Don’t Let Medicare (Exclusively) Dictate Your CDM Content

When we started as a healthcare consulting firm, 20 years ago, none of our hospital clients had a chargemaster coordinator on staff, let alone a chargemaster committee. Individual hospital departments operated in a vacuum from a charging perspective. These days things are very different and almost every hospital and health system we work with has a CDM coordinator, a committee that includes representatives from multiple departments and in most cases, some type of CDM maintenance software to help keep everything current, compliant and priced competitively.

When it comes to maintaining a compliant hospital chargemaster there are two things to consider; statutory compliance and contractual compliance. Statutory compliance issues arise from governmental payers such as Medicare and  most CDM coordinators spend a lot of time and resources trying to ensure that items added, changed or removed from the chargemaster are compliant with CMS and won’t affect reimbursement or create coding or RAC issues. The rules and regulations that govern statutory compliance can often be convoluted and even contradictory but again this is only one type of compliance.  Contractual compliance is based on the many contracts a hospital or health system has negotiated with other third party payers and these issues are often over looked or overshadowed by the fear that a change could affect Medicare claims. I am frequently asked by hospital CDM coordinators how a potential CDM change will affect Medicare or what CMS recommends for a given item or service.  My response is always the same; Medicare is only concerned with what is on the final claim, not the content of the chargemaster, and while the chargemaster does drive claim content, so does the coding department, front end scrubber and manual charge entries. You need to look at the contracts for your top four or five commercial payers prior to making any changes in the CDM and not focus too heavily on CMS. Remember, your facility has contractual obligations as well as internal obligations that may be very different than what CMS would recommend and most statutory regulation does not provide guidance or instruction on how to handle many CDM issues. 

Take for example revenue codes. CMS does not provide specific instruction when assigning most revenue codes as you can see below in an excerpt from the Medicare Claims Processing Manual Chapter 4 – Part B Hospital.

20.5 – Clarification of HCPCS Code to Revenue Code Reporting

(Rev. 1487, Issued: 04-08-08, Effective: 04-01-08, Implementation: 04-07-08)

Generally, CMS does not instruct hospitals on the assignment of HCPCS codes to revenue codes for services provided under OPPS since hospitals’ assignment of cost vary. Where explicit instructions are not provided, providers should report their charges under the revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in the cost report.

Now stop for a second and think about how other third party reimbursement could be affected by revenue codes.  Florida Medicaid for example pays all outpatient claims based exclusively on revenue code assignment. If you run a hospital in Florida you could be losing millions of dollars every year in Medicaid reimbursement if you are not very careful about how you assign revenue codes, especially in the ED and on Observation patients where injections and infusions will go unpaid if the revenue codes are not correct. Meanwhile, that same ED or Observation visit for a Medicare patient will be paid regardless of the revenue code assignment because they are paying based the CPT/HCPCS codes and the corresponding APCs.

There is no doubt that an up to date, compliant and properly priced chargemaster is a cornerstone of a hospital’s financial health.  Just remember that all hospitals have statutory, contractual and internal obligations that must be balanced when considering chargemaster maintainence.

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