Hospital pharmacies play a vital role in delivering appropriate medical care to patients, with accurate management of the charge description master (CDM) being essential.
The CDM, also known as the charge master, encompasses a comprehensive inventory of medical procedures, services, and supplies offered by a hospital, along with associated charges. Maintaining precision in the charge master is imperative to prevent instances of overcharging or undercharging patients, which can lead to financial implications or legal repercussions for the hospital. Thus, implementing an effective maintenance system is crucial to uphold the accuracy and currency of the chargemaster.
What is Chargemaster Maintenance?
The chargemaster serves as a comprehensive database integrated into a hospital or pharmacy’s electronic health record system. It encompasses various reference data necessary for generating patient charges, spanning medications, services, supplies, and their corresponding prices.
Maintaining the chargemaster effectively is paramount for ensuring accurate and appropriate billing within healthcare facilities. This practice not only aids in revenue maximization but also mitigates compliance risks and enhances patient satisfaction.
Regular updates to the chargemaster are essential to prevent potential revenue loss caused by outdated entries for any of the listed items. Thus, frequent maintenance is vital to uphold the chargemaster’s accuracy and efficacy.
Maintaining Currency in Your Chargemaster
Regularly reviewing medication entries in the Charge Description Master (CDM) is crucial for optimizing reimbursement and minimizing chargebacks. Given the continuous inflation-driven rise in drug prices, healthcare providers must consistently update their chargemaster with the latest and most accurate information. Failure to do so may result in missed reimbursement opportunities and significant financial losses.
Who is Responsible for Chargemaster Maintenance?
Addressing Chargemaster Maintenance:
Ensuring proper maintenance of the Chargemaster (CDM) is paramount for healthcare entities, yet it often gets overlooked due to fragmented responsibility across departments such as pharmacy and finance. This lack of clarity can lead to confusion and inaction regarding necessary updates.
Traditionally, the finance department has been tasked with CDM maintenance, although practices vary across sites. To streamline processes and establish accountability, it’s crucial to implement clear hospital policies and procedures designating responsible individuals within each department.
Utilizing Software
Healthcare services often streamline chargemaster maintenance by leveraging specialized software or formulary service vendors to update costs. These services calculate costs based on the Average Wholesale Price (AWP), which is more convenient for healthcare providers compared to their Actual Acquisition Costs (AAC).
While these tools offer significant utility, they still require manual oversight. Instances may arise where the AWP significantly differs from the actual acquisition costs, necessitating human intervention to rectify discrepancies.
Upon receiving updates from formulary service vendors, someone within the healthcare system, typically the IT department, is responsible for manually uploading these changes to internal programs. Automatic updates do not occur, requiring proactive action to ensure data accuracy.
Essential Focus Points for Chargemaster Maintenance
Ensuring Proper National Drug Code (NDC) Management:
Government entities like the Centers for Medicare and Medicaid Services mandate the inclusion of the National Drug Code (NDC) in billing and claims processes. While specific requirements may vary among payors, most necessitate an accurate NDC to facilitate precise payment for administered services.
The presence of an outdated NDC can significantly impede timely reimbursement, often leading to partial or complete claim denials. Although the administration of obsolete (yet non-expired) drugs is not uncommon, payors frequently reject claims on these grounds. Furthermore, an obsolete NDC may compromise the system’s ability to conduct drug interaction checks, potentially resulting in contraindications that jeopardize patient safety.
Pharmacies are advised to:
1. Assess all obsolete NDCs in their inventory.
2. Verify the presence of unexpired stock associated with each obsolete NDC.
3. Determine the availability of replacement options and promptly update the catalog to reflect active NDCs.
Catalog Items with HCPCS to Review
The Healthcare Common Procedure Coding System (HCPCS) serves as the standard for reporting procedures, services, and equipment for reimbursement purposes. These alphanumeric codes undergo regular updates by the Centers for Medicare and Medicaid Services on a quarterly basis.
