CHARGE MASTER BASICS DECEMBER 2, 2013 MIKE KOVAR PRINCIPAL WEISERMAZARS LLP
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1 CHARGE MASTER BASICS DECEMBER 2, 2013 MIKE KOVAR PRINCIPAL WEISERMAZARS LLP
2 What we will cover: Definitions and uses of the charge master Charge master concepts including important data elements such as CPT, HCPCS and Revenue Codes Charge master impacts on payments Charge master development and maintenance processes Opportunities to improve revenues through charge master 2
3 What is the Charge Master? The charge master is the list price book for the acute care hospital of all services, supplies, and drugs provided to patients in a hospital Also frequently called CDM or Charge Description Master Number of items listed in the charge master can vary from 5,000 to over 60,000 It provides hospitals with a mechanism to charge patients for the services, supplies, and drugs provided It used to receive payment from third parties as well as patients for services provided It is also used for statistical reporting, productivity monitoring and decision support functions at many hospitals 3
4 What is the Charge Master? Linked to clinical systems and test ordering functions Medicare and Medicaid cost reports are prepared from information in the charge master Charge master billing information reported to different insurance companies can vary Generally no regulations in most states requiring full disclosure of the charge master to the general public 4
5 What is the Charge Master? Department Number Description CDM Item Number CDM Description D e fa ult UB-04 Re ve nue Code CPT4 Code Medicare Code Medicaid Code Magnetic Resonance Imaging MRI BREAST W&W/O CON, LT C TC 4, Magnetic Resonance Imaging MR ANGIOGRAPHY-SPINE C TC 4, Magnetic Resonance Imaging MRI BREAST W/O CON, LEFT C TC 3, Magnetic Resonance Imaging MRI BREAST W/CONT, LEFT C TC 3, Magnetic Resonance Imaging MRI BREAST W&W/O CON, RT C TC 4, Magnetic Resonance Imaging MRI BREAST W/O CON, RT C TC 4, Magnetic Resonance Imaging MRI BREAST W/CONT, RT C TC 4, Magnetic Resonance Imaging MRA SPINE W&W/O CONT C TC 4, Price 5
6 Key Elements in the Charge Master CDM Item Number It usually includes department number or a link to the department number. Description No standard nomenclature required aspirin versus acetylsalicylic acid Description should be user friendly for patient accounting staff as well as patients. CPT Code (5 digit numeric code) or HCPCS Code (Alpha digit plus 4 numeric digit code) Provides the basis for outpatient payment for Medicare and many other insurance companies Not all services have CPT or HCPCS Codes (supplies and drugs) There are over 10,000 available codes 6
7 Key Elements in the Charge Master UB 04 Revenue Code (4 digit code) Price National Uniform Billing Committee maintains the list of codes Links typically to CPT code and is pointer to clinical department where the service is provided. Different insurers can require different Revenue Codes for the same service It is the dollar amount billed to the patient/payor It is not the amount reimbursed by the insurers or Medicare/Medicaid Prices have been determined a variety of ways: Medicare Fee Schedule amount times a markup factor Cost of procedure/supply/drug times a markup factor Across the board % increase Strategic pricing initiatives 7
8 Charge Master Payment Impact No insurance company pays 100% of the charge amount Payment methodology can vary based on patient status as an inpatient versus outpatient as well as by insurance company Medicare pays for inpatient acute care hospital stays using Diagnosis Related Groups (DRGs) Prospective payment system that pays based on a bundled payment for the hospital services only Charges only matter as they relate to high cost patients in a particular DRG 8
9 Charge Master Payment Impact Medicare pays for outpatient acute care hospital stays using Ambulatory Payment Classifications (APCs) Prospective payment system that pays based on a bundled payment for the hospital services only CPT and HCPCS Codes used to determine payment Status indicators are assigned to each charge item CMS continues to bundle services into larger and larger bundles for payment Charges only matter as they relate to high cost patients in a particular APC 9
10 Charge Master Payment Impact Medicaid across the country pays for inpatient acute care hospital stays using a variety of methods DRGs Case Rates Medicaid across the country pays for outpatient acute care hospital stays using a variety of methods APCs APGs Fee Schedules Flat rate by type of service 10
11 Charge Master Payment Impact Other insurance companies across the country pays for inpatient acute care hospital stays using a variety of methods DRGs Case Rates % of charge Other insurance companies across the country pays for outpatient acute care hospital stays using a variety of methods APCs APGs Fee Schedules Flat rate by type of service % of charge 11
12 Charge Master Development and Maintenance Charge master is constantly changing and requires daily attention New procedures, supplies and drugs CMS makes quarterly changes to the payment systems Other insurers can change their payment system daily, weekly, monthly Most hospitals have a Charge Master Manager There is no consistency across insurers including Medicare and Medicaid regarding charge master structure Different CPT, HCPCS, and Revenue Codes for the same services Supplies and drugs billable or not? What is paid and what is not paid! No industry wide pricing methodology % of charge 12
13 Charge Master Revenue Improvement Opportunities Improve capture of charges for the services provided Lost charges are a significant problem for most hospitals 10 to 25% of charges can be lost More accurate assignment of CPT and Revenue Codes on the charge master Payor overpayments and underpayments Regulatory compliance risk Revenue leakage Better payor contract development Simplify billing process Create consistent payment modeling Regulatory compliance risk Revenue leakage 13
14 Charge Master Revenue Improvement Opportunities Optimize payment resulting from inconsistencies between different payor contract terms Implant carve outs High cost drugs Emergency room visit levels Payable procedures by insurer 14
15 QUESTIONS? 15
16 Thank You 16
17 Presenter Information Mike Kovar
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MEDICAL FACILITIES CORPORATION June 2014 FORWARD LOOKING STATEMENTS This presentation may contain forward-looking statements within the meaning of certain securities laws, including the safe harbour provisions