System, and the National Drug Code
x CDM vendor resources (e.g., user’s guide or manual that
spells out in detail requirements for CDM maintenance at
the CDM file and field levels)
x Allowable data requirements within each field of the
CDM, which vary from vendor to vendor
x National Coverage Determinations and Local Coverage
x Other public and private payer guidelines (e.g., detail
medical necessity and reimbursement policies set by vari-
ous other entities)
x The CDM file itself (hard copy or electronic)
The fifth step is to conduct the actual review of the CDM fields,
taking care to specifically validate all data elements. Members
of the audit team must have the proper audit mentality, which is
to strive for the utmost CDM accuracy and consistency, involving all relevant stakeholders, and using all available resources
to support the compliance plan, the revenue cycle, and the organization’s mission. They will need to actively coordinate and
communicate throughout the audit.
A value-added CDM audit
should at minimum result in
fewer delayed or denied claims
and an increased sense of
ownership in the organization’s
overall compliance plan.
The CDM is the vehicle through which a healthcare facility
conducts all its charging operations. It is the link between the
front-end ordering systems and the back-end billing systems.
Consequently, every billable but not separately payable procedure, service, drug, or supply should be included in the CDM.
Additionally, there should be reasonable expectation of coverage or payment and reimbursement for the item or service. The
exception to this guideline is charge codes included in the CDM
for statistical purposes. These items or services are included in
the CDM for internal tracking and are not meant to be used for
During the audit, the audit team should ask the clinical department managers the following questions related to billing
and reimbursement. For example, is every billable but not separately payable procedure, service, drug, or supply used in your
department included in the CDM?
An example of a billable but not separately payable supply is
a patient who presents to the emergency department needing a
laceration sutured. The suture supply item is set up in the CDM
at $15 per suture. Suturing services are covered and billable,
and although Medicare will not pay for the suture supply item,
Conducting a CDM Audit
charge-based payers will. So it is important to include such
items on the CDM.
Another question to ask the department manager is if the staff
performs any services or procedures other than those listed in
the CDM. If so, the CDM committee should consider if these
items should be added to the CDM. This may be a good time to
discuss the CDM workflows with the department manager.
Other items that require careful attention include:
x Linked and exploding charges: facilities that use these
charging strategies must audit them carefully, as improp-
er execution can result in significant compliance issues.
x Department codes: verifying the department number for
a given charge item will ensure the correct department is
charged and credited in the cost-reporting process.
The audit team must carefully validate the data within the
CDM fields for every item, specifically noting any data fields
that are incorrect or inconsistent. All incorrect or inconsistent
data items must be reviewed with the stakeholders relevant to
that specific section of the CDM (department) to:
x Confirm the error or inconsistency
Implementing, Monitoring Changes
x Agree on the correct data
x Agree on the time frame to make the change in the CDM
(immediate, at beginning of next month or quarter, or
x Obtain sign-off on the data changes and time frame, and
retain the sign-off sheets for future reference
Once the review and validation occurs, the facility will move to a
new phase of agreeing to any changes with stakeholders, imple-
menting, and validating the changes. Facilities should monitor
activities post-implementation to ensure that the changes have
been made accurately and determine a return on investment. A
value-added CDM audit can result in many improvements, but
it should yield two significant results:
x A favorable (downward or reduced) trend in delayed and
x Increased stakeholder ownership over their part of the or-
ganization’s overall compliance plan ¢
This article is excerpted from: Richey, John. “Charge Description Master Audits.” In The Charge Description Master Handbook, Anne B. Casto, ed. Chicago, IL: AHIMA Press, 2011. Available at https://ahimastore.org.
1. Institute of Internal Auditors. 2010. www.theiia.org.
2. Roth, James. “How Do Internal Auditors Add Value? Characteristics Common to Top-Rated Audit Shops Help to
Shed Light on the Nebulous Concept of Adding Value.”
Internal Auditor 60, no. 1 (Feb. 2003).
John Richey is founding program director and instructor of health informatics at the University of Findlay in Ohio.