Pharmacies are advised to:
1. Verify the accuracy of the assigned codes.
2. Ensure alignment with their software, formulary manager, and internal systems.
3. Adjust the values to accurately reflect current pricing.
Catalog Items without a Valid Price Schedule
The price schedules establish the fundamental parameters such as cost basis, formula type, and markup for drugs. Without a designated price schedule, the calculation of the desired patient charge will be inaccurate.
Pharmacies are encouraged to:
1. Assess each item and assign the suitable price schedule accordingly.
2. In instances where no patient charge is applicable, utilize the No Charge schedule.
HCPCS Codes with Incomplete or Incorrect Multipliers (QCF)
The Quantity Conversion Factor (QCF) plays a crucial role in converting Pharmacy bill items’ quantity into a Medicare billing quantity during charge submission to the billing system. Failure to report the correct units can result in claim denials or flagging for potential fraud.
Pharmacies are advised to:
1. Ensure precise calculation of the QCF.
2. Review any flagged factors and make necessary updates as required.
Best Practices for Maintaining the Chargemaster
Establishing Effective Chargemaster Maintenance Procedures:
To ensure comprehensive reimbursement across all patient care aspects, healthcare organizations must implement clear procedures for chargemaster maintenance. The following steps serve as a guideline for crafting a medication chargemaster maintenance plan:
1. Patient Charge Initiation:
– Pharmacy Department personnel initiate patient charges via the pharmacy information system (PIS) software when dispensing patient-specific medications.
2. Monthly Updates:
– Perform monthly updates with a formulary service vendor to keep prices and National Drug Codes (NDCs) current.
– Update the PIS with NDCs purchased from wholesalers.
– Generate and review an exception report of discontinued or obsolete NDCs monthly, sending it to the finance department for PIS updates.
3. Cost Evaluation:
– Evaluate acquired medication Actual Acquisition Costs (AACs) and/or Average Wholesale Prices (AWPs) against those in the PIS “cost” field for accurate charge calculations, patient billing, and revenue integrity.
– Update AAC/AWP price changes monthly or as frequently as per vendor protocols.
4. Third-Party Payor Billing:
– Generate an exception report and compare it to the “cost” field in the PIS to ensure accurate billing to third-party payors.
5. Regulatory Updates:
– Download and compare NDCs, HCPCS drug codes (J-Code), and drug multipliers released by the Centers for Medicare and Medicaid Services (CMS) quarterly via their website against existing entries in the PIS.
6. Outpatient Medication Reimbursement:
– Evaluate outpatient charge-procedure billing codes to ensure proper charge calculations, patient billing, and revenue integrity for accurate reimbursement from third-party payors.
7. Collaboration and Reporting:
– Submit comparison results to the finance/billing/accounting department(s) for necessary system updates to ensure accurate billing to third-party payors.
– Share results with the Pharmacy Department to track outcomes and address any required changes in the PIS or other pharmacy software.
8. Auditing and Corrective Measures:
– Conduct audits of random patient bills and targeted/high-cost drugs by the pharmacy and billing team to identify variances or billing discrepancies.
– Report and rectify identified variances collaboratively between the pharmacy department and billing team.
9. Monitoring and Reporting:
– Record and trend maintenance results and findings on a dashboard managed by the pharmacy department.
– Share dashboard reports with the Quality and Compliance Committee based on the reporting schedule.
By adhering to these structured procedures, healthcare organizations can uphold billing accuracy, ensure regulatory compliance, and optimize revenue integrity within medication chargemaster maintenance practices.
Leveraging the Chargemaster for Enhanced Price Transparency
As healthcare consumerism evolves and patients advocate for increased pricing transparency, the traditional practice of healthcare systems developing proprietary pricing models is shifting.
With consumers assuming greater financial responsibility for their healthcare, there’s a growing demand for accessible pricing information. Healthcare systems must adapt to this trend by revising how they calculate and disclose their chargemaster rates.
Failure to embrace transparency in pricing may result in patients seeking more affordable alternatives, posing a risk of patient attrition for healthcare organizations. Conversely, organizations that prioritize accuracy in pricing and openly communicate their pricing models are poised to foster trust within their communities and gain a competitive edge over their counterparts.
