What an underpayment is
An underpayment is when a payer pays less than the contracted or allowed amount for a service. The claim is not denied, it is paid, just for less than you are owed. Because a payment posts, these often slip through unnoticed while quietly eroding revenue.
Why underpayments go unnoticed
Most practices check whether a claim was paid, not whether it was paid correctly. Without comparing each payment against the contracted rate, a payment that is ten or twenty percent short looks the same as a full one in the system.
Load your contracts and fee schedules
Recovery starts with knowing what each payer is supposed to pay. Load your contracted rates and fee schedules so every remittance can be measured against the expected allowed amount.
Compare every remittance to the expected amount
Review the payer's remittance (ERA) against the contracted rate line by line and flag variances. Reading remittances accurately is a skill in itself, our guide to reading an EOB and ERA covers the fundamentals.
Know the common causes
Underpayments often come from the payer applying the wrong fee schedule, bundling or downcoding services, or failing to load a renegotiated contract. Identifying the cause tells you how to appeal and how to prevent a repeat.
Appeal the variances and track by payer
Work underpayments like denials, appeal with the contract as evidence, and track them by payer. Patterns reveal which contracts and which payers need renegotiation or closer monitoring.
How Consult By Me helps
We reconcile payments against your contracts, flag and recover underpayments, and surface the patterns so you are paid what your contracts promise. Explore our RCM services and A/R recovery.
Contracted rates and payment rules are specific to your agreements; recovery depends on comparing payments to your own contracted amounts.