The Charge Master
Every hospital is responsible for
setting their retail prices for the products and services they offer. Medical
goods and services are priced and coded in an internal hospital database called
a Charge Master. Since hospitals do
not function as free-market competitors, hospital Charge Masters are veiled in
secrecy in all but 13
states* where state law requires disclosure of Charge Master
prices upon patient request. Although Indiana hospitals are not required to
make their Charge Master public, the Indiana Hospital Association publishes an
enlightening website
that discloses certain hospital data provided to Centers for Medicare &
Medicaid Services (CMS) and the Indiana State Department of Health
including measures of care provided in each hospital, patient satisfaction,
readmissions, infections, deaths, birthing outcomes and some basic hospital procedure
charges. The Indiana Hospital Association’s website is a respectable first step
toward public disclosure. But in light of a staggering disparity in hospital Charge
Master rates and the perception that the deepest discounts are granted to
the largest third-party payers, forces are pushing for greater transparency.
For example, Indiana’s Hospital
Lien Act provides hospitals may file a lien for hospital charges against an
action or claim brought by a patient against the parties responsible for their
injuries. In Parkview
Hospital v. Thomas E. Frost,
Frost’s attorneys alleged Parkview Hospital’s charges were unreasonable and
requested Parkview Hospital provide information about discounts given to other
patients with private health insurance and government healthcare reimbursement
programs. A recent opinion from the Indiana Court of Appeals stated:
“… evidence of discounts provided to
patients who either have private health insurance or are covered by government
healthcare reimbursement programs is relevant to the determination of
reasonable charges under the [Indiana Hospital Lien] Act…”
Hospital costs and reimbursements
The Charge Master balances
hospital costs, including inventory, staff, facility, insurance and permits with
the less predictable estimate of account receivables from patients and
third-party payers who reimburse hospital providers at diverse rates.
A hospital’s Charge Master for a
procedure or product may be as little as 150% or as much as 1000%
over Medicare, which reimburses only a small fraction of the Charge Master
rate. Private and group health insurance providers contract separately with
hospitals to discount the Charge Master rate by negotiating a Fee Schedule, a
percentage of charges or by agreement of ‘usual, customary & reasonable fees’.
Insurers generally reimburse at an amount greater than Medicare but
substantially less than Charge Master. In an article written by Steven I.
Weissman for the Florida
Bar Journal, it is estimated that average Charge Master pricing at
Florida’s hospitals would be 300% - 400% over the amount negotiated with major
health insurance providers. Although Indiana hospital procedure rates may vary somewhat
from Florida, the national trend toward deep discounts for government and contracting
insurers remains the same.
Compensating for reimbursement deficit
Automobile Insurers frequently
pay hospital expenses resulting from an accident up to the policy limits of
their clients’ Medical Payment automobile insurance coverage. Because
Medical Payment insurance is considered primary to health
insurance, hospitals bill auto insurance carriers the full Charge
Master rate before balance-billing the patient’s health insurance—offsetting
the deficit incurred from discounted health insurance and fractional Medicare
reimbursements.
Workman’s Compensation Insurance, out-of-network patients and uninsured
patients are also billed Charge Master although out-of-network patients often
pay a percentage of the Charge Master. Uninsured patients may qualify for free
or reduced fee medical care.
Is there a better way?
In the last decade, we have
seen some striking changes to the medical industry. But it can't be overlooked
that third-party payers have successfully exerted their influence to
sustain the status quo. In a healthcare system that categorizes patients—favoring
some, penalizing others—it’s of no surprise that the current structure
of “reasonable charges” and "acceptable reimbursements" imposed on
patient classes, is coming under scrutiny by a citizenry increasingly burdened
by the high cost of health care, public servants, members of the legal
community and medical professionals that would like to see a transparent and
equitable hospital marketplace—one that implements predictability, consistency
and fairness in hospital billing and discounts applied—all while maintaining
quality hospital services indispensable to our communities and the well-being
of our families.
Experienced personal injury attorneys and wrongful death lawyers
Our experienced personal injury attorneys and wrongful death
lawyers use their knowledge of the law, legislation and judicial
opinions to employ strategies that maximize our clients' financial recovery
after they have experienced a life-altering accident or event caused by
another person or entity. If you or someone you know has been involved in
an accident, injured by the negligence of a medical
professional, or the victim of nursing home neglect or wrongful
death, call personal injury attorney, Charlie Ward, of Ward & Ward Law Firm, at (317) 639-9501 for
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Website
recommendation: My
Care Insight.
*Figure
obtained as of this writing, June, 2016