Mergers + Acquisitions: Is Your Chargemaster Strategy Sound?

Expansion—through mergers, acquisitions, joint ventures and other strategic partnerships—has become an important tool in a hospital’s strategic wheelhouse. As your footprint expands to encompass the entire continuum of care, how do you ensure your chargemaster strategy is sound and consistent?

We break this question into two parts—soundness and consistency—for good reasons:

First, in an era of increased public price scrutiny, hospital CFOs must ensure that their chargemasters are defensible and can be clearly explained to outside observers and auditors.

Second, mergers, acquisitions and other affiliations often bring under a single umbrella organizations that may have very different pricing and coding methodologies, practices and strategies.

Healthcare providers can and should develop and pursue sound, consistent and defensible pricing strategies that are sensitive to market conditions and best practice methodologies while achieving net revenue objectives. To do so, you must have a thorough understanding of the basis of your line-item markups and charges, determine appropriate degrees of transparency, understand local and regional market forces, develop and implement effective gross and net revenue modeling tools, and conduct regular evaluations of your pricing strategy.

Furthermore, in order to ensure optimum integrity of a health systems decision support system, it is essential that consistent and synchronized coding across all entities exists in the chargemaster for like items. Often having a Corporate Charge Master is not enough where each entity has the flexibility to alter the HCPCS, Revenue Code and Modifier assignment or map unlike items to the chargemaster codes.

Finally, it is also important to consider in the development of rational and defensible pricing that chargemaster prices must be rationale when compared NOT only to market data or fee schedules or unit cost but that they make sense in relation to other related procedures. For example it is important that with and without contrast procedures, or level 1,2,3 etc., procedures, or unilateral and bi-lateral items in your CDM reflect a reasonable relative value relationship to each other.

To learn more about Panacea’s complete set of chargemaster solutions, click here.