, and prices. Properly maintaining and optimizing this system ensures accurate billing and reimbursement while reducing the likelihood of costly errors and insurance denials. Below, we explore key financial improvement opportunities that hospitals can realize by focusing on optimizing their charge master.

Increase Revenue Through Accurate Billing

One of the primary reasons hospitals need to optimize their charge master is to ensure accurate billing, which leads to more timely and appropriate reimbursement. When the charge master is out of date or incorrectly set up, it can lead to errors such as charging for services that should be bundled, missing charges for important procedures, or billing at incorrect rates. These errors not only impact revenue but also result in insurance denials, delayed payments, and the need for reworking claims.

By ensuring that your charge master is consistently updated with current CPT codes, pricing, and payer-specific requirements, you can reduce denials and decrease accounts receivable (AR) days. Sending out clean, accurate claims the first time reduces the need for follow-up and ensures that claims are paid faster, ultimately increasing cash flow.

Stay Competitive and Ensure Pricing Reflects Costs

Another significant benefit of optimizing the charge master is the ability to review and adjust pricing in line with the hospital’s costs. Over time, hospital operating costs—such as staff salaries, medical supplies, and equipment—continue to rise. However, some hospitals fail to adjust their pricing accordingly. This can create a financial strain, especially if pricing hasn't been updated for many years.

Hospitals should regularly evaluate their pricing structures to ensure that they are not only competitive in the market but also sufficient to cover their costs and contribute to profitability. This may involve implementing incremental price increases or developing alternative pricing models for different payer types, such as cash-pay patients, employer contracts, or industrial billing accounts.

Minimize Revenue Leakage

Revenue leakage occurs when services that could be billed are either missed or undercharged. Common areas where revenue leakage occurs include the emergency department, pharmacy, and operating room. Optimizing the charge master allows hospitals to identify these gaps and ensure that all billable services are captured appropriately.

For example, in the emergency department, hospitals should ensure that they are charging for all levels of care appropriately, including complex services such as imaging or lab work. Similarly, pharmacy charges must align with the correct CPT or HCPCS codes, ensuring that medications are billed at the right dosage and frequency. Properly mapping charges across departments helps prevent errors that result in revenue leakage.

Reduce Manual Interventions and Billing Adjustments

A well-optimized charge master reduces the need for manual adjustments by billing staff. When billing and coding staff must make frequent manual changes to claims, it not only increases the likelihood of errors but also decreases efficiency. By setting up the charge master to ensure that all charges, codes, and pricing are accurate from the start, hospitals can reduce manual interventions, streamline billing processes, and improve overall productivity.

Ensure Compliance and Avoid Penalties

Lastly, optimizing the charge master ensures that your hospital stays compliant with regulatory requirements, particularly those set forth by CMS. Failure to meet coding and billing guidelines can result in audits, fines, and penalties. Regular charge master reviews help hospitals stay current with CMS rules, ensuring that they bill accurately and avoid unnecessary compliance risks.

In conclusion, optimizing the hospital charge master is a powerful strategy for identifying financial improvement opportunities. By ensuring accurate billing, competitive pricing, minimizing revenue leakage, and reducing manual interventions, hospitals can significantly enhance their financial performance and overall operational efficiency.

Working with a Partner

MEDTEAM can be an invaluable partner in managing and updating your chargemaster. We offer the expertise to analyze the file build to increase usability, identify missed revenue opportunities, and improve billing accuracy. Our team of experienced professionals can ensure that your chargemaster is not only current but also optimized to maximize revenue and efficiency, helping your hospital thrive in an increasingly complex healthcare environment.

By partnering with MEDTEAM, hospitals can benefit from our extensive knowledge and experience in RCM, allowing you to focus on providing high-quality patient care while we handle the intricacies of chargemaster management.

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