Hospital Chargemaster and Gross Charges Explained

What a chargemaster is

A chargemaster, also called a charge description master, is a hospital's master list of gross charges. Each item or service the hospital can bill has a line on it, from a room charge to a supply to a scan.

Gross charges are list prices. They are the starting point the hospital sets, not a promise about what any particular patient will owe. Insurers pay negotiated rates, and many hospitals offer a discounted cash price.

Why few people pay the gross charge in full

A gross charge works a lot like the sticker price on a car or the rack rate at a hotel. It exists on paper, and discounts and contracts are measured from it. Many patients are billed through one of these routes:

• An insurer that has a contract with the hospital and pays a negotiated rate.
• A self-pay arrangement where the hospital offers a discounted cash price.
• A financial assistance policy that may reduce what an eligible patient is charged.

In each case the gross charge is a reference point rather than the final amount. That is why a bill that starts from a list price can look very different once a contract, discount or assistance is applied.

The prices that sit next to the gross charge

Hospital price files generally show several kinds of prices for the same service.

Gross charge

The list price from the chargemaster. It is often the highest number in a file and is generally not what is actually paid.

Discounted cash price

The price a hospital offers to someone who pays on their own rather than through insurance. Our guide on how to ask for the self-pay price walks through the conversation, and cash price versus insured rate explains how the two differ.

Payer-specific negotiated charge

The rate a hospital has agreed with a particular insurer. The same service can have a different negotiated rate for each insurer and plan. Files also show the de-identified minimum and maximum negotiated charges, which give a sense of the range.

What the federal price transparency rule requires

The CMS Hospital Price Transparency rule (45 CFR Part 180) has applied since January 1, 2021. Each hospital in the United States must post a machine-readable file of its standard charges for all items and services. These include the gross charge, the discounted cash price, payer-specific negotiated charges, and the de-identified minimum and maximum negotiated charges.

The rule also requires a consumer-friendly display of 300 shoppable services (70 specified by CMS and the rest selected by the hospital), or an online price estimator tool instead. CMS describes a shoppable service as one that a patient can schedule in advance; see our explainer on what shoppable services are. Hospitals that fall short of these requirements can face enforcement from CMS, which may take the form of warning notices, corrective action plans or civil monetary penalties.

To open the files yourself, how to use hospital price transparency files covers the layout and common columns.

Codes and fees behind a multi-line bill

Chargemaster lines are tied to billing codes. CPT codes are five-character codes maintained by the American Medical Association. For supplies, drugs and some services, a line may instead carry a HCPCS Level II code, a set maintained by CMS. Inpatient hospital stays are often paid by MS-DRG, and hospital bills often list revenue codes for the department or type of service. Our guide to CPT codes may help if the numbers on a bill look unfamiliar.

Bills can also be split between parties. A hospital or a hospital outpatient department can bill a facility fee, and a physician such as a surgeon, radiologist or anesthesiologist usually sends a separate professional fee. See facility fee versus professional fee. For chargemaster comparisons, note that the figures on Clear Hospital Costs are hospital facility charges drawn from each hospital's own files, so they are not total costs.

Using these prices to compare hospitals

Because gross charges are list prices, a high or low gross charge by itself does not show what someone would owe. The amount depends on a person's plan, whether they pay cash, and any assistance they qualify for. With a high-deductible plan, a member often pays the plan's negotiated rate before the deductible is met, which can make the negotiated rate column especially relevant. Whether a visit is billed as preventive or diagnostic can also change the cost.

Clear Hospital Costs publishes hospital prices for Texas and Florida, refreshed from the hospitals' files twice a week. Each hospital page lays out its gross charges, cash prices and insurer negotiated rates. The insurer rates shown may include Medicare Advantage and Medicaid managed care plans, and entries that are clearly data errors are excluded, as explained on our methodology page. A page such as MRI cost in Houston shows how the prices line up for one service, and how to compare hospitals by price explains the steps.

If a bill seems high, some people ask for an itemized version and compare it against the file; how to read an itemized hospital bill covers that. Others look into negotiating a hospital bill or hospital financial assistance, since each hospital sets its own eligibility rules. If a medical emergency arises, the standard advice is to call 911 or head to the closest emergency room.