Charged Up About Chargemaster Automation

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?

Revenue integrity strives to prevent risk reoccurrence and lessen its impact. As any doctor will tell you, it’s better to prevent illness than to treat it. To prevent problems, in this instance, you need to use technology to your advantage. You need to make process improvements such as teaching staff to use the technology you have more adeptly, creating and follow best practice rules and ensuring correct payment through proper pricing, charging, coding and documentation.

I’m not advocating an unnecessary spend—in reality automating your chargemaster is as vital to the health of your hospital as having great physicians and top-notch medical equipment. Just ask Doug Barry, vice president of revenue cycle and HIM for Glen Falls Hospital in Glen Falls, NY.

This 400-bed hospital, largest one situated between Albany, NY and Montreal, Canada, includes a main acute care hospital campus and 28 health care facilities and a service area that stretches across six, primarily rural, counties and 3,300 square miles. The breadth of their coverage area means that many of the services they provide do not generate enough revenue to pay for themselves—a situation to which many other facilities can relate. For Glen Falls Hospital, optimizing their revenue is critical, which is why in fall 2009 the facility decided to invest a six-figure sum into automated revenue integrity software.

When the market tanked, Glen Falls Hospital went through the same budgetary overhaul that many hospitals nationwide did, however, at the end of their process they had cut their highly skilled chargemaster person. Recognizing this error, they promoted from within but still needed to train this person and provide the tools to discern where their revenue was leaking. It was time to automate. After researching and talking with various vendors, they landed on Craneware, based in Atlanta, GA.

“We needed this software for continuity and consistency. For us it was the absence of the intellectual capital [that made us realize] we needed to automate this process,” says Barry. “It’s an area with a high volume of activity; you need to have a control point.”

Prior to taking the software live, Barry’s team trained on it. What they found? Along with improvements in their ability to efficiently price, charge and code for services, their reporting and data mining processes went from being a weeklong effort to three to four minutes.

Moreover, the software flags exceptions to industry best practices and allows hospital staff to manage those exceptions rather than getting mired in complex details. It also enables staff to identify the exact sources of the problems and correct them before they become patterns of behavior within the charges. A much more efficient approach than correcting the same errors over and over again later, after claims have been denied or rejected. Plus the automated process allows providers to see losses of revenue that would be missed by traditional scrubbers.

“Just 12 months prior to adding the Craneware software we had a consultant check our chargemaster and we were told that it was in relatively good shape but what we found intriguing was that the consultants never talked about the things we were not charging for,” says Barry. “This software is doing a better job of identifying opportunities.”

Indeed automating their chargemaster has given their bottom line a boost—they’ve been able to identify more than a few opportunities over the last year.

I understand that financial leaders have a lot of cost-cutting measures on their minds and the supply chain offers the low-hanging fruit; however automating your chargemaster has the potential to unveil millions of dollars in reimbursement—it’s not low hanging fruit but I think you’ll find it’s a more ample harvest.