What is a chargemaster?
A chargemaster is a comprehensive list of charges for each inpatient and outpatient service provided by a hospital —each test, exam, surgery, procedure, room charge or supply is an item within a hospital’s chargemaster.
- Given the broad scope of services provided by hospitals every day, a chargemaster contains thousands of items and services with their associated charges.
- Health insurance companies contract with hospitals to care for their members. Hospitals are paid the insurance company’s negotiated rate which, in general, is significantly less than the amount listed on the chargemaster.
- An individual hospital’s charges vary based on its unique range of services, adoption of new medical technologies, capital investments and other local factors.
- The insurance company’s negotiated rate, not the chargemaster, is the basis for determining the patient’s actual out of pocket cost after the satisfaction of a deductible which is the patient's responsibility. As an example, a hospital may charge $4,000 for a particular service. The insurer’s negotiated rate with the hospital is $1000. The patient has a deductible of $500 and a co-pay of 20% of the negotiated rate. The patient will owe $700.
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