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Charged Up About Chargemaster Automation

Karen Minich-Pourshadi, for HealthLeaders Media, November 1, 2010

Here’s a CFO pop quiz: What is the one, often overlooked, linchpin in the revenue cycle? I’ll give you a hint; it’s also the most important tool you have for ensuring compliance and optimal reimbursement.

If you answered, “the chargemaster,” then you’re correct.

It’s easy to forget just how important your chargemaster is, especially with all the other revenue cycle components you have to watch. But if there’s one area you cannot afford to take your eyes off, it’s the chargemaster. With every revenue transaction funneling through it, the chargemaster has the potential to bring in or cost your hospital millions of dollars. Knowing that, I have to ask, why is it that so many hospitals still use a manual process when an automated one is really a time- and money-saver?

When you stick with a manual process, errors due to absent or incorrect information are often identified downstream when it’s past the point of the original transaction. Moreover, there are thousands of changes to coding rules each year, and with many hospitals using a chargemaster with as many as 40,000 line items, it’s impossible to think that this could be correctly updated manually. A manual chargemaster also leaves financial leaders without the ability to pinpoint specific sources of errors, which ultimately leads to reimbursement delays, reductions and denials. Quite simply, anything with the level of detail, complexity and routine maintenance of your chargemaster has too many variables that can translate into revenue leaks for your hospital.

Actually it’s been estimated in more than a few healthcare reports that providers lose millions of dollars annually due to errors in claims data—which is often traced back to the chargemaster. Traditionally stopping a revenue leak comes from revenue management efforts focused on revenue operations and revenue audits—those are excellent tools, but what about revenue integrity?

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2 comments on "Charged Up About Chargemaster Automation"


Michael (11/1/2010 at 6:00 PM)
Couldn't agree more Jill. The software from Craneware is probably the best solution to automate how a Provider uncovers potential gaps in their CDM, however I'm not certain any Provider would use the software exclusively to add charges unless they've done their due diligence of the operation to determine the validity of what the software found. I believe the Craneware software also helps identify trends and revenue gaps by inspecting claims as well as the links between supply chain spend and reimbursement. In these cases - I suspect the software is only automating the process of finding the potential gaps and missing links. It's up to the Providers' Revenue Integrity team to resolve any issues and fix the gaps, but their job is now spent fixing and not trying to find needles in a haystack. Software is only as good as the sustainable process build around the solution.

Jill R (11/1/2010 at 2:53 PM)
Let me start off by saying Craneware is a great product and worthwhile investment, however, Providers need to use some discretion when adding charges that may be all-inclusive or perceived as unbundled. While it may appear that there is greater potential for reimbursement, indeed you may be increasing your potential for denials, thus unrealistically inflating your AR, and expected Reimbursement. One of the modules Craneware offers is a product that looks at charging patterns nationwide and tells you, for example "75% of providers who charged for X, also billed for Y and Z". While this may invaluable for those whose CDMs are lacking in the appropriate macros, others may just be padding their claims with non-payable charges and engaging (unwittingly) in non-compliant billing practices, putting themselves at risk possibly for fraud/abuse investigation. I would use a GREAT deal of caution with this product. Just because 75% of hospitals do it, does NOT mean they are doing it right....as the RAC audits have proven. As with everything, buyer beware, if it sounds too good to be true, it probably is. I am in no way suggesting that it is better to leave money on the table, far from it, just that you use some common sense and in all things, do what is right.......that's why it's called Revenue INTEGRITY.