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HOSPITAL ZERO-BASE PRICING®:
A NOVEL APPROACH TO ESTABLISHING RATIONAL CHARGEMASTER PRICES
By: Frederick Stodolak, Chief Executive Officer, Panacea Healthcare Solutions
Higher deductibles, health savings accounts, increased transparency, and government and consumer scrutiny provide the impetus to implement rational chargemaster prices. Content Summary • Today’s environment necessitates that healthcare CFOs and financial managers can explain, document, and defend the rationale behind their CDM prices. • Hospital financial managers who previously had optimized their chargemaster prices or inherited irrational chargemasters should consider a hospital zero-base pricing initiative.
Have you ever wondered why hospital prices appear so irrational to consumers? Hospitals and healthcare systems have experienced years of inadequate inflationary update factors often reduced by factors such as presumed over coding under the federal inpatient and outpatient prospective payment systems. Consequently, operating margins, once attained through tight operating budget controls and across-the-board price increases to payers, have suffered for decades. Many hospitals experienced reimbursement shortfalls and some optimized their chargemaster prices to subsidize such losses and to help maintain their financial viability. Unfortunately, while these techniques were for good reason, they have caused individual chargemaster line item prices to appear irrational and indefensible.
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