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Health insurance underpayments are an unfortunate reality for anyone working as a provider. Whether underpayments are accidental or intentional, they allow insurance companies to reduce their expenses and make a larger profit. Providers need to be aware of the possibility of underpayments, as frequent underpayments can significantly affect revenue.

One way that providers can easily detect underpayments is to use a healthcare underpayment revenue recovery solution. This software allows providers to monitor remittances for potential underpayment so they can begin the appeal process with the insurer. It also provides data for providers about reimbursement rates, enabling them to change practices in order to minimize the chance that underpayments will occur. To learn more about the three most common causes of health insurance underpayments and how a healthcare underpayment revenue recovery solution can help, read on.

1. Insurer Uses an Outdated Contract for Calculations

One of the most common reasons why health insurance claims are underpaid is that the insurance company is using an outdated version of the contract you've negotiated with them. This tends to occur when they haven't updated their own billing systems or if they've updated them with incorrect information. After negotiating a contract with a health insurance carrier, you'll be provided with an Explanation of Benefits statement that contains a fee schedule for procedures that you perform.

By monitoring your remittances using a healthcare underpayment revenue recovery system, it's important to update it right away with the new fee schedule. This allows you to see if an insurance company has been slow to update your fee schedule in their own software or has entered the wrong values, preventing you from being accidentally underpaid due to a computer glitch.

2. Provider Coding and Billing Errors

Sometimes the provider is at fault for underpayments due to a coding and billing error. This is often due to simple human error—one of your coding staff may omit a procedure from the bill or forget to submit a portion of the bill to the insurance provider. Instituting multiple levels of review in your billing department can help you catch these errors before they result in health insurance underpayments.

Underpayments can also result from your coding staff using procedure codes that the health insurance company isn't expecting. Health insurance companies rely on these procedure codes in order to determine how much to reimburse you for your claim. Similar procedures can have significantly different reimbursement rates.

A healthcare underpayment revenue recovery solution can help you identify areas where you're losing out on reimbursement due to using the wrong code for procedures, increasing your revenue.

3. Insurance Claim Denials

Finally, claim denials can be considered to be another form of underpayment. Health insurance companies may deny claims for unwarranted emergency care or for hospital readmissions. Claims that are denied entirely can affect hospital revenue considerably.

Healthcare underpayment revenue recovery solutions can help you classify claim denials, allowing you to see what they have in common. This allows you to quickly pre-screen patients based on their symptoms and required procedures, which enables you to determine how likely their insurer is to deny their claim. If a patient doesn't require emergency care and the insurer is unlikely to pay for their care, you'll reduce expenses by discharging them instead of admitting them.

Overall, a healthcare underpayment revenue recovery solution for your hospital allows you to identify underpayment, expedite the appeals process for potential underpayment, and minimize the risk of underpayment happening in the first place. It's an important part of maintaining hospital revenue and ensuring that health insurance companies are treating you fairly. If your hospital doesn't have a healthcare underpayment revenue recovery solution, you're very likely missing out on the reimbursement that you're owed by insurers.