The Chargemaster is Us


In 2010, the US spent $2.6 trillion on health care, an average of $8,402 per person. Despite the enactment of the Affordable Care Act (ACA), concerns about rising health care costs weigh heavily on the minds of most Americans. Despite the cost-reducing provisions in the ACA, system-wide health care costs are projected to rise faster than national income, and this cost growth has critical implications. Because of the lack of transparency in the pricing of health care, consumers have little ability to hold their providers and payers accountable for these inexplicable increases in costs. levels the playing field.

Consumers, payers, regulators, and providers need better tools to help them share and ascertain meaningful information about health care costs. Unless consumers can find a way to hold providers accountable, medical bills will continue to push more Americans into personal bankruptcy. Raising health insurance premiums, including a double digit increase in 2013 in some states hurt small businesses, the engine of economic recovery. For individuals, businesses, and our nation, the stakes could not be higher and the solution could not be more simple.

The Mission

It’s no mystery that health care costs are rising at three times the rate of inflation in the US and this escalation is expected to continue. More of a mystery is how hospital and related charges across the US are determined. A recent study in the Archives of Internal Medicine reported that hospital fees for a routine appendectomy in California ranged from $1,500 to $182,955. The study also found wide variations in charges even among appendectomy patients treated at the same hospital.

Current efforts to unveil the shroud over health care pricing, (Castlight Health, Clearcost Health, Change Healthcare) are limited and are structured to benefit investors, not the public.

A crowdsourced approach to gathering cost information will reveal data that payers and provider organizations are less likely to share for proprietary reasons and that because the data can be sold at a premium.

Our Customer

Despite that fact that Americans may think that the US Health Care System is market driven, the prices actually paid for health care goods and services are remarkably opaque. Our customer is an individual who has one or many medical bills and wants to compare his/her bill with others who have had the same condition or procedure.

The Chargemaster

The Chargemaster, also known as the Charge Description Master (CDM) is a file that contains the prices of all services, goods, and procedures at a US hospital. The Chargemaster is used to generate a patient’s bill. In 1996, with the Health Insurance Portability and Accountability Act (HIPAA), Congress sought to impose national format on chargemaster data, but there is still much to be done on a national level.

In California, hospitals are mandated to provide their chargemaster files annually, but are currently not required to be provided in a standardized format. As a result, it is difficult to draw any meaningful data or analysis out of the reports despite the good intentions of the mandate.

A single medical bill is a rich source of information that in aggregate can provide a rich source of health economics analytics. In addition to patient demographics, hospital bills typically include institutional data, physician names, hospital pharmacies, procedure codes, diagnosis codes and charges. While there are other efforts to gather this information from insurance claims data (i.e., Castlight Health gets data from self-insured employers’ claims and explanation of benefits), is our grassroots approach. will open another window into cost transparency and help build communities of health care consumers who can educate and empower each other and the institutions that serve them. To protect user privacy, medical bill data will be de-identified. All data practices will comply with HIPAA privacy protections.

Given the proliferation of data digitization technologies, and the frustration revealed by many patients unable to pay their medical bills we feel that the time is ripe to provide consumers with a tool to share this information anonymously and compare pricing information. This could potentially help consumers negotiate their bills with supporting evidence and additionally provide institutions and insurers with metrics to improve how institutions price their care. As 50 million currently uninsured Americans are poised to obtain health insurance through the Affordable Care Act in 2014, the effect on health care costs and the rate of increase in health care spending are less certain.

The average plan purchased through a State Health Insurance Exchange will still place the onus of payment on the insured. As high deductible health plans become the standard in insurance for individuals and the uninsured, the market needs tools to reveal disparities in cost. In addition, as unnecessary tests and treatments are thought to comprise over 30% health care costs, a data platform that relies on the submissions of individual consumers may also reveal insights regarding practice patterns of individual providers and health care institutions. Such a rich source of data can provide market intelligence to institutions, payers, and patients who, armed with this information, are now in a better position to negotiate payment and apply rational pricing to their services.