Over the past few weeks, we’ve talked a lot here about medical coding — what it is and how it’s done. At a fundamental level, hospitals and clinics code diagnoses and procedures so that they can get paid by a third-party payer or the patient.

That all-important “getting paid” part is where the charge master, also known as the chargemaster (one word) or the charge description master (CDM), comes in. The CPT (procedure) code of 97810 tells us that a patient received basic acupuncture, and the ICD-9-CM (diagnosis) code of 784.0 tells us it was related to the patient’s headaches, but nowhere does it tell us anything about cost.

A charge master is essentially a big list of every service, procedure, or item that could be billed to a patient — and its price. Each hospital or clinic develops its own charge master and formats vary. Charge masters allow health care providers to match services rendered with their appropriate charges. In some states, providers must make their charge masters available to the public.

Let’s look at the acupuncture example. Before generating a bill, the health care provider must find out what price is attached to CPT code 97810 (defined as “acupuncture, one or more needles, without electrical stimulation, initial 15 minutes of personal one-on-one contact with the patient”).

Think of the charge master as a spreadsheet. In the first column is a list of CPT codes. You’ll scroll down to the row representing 97810. In that row, you’ll find columns containing:

• The CPT code for that procedure (of course)


• A written description of the procedure


• The revenue code, a four-digit code indicating where the procedure took place (e.g., emergency department, outpatient clinic) or the general type of procedure performed


• The procedure price


• Organization-specific information (e.g., hospital/clinic department that performs the procedure)

For our acupuncture example, you might see: 97810; acupuncture, one or more needles …; 2101; $41.00; internal medicine. Depending on the organization, you might find additional information as well.

This data is then entered into a CMS 1450 (for institutional providers such as hospitals and outpatient clinics; form is also known as UB-04) or CMS 1500 (for physicians) claim form and sent off to the third-party payer. (You can look up examples of both forms on the Centers for Medicare and Medicaid Services website.)

For medical centers, an optimized charge master means increased revenue. If legitimate, chargeable items are missing from the charge master, the health care provider is missing out on that revenue. For example, a charge master might be missing a line item for the second part of a three-part procedure.

Or, a new procedure or service may not yet be included in the charge master, meaning it could be given to patients without them being billed for it. Likewise, a mistakenly billed charge — due to an outdated CPT code in the charge master — delays insurance reimbursements.

To remedy these issues, health care organizations should better educate their coding staff and physicians about the importance of charge capture. They can also perform audits — by manually comparing physician documentation with what was ultimately charged to the patient — to check for inconsistencies.

Software solutions can also add value by searching for out-of-date CPT codes or by applying logic to charges, sniffing out cases where you couldn’t perform procedure X without using supply/device Y, and yet X was billed while Y was not.

Do you know what’s in your charge master?

Don’t miss out on charges or take compliance risks. pmFAQtory can help. Please contact us to discuss your needs.