Hospital Charge Master, what is it?

The Hospital Charge Master is an all-inclusive list of items with corresponding prices as they apply to a patient’s visit in a hospital.  Each item within the Charge Master is assigned a unique identifier code and a set price, so in a nutshell it’s like a restaurant menu with prices, but for services and procedures rather than food.

Unlike restaurants though, health insurance providers usually pay hospital bills, and each has a different negotiated amount they will reimburse for a specific service or procedure.  This disparity across payers places the hospital in an odd spot; it can’t have a different menu of prices for different agreements or different people – that’s not legal.

So how can a hospital expect to have predictable earning results when everyone paying isn’t paying the same price? Basically the strategy is to exaggerate or pad the price list, and then apply discount rates to align the price to what a particular insurance has agreed to pay. Typically this translates to grossly inflated prices within the list order to correct for the spectrum of reimbursement.

There are two obvious ways I currently see the Charge Master is going to make someone’s life painful.

  • When shopping around a patient might see wildly inflated prices, and because each hospital creates and maintains its own list – a huge variance from hospital to hospital.
  • People who can afford better insurance will pay less, and people without insurance risk paying full price. (Don’t freak out, nearly all hospitals try to bill non-insured patients at the drastically reduced Medicaid rates)

Think of the Charge Master, as the starting point for negotiation about how much will actually be paid to the hospital for specific procedures. But just in case, make sure you have a good negotiator on your side!

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