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Best Practices for Maintaining Your Charge Description Master to Maximize Revenue

AAFCPAs reminds healthcare clients of the critical impact an accurate and up-to-date Charge Description Master (CDM) can have on the organization’s revenue cycle success. The CDM is the central mechanism of the revenue cycle, and the accuracy of the data elements serves as a link between service delivery, billing, and optimal reimbursement. Missing charges, over charges, and coding errors can adversely impact your revenue and create significant compliance issues, including penalties for charge overages.

AAFCPAs advises clients to perform routine maintenance of the CDM at least annually, and ideally quarterly. Additionally, the CDM should be examined outside of routine maintenance with the addition of new services, payer contract changes, or other internal corporate changes. Keeping an accurate CDM will help maximize revenue and avoid payer denials.

Healthcare Organizations Should Address These Items While Reviewing Their CDM:

  • Reimbursement codes should be available in both the Electronic Health Records (EHR) and Practice Management (PM) systems to ensure all services provided and documented are billed.
  • New, current year codes should be added prior to their effective date.
  • Outdated codes should be marked expired with their corresponding effective date.
  • The charge fee schedule should be analyzed throughout the year and compared to your payer contracts; monitor for any charge fees that may be set lower than the reimbursement rate.
  • National Drug Code (NDC) numbers should be current and accurate.

Other data elements to review include:

  • Global days set correctly
  • Departments or modalities attached to codes
  • The accuracy of code descriptions
  • Default place of service for codes
  • Modifiers attached
  • Revenue codes added

Note: The items listed are not all inclusive, and could differ based on your PM system’s capabilities, specialty, or other billing rules.

Review the Charge Fee Schedule

Most organizations start setting their fee schedule by a percent of Medicare, e.g. 150% or 200% of the current year Medicare allowable. This is a good foundation to start, but AAFCPAs encourages clients to go a step further to ensure revenue is maximized per code, and fees are competitive in your market and specialty. Once you have a baseline fee schedule, it should then be matched up with all other contracted fee schedules to be sure you have no rate lower than the highest payer allowable.

Maintain Updated Contracts

AAFCPAs advises clients to maintain a copy of all contracts, including their fee schedules. Providers should have a contracted fee, whether it is the payer’s standard rate or a carved out negotiated rate, for every procedure code, even if your organization does not bill for all codes. Knowing your rates for all codes will allow you to better understand what you may be reimbursed in advance of performing a service, and to understand whether starting a new procedure will be cost effective. This information may also help control internal costs, and ensure you are being reimbursed appropriately.

If you do not have a copy of all fee schedules, we advise you to reach out to your contracted payers and request a copy. Payers are contractually bound to provide you with a copy of ALL your rates. For government payers, most fee schedules may be downloaded online. For Medicare, this should be done on a quarterly basis; for other payers, an annual basis.

Fee schedules should be input into your billing system so you may track the accuracy of your reimbursements. If your system does not have the capability to store these fee schedules in a way that would allow you to monitor the accuracy of payer allowables during payment posting, a manual/external contractual analysis should be performed at least monthly. You may do this by:

  • Running payment reports from your billing system
  • Reviewing payer allowables on the Explanation of Benefits (EOB)
  • Comparing allowables on the EOB to your contract fee schedules

Analyze Reimbursement Rates Regularly

It is imperative to keep abreast of private and government payers’ reimbursement rates on at least a quarterly basis. Payers can, and do change the allowables often for certain procedures or drug codes. Reviewing these on a consistent basis will help ensure you are keeping fees set above the current reimbursement rates.

Unfortunately, many healthcare organizations do not know they are leaving money on the table. Without a steady review of the CDM, losses may go unnoticed for years and the financial impact could be costly.  AAFCPAs advises clients to implement processes and procedures to maintain an accurate and compliant CDM. Performing a quarterly or annual audit on the CDM is a wise investment to ensure your organization is up-to-date on current year changes and to make certain your fee schedule is properly set. This will help providers to locate lost revenue from missed charges and coding errors, reduce the risk of billing overcharges, and identify and fix compliance issues pre-bill, preventing costly rework and late charges.

Additionally, AAFCPAs advises healthcare clients to monitor, test, and constantly enhance their internal controls and processes, as well as consider external factors that could impact their reimbursement.

AAFCPAs has spent over four decades providing incisive financial knowledge and strategic management advice to help our healthcare clients obtain optimal reimbursements, maintain regulatory compliance, increase cash flow, and sustain performance. AAFCPAs is available to provide strategic advice on your CDM in order to optimize reimbursement and maintain regulatory compliance.

If you have questions please contact Matt Hutt, CPA, CGMA, at 774.512.4043, mhutt@nullaafcpa.com; or your AAFCPAs Partner.