Q&A: Chargemaster and net revenue

Q. What is the connection between the list price on a chargemaster and net revenue?

A. The price in the chargemaster for the line item is the list or gross price—not what is paid for the service. However, this list price is used to generate overall gross revenue for financial statements and must tie out to the ledger on a daily, weekly, monthly, and yearly basis.

The price is often inherited by the chargemaster coordinator when he or she assumes management of a chargemaster. One of the key responsibilities of a chargemaster coordinator is maintaining the stability of gross revenue for the hospital organization from one period to the next. Annual price increases and any adjustments to prices made during the fiscal year must be executed in a manner that does not result in significant variations by type of service, revenue department, or type of patients.

While the list price does not equate to net revenue for the organization, it is the basis for net revenue or cash estimates. The price is also used as a gauge for relative cost of one item or service compared to another. The price is also frequently the basis for patient financial estimates.

For more information, see The Chargemaster Essentials Toolkit.

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