Charged Up About Chargemaster Automation

Karen Minich-Pourshadi, 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?

Karen Minich-Pourshadi Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media. Twitter
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