REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
May 6, 2025
FROM
ANDREW GOLDFRACH, ARMC Chief Executive Officer, Arrowhead Regional Medical Center
SUBJECT
Title
Charge Description Master Increase
End
RECOMMENDATION(S)
Recommendation
Authorize Arrowhead Regional Medical Center to amend and increase the rates in the Arrowhead Regional Medical Center Charge Description Master by 8%, effective July 1, 2025.
(Presenter: Andrew Goldfrach, ARMC Chief Executive Officer, 580-6150)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The Charge Description Master (CDM) will allow Arrowhead Regional Medical Center (ARMC) to bill for all charges consistent with operational expenses and third-party reimbursements with the commitment towards full cost recovery. This increase is estimated to generate approximately $2.4 million in additional net revenue per year, which will be utilized to offset against anticipated increased costs to ARMC’s operations.
BACKGROUND INFORMATION
Approval of this item will authorize ARMC to increase the rates on the CDM by 8%, which would keep ARMC’s charges equivalent to area market rates and account for increasing costs to ARMC’s operations. The adjustment in patient charges will correspond to and result in an increase in reimbursement from non-governmental payors.
This 8% increase of charges will assist in recovering necessary revenue needed to provide healthcare for county residents. The cost of medical care is affected by the implementation of costly new procedures and drugs. Additionally, the minimum wage increase in California impacts healthcare costs.
The CDM is the price list for services and items provided at ARMC facilities and includes the comprehensive listing of billing codes for such services and items. ARMC is required to have a CDM that contains the billing Current Procedural Terminology, Health Care Common Procedure Coding Systems, revenue codes and charges for patient supplies, procedures, daily room rates and clinical rates for services performed at and billed by ARMC.
Through the County procurement process, Hospital Pricing Specialists, LLC was awarded a contract, executed by the Purchasing Agent, in the amount of $100,000, with the contract term of October 22, 2024 through October 21, 2025, to perform a comparative assessment of ARMC's CDM against those of similar hospitals in the market area. Through this strategic analysis, the contractor provided a market-driven recommendation of the prices for the hospital CDM. The analysis supports an 8% increase in gross revenue/charges while optimizing net revenue potential through a strategic approach by service line categories, procedure usage and commercial payer contracts.
On February 27, 2024 (Item No. 13), the Board of Supervisors (Board) approved an increase of 8% to the CDM. ARMC reviews and revises its rates periodically.
Under Health & Safety Code Section 1473, the Board in each county may fix the rates charged to patients admitted to any county hospital. ARMC recommends that the Board, as the governing body of ARMC, approve the increase to the CDM rates as it will allow ARMC to bill for its services consistent with surrounding hospitals and its expenses and to provide for the health and social services needs of county residents by enabling its CDM rates to reflect anticipated increased costs to ARMC’s operations.
PROCUREMENT
Not applicable.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Charles Phan, Supervising Deputy County Counsel, 387-5455) on April 3, 2025; ARMC Finance (Chen Wu, Finance and Budget Officer, 580-3165) on April 11, 2025; Finance (Jenny Yang, Administrative Analyst, 387-4884) on April 17, 2025; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387- 5423) on April 18, 2025.