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Source: Medscape.com
In the United States, the charge master, or charge description master (CDM), is a comprehensive listing of approximately 45,000 items billable to a hospital patient or a patient’s health insurance provider. In practice, it usually contains highly inflated prices at several times that of actual costs to the hospital. The charge master typically serves as the starting point for negotiations with patients and health insurance providers of what amount of money will actually be paid to the hospital. It is described as “the central mechanism of the revenue cycle” of a hospital. Although Americans and foreigners alike tend to think of the U.S. health care system as being a “market-driven” system, the prices actually paid for health care goods and services in that system have remained remarkably opaque.

Each U.S. hospital has had its own charge master.
There is no universal formula to determine charges
Charges vary by as much as 17 times across all hospitals in just California.
Charges are much higher than the prices hospitals are actually paid.
Hospitals accept different payments from different payers for identical services

Until recently, uninsured or self-paying U.S. patients have been billed the full charges listed in hospitals’ inflated charge masters, usually on the argument that the Medicare rules required it. What prevailing distributive ethic in U.S. society, for example, would dictate that uninsured patients be billed the highest prices for hospital care and then be hounded, often mercilessly, by bill collectors? Many hospitals now have means-tested discounts off their charge masters for uninsured patients, which bring the prices charged the uninsured closer to those paid by commercial insurers.

Martin Shum