Kill Your Chargemaster
In fact, many of you would argue that the chargemaster prices cited above, and throughout the CMS data release, are irrelevant given the actual reimbursement amount. OK. I'll buy that. Anyone who knows healthcare would buy that. But that doesn't mean the "list prices" are meaningless.
If the chargemaster prices are so irrelevant to your organization's reimbursement, why do they exist? I've never gotten a satisfactory answer to that question in nearly 13 years of covering healthcare.
The only reason must be that since commercial insurers also negotiate to get the best deal they can and often start negotiations with Medicare payments, that the list prices are intended for the uninsured.
Several stories in the trade media over the past 10 years have focused on the role the chargemaster plays in billing the uninsured for care. Court cases on hospitals' nonprofit status have been based at least tangentially on chargemaster billing, as have Congressional hearings and the beefing up of requirements for hospitals to justify their tax exemption through the IRS.
Time Magazine didn't discover the practice of billing the uninsured based on the chargemaster. But Steven Brill's article has received a lot of attention not only for its comprehensiveness, but also for its focus on real people who are paying "full boat."
So don't tell me chargemasters don't matter. They clearly do for some people.
In stories I've written about charity care policies, nonprofit status, the cost of the uninsured to hospitals, and so-called patient-friendly billing, hospital and health system senior leaders insist that chargemaster prices represent a data point for negotiations with private insurers.
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