Charge Description Best Practices

Does your hospital have a clear and definitive policy for charge descriptions? Hospitals and health systems are often challenged by how they should address billing descriptions, and consultants may overlook the importance of quality descriptors for long-term file management.

What Is a Charge Description?

Charge descriptions are key data elements in the charging file of a hospital, clinic, or physician billing system. The charge description is a limited character field that represents the item or service that is being charged by the healthcare provider. Differing hospital information system vendors have varying field length limits, but all try to accommodate the electronic hospital and professional fee (“UB” and “1500” claims requirements). Charge descriptions flow to detailed patient account encounter-specific charges that may be provided upon request to the patient or simply archived in your system for charge detail backup. Descriptions are also frequently reported on revenue-oriented reports such as charge description master (CDM), revenue & usage, statistics, daily activity/daily charges, etc.). Most importantly, charge descriptions are key to complete and accurate chargemaster maintenance.

Internal and external audits and work processes often include the comparison of detailed charges against claims and chart documentation. Charge descriptions are often pivotal to efficient and accurate audit interpretations. However, from the charge capture perspective, we realize that descriptions may serve varying functions. The level of risk of vague or truncated descriptions differs based on the applicable charge capture functionality, coding actions, claims processing environments, and applicable payment systems.

As your team evaluates charge description management at your organization, consider both the current approach to charge descriptions as well as your ideal charge management environment. The following sections contain insights on charge descriptions from our team’s decades of CDM management experience.

How Important are Descriptions?

Many teams have not fully considered the implications of CDM descriptors on charge integrity or file management. Hospital staff may place charge descriptions at a lower priority, believing they carry little risk. We understand that perspective: in today’s reimbursement environment, most claims are paid based on codes, percent of charges, or other methods, and descriptions have little impact on payment.

However, it is critical for every CDM or revenue cycle team to assess how well their charge descriptions support their current or planned auditing, monitoring and file management priorities. Specificity of charge descriptions ensures fewer file maintenance errors, easier quarterly and annual CDM updates, and greater support for data monitoring or auditing activities.

5 Rules of Charge Descriptions

Now that we’ve discussed the importance of descriptions, let’s address some basic strategic approaches common in proactive hospitals. Panacea’s experts apply these five foundational guidelines when working with ChargeAssist® customers, performing consulting audits, and delivering educational programs:

  • Be Accurate and Specific

    Charge descriptors should represent the item or service as accurately and specifically as possible within system field length limitations.

  • Clarity is Key

    Charge descriptors should provide the necessary clarity for masterfile maintenance, charge monitoring, and auditing purposes.

  • Include Key Verbiage

    Charge descriptors should include key verbiage or terminology to allow confirmation of the associated “hard-coded” CPT-4, HCPCS Level II, or other data elements in the charging file.

  • Follow Hospital-Defined Standards

    Charge descriptors should follow hospital-defined standards to avoid charge capture confusion or difficulty in charge lookup. Standards may include the sequence or order of description verbiage, standard abbreviations, rules related to punctuation, capitalization preferences, and other agreed-upon description guidelines to achieve the level of specificity needed.

  • Ensure Consistent Verbiage

    Charge descriptors should include verbiage similar (while not necessarily parallel) to the associated ancillary system files to allow accurate file synchronization, auditing, and long-term file maintenance activities.

As mentioned earlier, charge description standards are unique and specific to the hospital. While they may be formalized in some environments, they may have simply been adopted over time and not well-defined in other environments. Integrating our five rules will help your team establish priorities and communicate goals.

Overly General Descriptions Lead to CDM File Maintenance Challenges

It may come as a surprise that “patient-friendly billing” is absent from our five rules.

Some individuals advocate for service descriptors that patients can easily understand. However, overly-general descriptions often lead to CDM file maintenance challenges and potential charge capture problems.   We believe that the most patient friendly approach an organization can take is to use charge descriptors that clearly state the service. If descriptors reflect key terms within the associated code descriptions, then the patient can confirm the item despite the verbiage being clinical or technical in nature.

Mistakes to Avoid

Here are a few common pitfalls our experts encounter when helping hospitals establish effective charge management practices.

  • Failing to Prioritize Clarity

    The most common CDM management mistake we encounter occurs when the hospital or health system simply fails to consider the importance of descriptor clarity. Often, chargemaster owners are working with data built long ago following guidance, advice, and input from various individuals who may no longer be involved with the organization.

  • Relying on Purchased Code Descriptors

    Another mistake is assuming that purchased code descriptors are appropriate for populating your charging files. Some hospitals rely on purchased CPT-4 and HCPCS Level II “Short Descriptions,” which fail to provide the level of detail needed. While this approach is common for some legacy physician billing systems, the function and fields in today’s more advanced systems can accommodate individualized and highly-specific descriptors for your charge items.

  • Bypassing Strategic Discussions for Conversions

    Some hospitals must adopt corporate standard descriptions or descriptions developed by an affiliated health system. Since charge descriptions are highly personalized for most organizations, conversion planning should always include strategic discussions about descriptors. This is often overlooked.

  • Using Embedded Charge Descriptions

    While not necessarily a mistake, we find that charge descriptions embedded with CPT-4 or HCPCS codes can lead to additional file maintenance challenges. Remember that when the code changes, the charge description must change.

We hope these charge description ideas are helpful for your team and can be used to establish some preliminary efforts toward improvement. Today’s proactive charge management teams realize that charge description updates can improve workflow efficiency, data integrity, and long-term file management efforts.