Changes afoot for chargemaster

With more people paying attention to healthcare pricing, IT companies are changing their approach to chargemaster tools

In recent months, "chargemaster" - like "compromise," or "mud" - has become a dirty word.

Ever since "Bitter Pill," Steven Brill's mammoth 24,000-word cover story in TIME magazine this March put the spotlight on this shadowy reference tool - a voluminous file that dictates the cost of the services and medicines and hardware a hospital provides - the public has become aware in a way it hadn't been before that the prices paid by healthcare consumers often have very little logic to them.

Most hospitals "treat it as if it were an eccentric uncle living in the attic," Brill wrote in TIME. "I soon found that they have good reason to hope that outsiders pay no attention to the chargemaster or the process that produces it. For there seems to be no process, no rationale, behind the core document that is the basis for hundreds of billions of dollars in health care bills."

Lately, some people have been thinking about the ways healthcare prices are formulated and communicated.

Notably, Health and Human Services Secretary Kathleen Sebelius unlocked a huge trove of data this past May that that laid bare the chargemaster list prices of hospitals nationwide (she did the same for outpatient prices in June). When seen next to much-lower negotiated prices paid by Medicare, the numbers could be infuriating.

"We're a great believer that unlocking that data (and) turning it over to those who know how to formulate that data for policymakers and providers is the best possible thing to do," said Sebelius in June.

As the price list comes under closer scrutiny, some vendors are starting to rethink they way they design their chargemaster tools.

On June 10, for instance, Yakima, Wash.-based VitalWare and St. Paul, Minn.-based Panacea Healthcare Solutions announced a partnership to develop what they describe as "intelligent, defensible chargemasters."

When asked just what that means, VitalWare CEO Kerry Martin said, "When we talk about intelligence, we talk about using your cost data as much as possible to help you determine prices."

Take a knee replacement, for instance. "I'll bet you the range of knee replacements go from $1,500 or $2,000, clear up to $8,000," says Martin. "The physicians is making that choice based on his relationship with that salesperson from Stryker, or he's making it based on his comfort level with a particular product, even though there may be newer technology on the marketplace?"

Problematically, the CFO has no say, for the most part, in determining knee replacement A, which covers this, or knee replacement B, which costs this, or knee replacement C, which is out of the park, and if I used it on a Medicare patient I'm not even going to get reimbursed the cost of that device - let alone the cost of the room and my nurses, etc."