Chargemaster

Key facts

Maintained by

Each hospital, usually its revenue cycle or finance department

Typical fields

Charge code, description, revenue code, CPT or HCPCS code, gross charge

Public disclosure

Gross charges must be published under federal hospital price transparency rules

Disclosure statute

Section 2718(e) of the Public Health Service Act

What is a chargemaster?

Every supply, drug, room charge, lab test and procedure a hospital can bill has a line in its chargemaster. When clinicians document care, charge capture systems pull the matching lines onto the patient account, and the billing system turns them into an institutional claim.

Chargemaster prices are list prices, often called gross charges. Each hospital sets its own, so the same test can carry very different charges at hospitals a few miles apart. Few payers pay them as billed: Medicare and Medicaid pay set rates, and commercial insurers pay negotiated rates, some written as a percentage of charges.

How a chargemaster is structured

A typical chargemaster line includes:

• An internal charge code and a text description of the item or service.
• A revenue code that identifies the department or type of service on the UB-04 or 837I claim.
• A CPT or HCPCS code where one applies, and sometimes an NDC for drugs.
• The gross charge, often with modifiers or department identifiers.

Why the chargemaster matters

Charges affect real money even though few payers pay them directly. Uninsured patients may be billed at or near gross charges unless a discount or financial assistance policy applies. Some commercial contracts pay a percentage of charges, and Medicare uses cost-to-charge ratios from hospital cost reports when calculating outlier payments.

Chargemaster data now appears in hospital price transparency files as gross charges alongside negotiated rates and cash prices. Comparing gross charges with negotiated rates shows how far list prices sit from what is paid, and the ratio of charges to Medicare payment is a common measure of hospital markup.

Common misconceptions about chargemasters

A chargemaster price is not what a hospital expects to collect, and high charges alone do not mean high revenue. Differences between hospitals often reflect pricing strategy and contract structures more than cost, so gross charges should be read alongside payer-specific negotiated charges and discounted cash prices.