Understanding The Chargemaster
Understanding the Chargemaster and its Importance
For healthcare organizations, a document known as the chargemaster plays a critical role in revenue cycle functions. This fact sheet defines the chargemaster and offers an overview of its impact on providers’ business operations as well as strategies organizations have used to enhance chargemaster accuracy.
What is a Chargemaster, or CDM?
A chargemaster, sometimes referred to as the charge description master or CDM, translates the clinical activities described in patients’ medical records into the language payers use to process claims. The CDM assigns a hospital-defined billing number to each billable service, supply, or pharmaceutical, and the billing number is then linked to a standardized numeric code used for submitting claims to insurers. The CDM number is also linked with a specific charge (price) for each service, supply, etc. being billed.
Why is CDM Accuracy Important?
An updated, well-maintained chargemaster benefits healthcare organizations in a variety of ways:
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Financial. Without an up-to-date CDM, providers may experience a high number of payment discrepancies, inaccurate charges, or missed charges—meaning that they are not receiving appropriate reimbursement for services.
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Clinical. Inaccurate reimbursement may leave less capital to invest in new technologies and patient care improvements. Further, chargemaster integrity allows providers to generate more accurate reports on patient volume, clinical practices, and resource utilization.
WWW.HEALTHCAREBUSINESSINSIGHTS.COM • PHONE: 888.700.5223 • FAX: 888.700.5959
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Compliance. Through attention to CDM maintenance, providers can verify adherence to organizational charging standards and federal regulations. •
Patient Experience. Regularly updating the CDM helps hospitals and health systems set competitive rates based on industry standards, market conditions, and insurer contracts. Further, a standardized CDM ensures consistent pricing for
For healthcare organizations, a document known as the chargemaster plays a critical role in revenue cycle functions. This fact sheet defines the chargemaster and offers an overview of its impact on providers’ business operations as well as strategies organizations have used to enhance chargemaster accuracy.
What is a Chargemaster, or CDM?
A chargemaster, sometimes referred to as the charge description master or CDM, translates the clinical activities described in patients’ medical records into the language payers use to process claims. The CDM assigns a hospital-defined billing number to each billable service, supply, or pharmaceutical, and the billing number is then linked to a standardized numeric code used for submitting claims to insurers. The CDM number is also linked with a specific charge (price) for each service, supply, etc. being billed.
Why is CDM Accuracy Important?
An updated, well-maintained chargemaster benefits healthcare organizations in a variety of ways:
•
Financial. Without an up-to-date CDM, providers may experience a high number of payment discrepancies, inaccurate charges, or missed charges—meaning that they are not receiving appropriate reimbursement for services.
•
Clinical. Inaccurate reimbursement may leave less capital to invest in new technologies and patient care improvements. Further, chargemaster integrity allows providers to generate more accurate reports on patient volume, clinical practices, and resource utilization.
WWW.HEALTHCAREBUSINESSINSIGHTS.COM • PHONE: 888.700.5223 • FAX: 888.700.5959
2
•
Compliance. Through attention to CDM maintenance, providers can verify adherence to organizational charging standards and federal regulations. •
Patient Experience. Regularly updating the CDM helps hospitals and health systems set competitive rates based on industry standards, market conditions, and insurer contracts. Further, a standardized CDM ensures consistent pricing for