Optimizing the chargemaster: Best practices
Healthcare Finance News Editor Richard Pizzi spoke recently with Kelley Blair, senior vice president of professional services at Craneware, about best practices in managing the hospital charge description master (CDM). Craneware is an Atlanta-based provider of automated revenue integrity solutions for healthcare organizations, and Kelley has spent many hours working with hospital business office personnel on chargemaster maintenance.
What are the biggest challenges in chargemaster maintenance today?
From the chargemaster perspective there are two main risks. The number one issue is whether or not you have an inaccurate chargemaster. If you do, then you're not accurately reflecting to the payer world what you're doing clinically. It's challenging to keep the chargemaster accurate because the rules change throughout the year. Every quarter the Centers for Medicare & Medicaid Services make changes to the rule sets. And the clinical departments in hospitals also make changes throughout the year. Of course, you also have your third party payers, who often follow CMS, but sometimes come up with their own rule sets for different service areas that they want to track and bill differently than Medicare. It's very difficult to keep up with all of those changes.
The second big component of risk is whether your chargemaster is complete. Completing a chargemaster review can be pretty time-intensive, and the departments don't always understand the importance of a complete and accurate chargemaster. It's just not their focus on a day-to-day basis. In smaller hospitals, you don't often see a dedicated chargemaster person – someone that's responsible for maintaining the database. The accuracy of the chargemaster in such cases is really questionable.
As for best practices, one thing you can do is make sure there is a process for ongoing measuring of the chargemaster against the CMS rules. Somebody needs to look at the chargemaster regularly, and we believe it's best done from a technology perspective.
Another best practice is external review – bring in a live consultant to check your chargemaster database every year. Someone, internal or external, needs to be doing comparisons against the CMS databases.
Is there a reason why some facilities don't have a dedicated person assigned to chargemaster management?
In hospitals of 150 beds and under, the chargemaster is an afterthought. But even smaller facilities need to realize that you must focus on the chargemaster just as you focus on the revenue cycle. Once you get above 150 beds, you have to make certain that your dedicated chargemaster manager is supported, because you see an increase in the complexity of services that are provided. There must be a CDM review in every department annually in order to catch charging issues that the departments are confused about. Unfortunately, most facilities are not doing that.
What kind of investment does it take for a hospital to properly look after their chargemaster?
There is a significant investment of resources. When we look at completing a chargemaster review without technology, you generally see that it takes at least eight weeks of work. With the technology pieces in place, you're looking at a two-week process. But new rules are always coming out. All the clinical systems have to be updated, and the clinical managers have to be educated in the new charging practices.
What's a common increase in billing and collections that a hospital might experience over 6-12 months if they properly manage their chargemaster?
In our chargemaster reviews, we typically see a six-figure return. Much of it will be through missed charges the department managers didn't know they could charge for. But there's also the issue of replacement codes. What you find is that a procedure was billed under a single line item, a single CPT code, and the following year CMS decides to split it out into two charges. But only one of those charges may be set up in the system. If someone is not monitoring the chargemaster and effectively comparing the current chargemaster to CMS changes, you will have a real challenge in front of you. You'll be comparing spreadsheets from CMS to spreadsheets from your HIS department and trying to merge them together to identify where the changes would be.
What are the characteristics of the hospitals that do get it right?
Typically, the impetus to do a better job of managing the chargemaster comes from the director level, from the revenue cycle perspective. We often find that the chargemaster is not on the radar of the CFO, even though it should be. We see our best practices come from that director-level person who is very aware of the significance of the role they're playing. They usually drive improvements in chargemaster management and bring the problem and potential solution to the CFO.
Another best practice of successful hospitals relates to electronic workflow. One of the things we notice is that department managers can become disenchanted if they don't get a quick response on CDM issues. If there's not an efficient CDM workflow, you can have breakdowns in the communication process. We recommend having something electronic in place so that you can make sure the turnaround is quick. That helps with prioritizing requests, and proves to department managers that the revenue cycle is responding to their needs.
In which departments do you see the most financial return after optimizing the chargemaster?
I would say the top ones are radiology, cardiac catheterization and supply. Some of it comes down to department managers and where they "grew up" within the hospital. If someone has a business office background and works in a clinical department, they can really drive improvement.
Education is ultimately a crucial piece. Hospitals should have an educational program in place. Charges are changing all the time, and department managers may not have a good understanding of the revenue cycle. The organizations that are successful focus intently on the education of clinical departments in revenue cycle processes.
