Hospital Pharmacy Chargemaster Maintenance

Most hospital revenue cycle leaders know that chargemaster maintenance is an important part of keeping your hospital compliant and improving revenue cycle efficiency. However, there is one part of chargemaster (charge description master or CDM) that is often overlooked as part of the regular review - pharmacy drugs.

There are several reasons that the pharmacy CDM doesn’t receive the attention it deserves:

• For many hospital charging systems, rather than a charge item existing in the traditional CDM, charges and pricing are passed from the clinical pharmacy system.
• The clinical pharmacy system is often maintained by pharmacy experts rather than billing or coding experts.
• Most of the drugs charged for by the hospital are not separately reimbursable.
• Often, charges for drugs are grouped to a single line on the UB-04 billing form.
• Changes occur much more frequently than for other departments due to new drugs coming to market and changes in prices.

Despite these reasons, there are unique aspects that the CDM team should be familiar with regarding drug charges. If they aren’t, there may be hidden problems.

• HCPCS Code Assignment – The HCPCS billing codes are typically assigned to a drug based on the drug’s National Drug Code (or NDC). Who is making that assignment? Do they have the right resources? Who do they ask when they have a question?
• Billing Conversion Tables – The quantity of a drug that a hospital dispenses often does not equal the quantity of a billable unit. So, there is typically a function in the hospital’s billing system that does a mathematical conversion of dispensed units to billable units. Like the HCPCS code, it is important to make sure the person entering the conversion factors understands the importance of the function.
• Mark-up – For hospitals that pass the drug charge from the pharmacy system to the billing system, there is often a mark-up applied during the process. The markup could simply be a multiplier of cost. It may not be the same multiplier for all drugs. There could also be a fixed “dispensing fee” attached to the charge amount as well. Understanding this process is important for case costing, as many cost accounting systems use the billing data to calculate profitability of services.
• Reimbursable Drugs – For certain services, the coding and charging of drugs can be the difference between making and losing money. The most significant of these is chemotherapy. Assigning the correct HCPCS codes and making sure the correct quantities are charged are key. Hospitals should consider reviewing a sample of these claims to make sure charging is correct.

In summary, reviewing the pharmacy CDM takes a team effort between the pharmacy department and rest of the CDM team and a few additional steps beyond what is needed for most other departments. Those extra steps are important in keeping the hospitals CDM compliant and accurate.