Fundamentals of Charge Description Master
Axis Fundamentals of Charge Description Master
An up-to-date, maintained hospital Charge Description Master (CDM) is essential for hospitals to succeed as an organization and decrease the potential for margin erosion. The CDM is the document that contains the most comprehensive list of a hospital's core: products, services, and procedures. Keeping this updated and accurate is essential for hospital revenue, ongoing operations, and informed strategic planning.
In many ways, the CDM for a hospital represents the financial and operational critical path. In addition to helping generate revenue and ensure that billing is correct, it also ensures that a hospital is compliant with all regulations. This is especially important for becoming and remaining Medicaid complaint. For example, a CDM will automatically remove items that cannot be charged, thus preventing errors and regulatory issues.
The chargemaster can track productivity, create reports, and help estimate costs before a procedure is completed for patients. This scope impacts many areas of a hospital, including revenue, pricing, IT, accounting, claims, and more. Keeping the CDM up to date is not only recommended but essential. Even a slight mistake in codes may decrease revenue or could result in compliance penalties for the hospital. A CDM this is not set up correctly or maintained can cost millions of dollars in lost revenue and compliance penalties.[1]
Understanding CDM Elements
A CDM contains charge codes, which are associated with revenue codes. These link to categories that are used in billing and providing the correct payment from the customer. Each item the hospital can charge for should be a code within the CDM. This allows for accurate billing, not just for patients, but for healthcare providers, supplies, and other services. This information is all maintained in an electronic file. It is important to understand the elements of the CDM to appreciate the level of maintenance required. Breaking each element down further, there are five basic components of the CDM:
Service Description: There is often a technical description and a billing description. The technical description is used for internal purposes, while the billing shows on patient billing. Where possible, hospitals typically use Current Procedural Terminology (CPT) codes and descriptions to describe the services and procedures. These are not always easy for a patient to interpret, which is why it can be helpful to have a billing description for patients to see on their bill and more easily comprehend.
CPT Codes: A CPT code is five digits long and can be numeric only or alphanumeric. The American Medical Association (AMA) develops and maintains the codes, and they are meant to bring uniformity to hospitals. They can describe everything from surgeries to evaluations, and the codes are grouped numerically. For example, the codes for Radiology are 70010-79999.[2] There are different categories of CPT codes, Category I, II, and II. Category I codes are the core codes. Category II adds information to the codes from Category I. Category III are temporary codes that have newer, or experimental, procedures.
Healthcare Common Procedure Coding System (HCPCS) Codes: These codes are necessary to bill Medicare and Medicaid patients. They are based on the CPT coding system, but they are maintained by the American Medical Association (AMA). These codes also allow Medicare to track items.
Modifiers: Modifiers are hardcoded into the CDM extremely rarely. They are only hardcoded in the system if it should be appended to the code every time it is reported. Typically, these are used for reducing the service that exists in the CPT.
Revenue Codes: These three-digit codes are used to categorizes charges. They are used by Medicare and other insurance companies to analyze charge related data.
These are the basic elements of the CDM a hospital uses, but there are additional components that can be considered on a case-by-case basis.
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