Effective January 1, 2019, the Centers for Medicare & Medicaid Services has mandated hospitals

make public their "Standard Charges" (whether that be the chargemaster itself or in another form of the hospital's choice). This public listing must be posted to the internet, be in a machine-readable format and be updated at least annually, or more often as appropriate.

Patient Friendly Approach

GLOSSARY OF Billing Terms

Chargemaster (CDM)

The CDM is the individual price list for everything that is necessary to provide patient care. This includes supplies, drugs, surgery time, anesthesia and recovery time.  Every procedure that is performed requires multiple charges in order to capture all the required components that make up the total price for the procedure. In order for patients to understand the price of their procedure, they need to know each of the individual charges that will make up the total price. This is very similar to the sticker price on a new car.  Imagine, if you can, that the sticker price on a car lists out every one of the 2,496 components that went into creating that car: each individual bolt, every sensor, every light, wire and engine part with a total price at the bottom.  This would not be a consumer-friendly method and would likely cause confusion, but that is how the chargemaster is used in healthcare today.

Total Charges

The dollar amount submitted on the claim for total services provided to the patient before any insurance discounts. Similar to a “sticker price”, it's usually not the final amount paid. 

Reimbursement

The amount paid to the hospital for services provided to the patient. This includes money received from primary and secondary insurers as well as from the patient. 

Out-of-pocket costs

The amount a patient pays to the hospital, usually in the form of a deductible and/or co-pay.  For example, one of the most common outpatient surgical procedures in the United States is cataract surgery. This procedure has an average charge of $15,300 at a large urban hospital, $11,700 at a university hospital and $4,600 at a small community hospital. 


The Medicare National Payment Rate for this procedure is $1,910 for 2018 with an unadjusted  co-payment amount of $382.

Medicare

 Medicare is the U.S. health insurance program for people aged 65 or older, or people under 65 with certain disabilities or conditions. According to the American Hospital Association,hospitals generally receive payment of only 86 cents for every dollar of actual cost of providing care for Medicare patients.

Self-Payment

When a patient pays entirely out of pocket for health-related services because they don't have insurance coverage. For patients who do not have insurance, hospitals typically have financial assistance programs for patients who qualify.