Glossary · Payments
What is an underpayment?
An underpayment is a claim paid below what the provider's contract says it should pay. It looks like a normal payment on the remittance, so most go unnoticed.
Example · fictional data
Each line checked against the contract. Two short pays, one explained by sequestration.
Contract variance check
| Service | Contract rate | Allowed | Variance | Verdict |
|---|---|---|---|---|
| 99214 Office visit | $128.40 | $128.40 | $0.00 | Paid right |
| 20610 Joint injection | $96.10 | $71.30 | -$24.80 | Underpaid, dispute |
| 93000 ECG, Medicare | $17.30 | $16.95 | -$0.35 | Sequestration, expected |
| 72148 MRI lumbar | $412.00 | $365.00 | -$47.00 | Underpaid, dispute |
- Disputes go out grouped by payer and cause. If the same code is short every time, the payer probably loaded the contract wrong.
A denial is visible: the payment is zero. An underpayment isn’t. The remittance shows an allowed amount, a contractual adjustment and a payment, all of which look normal unless someone compares them with the contract.
Why payers underpay
- The contract or fee schedule was loaded wrong, or an update wasn’t applied.
- A modifier or multiple-procedure rule was applied incorrectly.
- The payer paid an out-of-network rate for an in-network provider.
- Units, place of service or carve-outs were priced differently from the contract.
Recovering it
- Compute the expected payment for each line from the contract.
- Ignore variances explained by legitimate rules, such as sequestration, or too small to work.
- Group what’s left by payer and cause.
- Dispute with the contract clause and the math, and follow up until it’s paid or escalated.
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