Chargemaster: Learn an Integral Component of Facility Billing and Coding

With a trend moving toward hospital care, consider chargemaster basics.


As more physicians head under the hospital umbrella to furnish cost-effective care, opportunities are opening for coders in the facility environment. Your doctor may be considering a move to a facility setting, or perhaps you’ve been considering taking advantage of new emerging hospital jobs. Whatever your motivation may be, now is a good time to learn as much as you can about the nuances of facility coding. To get you better acquainted with hospital coding and billing, let’s talk about one area of coding that is different from the physician office: the chargemaster.

Ambulatory Surgical Center CASCC

The chargemaster is a large master file combining all services provided by each hospital. As patients receive services, that department enters the charges through this mechanism.

The structure contains these elements:

  • An internal general ledger number
  • A revenue code under which the charge will be posted
  • A CPT® code
  • The facility’s charge for one unit of service

Also included is a flag which indicates a current service, service or code scheduled for deletion, or inactive service.

Chargemaster Maintenance

The chargemaster needs to be updated at least annually, and when beginning new services or discontinuing current services. This task is likely to be a full-time position in a large facility. When a new fiscal year begins, it is common for hospitals to increase their rates across the board. This requires chargemaster updating to reflect the new rates. Chargemasters also must be updated to reflect ongoing code changes.

Posting Charges

Typically, all laboratory, radiology, respiratory/pulmonary, and therapy services are posted from the chargemaster, as well as pharmacy and supply charges. If the facility has a dedicated gastrointestinal (GI) or cardiovascular lab, these charges may also be posted through the chargemaster. When the designated department provides services to a patient, the department is responsible for entering the correct charges to the patient’s financial record. For admitted inpatients, the unit on which the patient is admitted will post the applicable room charges, drugs, and supplies to the patient record. Clinics, the emergency department, and the observation area will post facility charges applicable to their respective areas; and surgery, anesthesia, and recovery will post their charges. For surgery, anesthesia, and recovery, 1 unit typically equals 15 minutes (4 units would equal 1 hour).

It is customary for facilities to set their financial systems to drop claims to the biller’s queue in a specific number of days after patient encounter. For example: If it is set for six days, the claim will drop to the biller on day seven. This step allows time for departments to complete charging for their patients and for the coding department to finalize coding.

Coder’s Role

Facility coders are responsible for diagnosis coding of all inpatient records, ambulatory surgery, emergency department, and ancillary service departments. It isn’t uncommon to report 15 or more diagnosis codes on an inpatient record. Coders apply CPT® codes for ambulatory surgery and some emergency services. Patients who present for diagnostic testing, such as laboratory or radiology, will not require CPT® codes from the coding staff because these codes will be applied by the chargemaster. CPT® codes are not reported on inpatient claims; however, procedure codes from ICD-9, volume 3, must be applied by the coder. Facility coders also are required to report the present on admission (POA) indicator on inpatient claims and abstract the record. The abstractor is a separate software program that finalizes the coding function. These steps must be completed based on productivity and accuracy standards.

Biller’s Role

Billers and coders generally are maintained as separate departments in a facility, and likely do not interact with each other on a daily bases. The coders may be stationed in the health information management department, or they may be working remotely from home. Billers are most commonly based in the business office.

Once a claim drops to the biller’s queue, the responsibility then falls to the biller to review the claim information for posting errors, missing charges, missing modifiers, incorrect number of units, and coding completion. The facility biller must be adequately skilled to make these determinations. Although it is unlikely that each drug or supply will be recognized by the biller, he or she must be able to determine when required charges are missing. Examples are:

(1) Anesthesia and recovery is charged; no surgery charge

(2) Procedure code indicates implant; charge for implant is missing

(3) 230 units charged for anesthesia (This would equate to 15 hours under sedation, an unlikely number of units.)

If the biller determines that a claim has erroneous or missing charges, he or she must place a hold on the claim until the errors have been corrected. One rationale for the facility financial system’s automatic dropping of claims is to maintain some control of unbilled claims. The billing manager can determine the number of claims dropped to each biller and the number of claims released by the biller. The biller is held accountable for claims assigned to his or her queue, and must be ready to report held claims due to charge errors or incomplete coding. If certain departments have a high incident of incorrect or delayed charging, the manager of that department is likely notified and expected to develop an action plan to reduce charge posting errors. If there is a coding backlog, coding management is expected to explain the delay and provide a reasonable plan to bring the work current.

Delays and Late Charges

Another potential problem is charge posting delays over a three-day holiday. If services rendered on Friday are not posted until sometime the following week, the original claim will be incomplete. The delayed posting will drop to the biller queue as late charges (depending on how many days the financial system is set for dropping the claim). Medicare typically pays hospitals based on Medicare Severity Diagnosis-related Group (MS-DRG) for inpatient claims and Ambulatory Payment Classifications (APC) for most outpatient services. This equates to reimbursement for all services based upon the calculation; late charge billing is not accepted from facilities that are reimbursed based on these concepts. This is another reason facility billers must be skilled enough to recognize missing charges. If deemed to be the case, the claim must be held until the late charges have dropped and those charges must be added to the original claim. If released prior to the late charge inclusion, the original claim must be revised and resubmitted as an adjusted claim.

Keeping Errors in Check

The skill set required for facility billers is much different from physician billers. Although the chargemaster is a valuable tool used for charge maintenance and posting, the users must exercise care in correct posting and the biller must keep billing errors to a minimum. These performance stats are often tracked by management to determine areas of billing weakness and to plan for and implement training where deficiencies are identified.

Planning Ahead for Hospital Coding Trends

The Certified Professional Coder-Hospital Outpatient (CPC-H®) credential prepares a coder for the specialized payment knowledge necessary for facility jobs. The CPC‐H® credential recognizes expertise in the area of outpatient hospital, hospital‐based ASC coding, and independent ambulatory surgery centers (ASC). If you are interested in solidifying your expertise in these areas, go to AAPC website to learn more.


Dorothy Steed, CPA, CPC-H, CPC-I, CEMC, CFPC, CPMA, CHCC, CPUM, CPUR, CPHM, CCS-P, ACS-OP, RCC, RMC, is a technical college instructor in Atlanta and an independent consultant, performing physician audits and education for the Quality Improvement Organization in Georgia. Her 34 years of experience in health care includes working as a Medicare specialist for a large hospital system, as well as contributing to various medical publications, presenting at health care conferences, and developing training classes focusing on facility billing, coding, and reimbursement.


Latest posts by admin aapc (see all)

Leave a Reply

Your email address will not be published. Required fields are marked *