A typical healthcare provider in the United States is reliant on payors, such as insurance companies, to pay the medical bills of the patients who seek their care. Based on the services they deliver, they make their claims to the payor in prescribed format, requesting reimbursement in accordance with the coverage linked to the patient. When healthcare providers do not receive the full reimbursement owed for services rendered, it is referred to as an Underpayment. This can happen due to various factors, including contractual discrepancies, policy variations or errors in the billing and coding process.
According to a survey by the American Hospital Association, payor-related underpayments accounted for 15.2% of all underpayments in 2019, while revenue cycle-related underpayments accounted for 84.8% of all underpayments in 2019. Addressing underpayments is crucial for healthcare providers to maximize revenue and ensure financial stability, especially in the current climate of increasing financial pressure on the industry.
The financial health of healthcare providers can depend heavily on how aware they are of the true underlying causes of frequent underpayments, as well as effective strategies and proactive steps they take to address them and optimize revenue flow. A common method used to identify the gaps is a Payment variance report but these have limitations due to data inconsistencies and human error. According to a Healthcare Financial Management Association survey, healthcare organizations that use advanced analytics to identify underpayments are more likely to recover 75-100% of underpayments.
Download this white paper where we explore the common causes of underpayments in healthcare, strategies for identifying and recovering underpayments, and the impact of underpayments on healthcare providers.