[1][2][3] The chargemaster typically serves as the starting point for negotiations with patients and health insurance providers of what amount of money will actually be paid to the hospital.
[7] Chargemasters include thousands of hospital services, medical procedures, equipment fees, drugs, supplies, and diagnostic evaluations such as imaging and blood tests.
[6] Traditionally, hospitals regarded their chargemaster, alongside the medical codes that catalogue the billing items, as a trade secret that is central to their business, and state laws and courts have historically accepted the view that these are proprietary information.
[citation needed] Approximately forty percent of hospitals pay outside companies to help create and then adapt their chargemasters on a yearly basis.
[16] Authors J. Patrick Rooney and Dan Perrin note in their book America's Health Care Crisis Solved, "Charge-master rates, in reality, serve as nothing more than the starting point for negotiations" with the payer.
First, there was a Time magazine cover story published February 20, 2013, titled "Bitter Pill: Why Medical Bills Are Killing Us",[3] in which reporter Steven Brill examined the overlooked role that chargemasters played in the American health care system's cost crisis, asserting that they routinely listed extremely high prices "devoid of any calculation related to cost", and were generally regarded as "fiction" in the healthcare industry, despite their significant role in setting prices for both insured and uninsured patients alike.
[25] In a 2007 article for Health Affairs, Gerard F. Anderson observed, "Without knowing what services they will use in advance, it is impossible for patients to comparison shop.