Hospitals have two main problems when it comes to finances. One is revenue, as in they’re not generating enough, and the second is receivables, as in they’re not collecting enough on the revenue so they can pay bills and buy other stuff.

charge master consultant

Every hospital has a charge master. A charge master is a full listing of all procedures that a hospital provides. The reason there is a charge master is to help make the process of charging for services easier and faster. Charges are usually already priced and coded. The reason I say usually is that some charges aren’t priced because a hospital might be trying to track certain non-chargeable services, while other charges may have the procedures coded by medical records (such as many surgical procedures) instead.

For those charges that aren’t coded by medical records, this means that they have to be coded in the charge master. Most charges only have to be given a procedure code once, and then it remains that way forever. However, many others change on a regular basis.

The average number of years that facilities have someone come in and review their charge master is 3 to 5 years. Since big changes occur around the beginning of every year, and small changes occur quarterly, this means that hospitals may be charging for services that don't exist and not charging for new services that have codes, and not getting paid because their codes aren’t up to date. On the first issue, even mistakenly charging for services that don't exist could be considered fraud by Medicare, which could issue financial punishment by as much as triple the amount of charges they say a hospital fraudulently charged for.

Procedure codes aren’t the only thing one checks on in a charge master review. One also checks revenue codes, classifications which tell insurance companies where services are provided. One also compares what hospitals are charging for services and compares them with Medicare fee schedules (there are two different types) to make sure hospitals are billing more than what Medicare reimburses. This is because Medicare will only pay based on what they’re billed, so if the hospital charge is lower, not the actual fee schedule price, hospitals could be losing reimbursement dollars.

If a hospital has a charge master coordinator, or someone who’s only job is to perform this function, then an annual charge master review probably isn't needed, but it can't hurt to have someone check things out every 3 or 4 years; even accounting departments get audited. If they don’t... well, the consequences could be costly.

I spent six months at a 2-hospital system in New Jersey years ago doing their charge master, as they hadn't had anyone working it in almost 2 years. I also did a check of their revenue. It turns out they'd actually had a charge master review by someone else 3 years earlier, but never implemented anything that had been recommended. By the time I left, they'd increased revenue by a couple hundred million combined. Later on I spent a year at a hospital in Westchester County. By the time I left there, they had more than doubled their yearly revenue.

Charge master reviews don't take all that long to do if everything is set up properly. First it's a review of all files. Then there are the department interviews, which is the timely part if access to the directors of all the ancillary departments takes time to pull together. Like most organizations that do this work, we charge based on the size of the facility. The larger the organization, the more complex the work, which means more time to do everything properly. Money on expenses can be saved if both parties are set up to do video or phone conferencing.

A charge capture, or revenue review, takes a little bit longer, and it probably works best to have it become part of the charge master review. The interviews with department directors are more comprehensive. They're also educational, as anyone worth the work wants to spend more time with the directors and possibly some of their employees, giving instructions on charge capture, coding, and anything else as needed.

How much does all of this cost? Each organization has their own processes for coming up with the fees to do this sort of thing. To determine my fee, I start off with the hourly rate I want to get paid, estimate how long I think the entire process will take, then I give a project price for the requested work. If there are other projects the hospital wishes to explore, those fees will be add-ons, but the rates will be less if added to the original project that if it became a standalone.

Besides, that's the wrong question to ask. A better question would be how much your hospital would be willing to spend if revenue increased by millions of dollars a year that you didn't previously have, especially if you estimate than your reimbursement will average anywhere from 20 to 30%. Even if it was only 10%, no consultant's fee is going to be anywhere close to that. 🙂

If you'd like to know more, check out my two-part series on what it is that charge master consultants do. Any questions or comments, please feel free to add your comments below.