Underpayment Checker
Contracts pay a percentage of Medicare. Remittances do not always honor it. Reconstruct what a line should have paid in seconds and see the dollar and percentage variance.
Most payer contracts pay a percentage of the Medicare rate — 110%, 130%, 160% of Medicare, and so on. If you know the Medicare allowed amount for a code, you know what the payer was supposed to pay. Enter the numbers from a remittance and this checker shows whether the payment matches the contract or came in short.
Check a payment against your contract rate
The formula
Expected payment = Medicare allowed amount x contracted % of Medicare x units. Variance is simply what arrived minus what was expected. The checker allows a 2% tolerance band before calling a payment short, because fee schedule updates, locality differences and rounding routinely move a line by a percent or two — a variance beyond that band is a pattern worth chasing, especially since the same error usually sits on every claim for that code, not just the one you sampled.
Reading your result
- Underpaid — verify the Medicare allowed amount first (correct year, locality and facility vs non-facility rate), then appeal with the contract language. Sample ten more lines for the same code before concluding it is a one-off.
- At contract — within tolerance; log it and move on.
- Paid above expected — document it. Systematic overpayments get clawed back, and finding them yourself is far cheaper than a payer audit doing it.
Underpayment hunting is slow, line-by-line work, which is why it so rarely gets done in-house. It is a standard part of our AR management service — every remittance is checked against the contracted rate, not just deposited.
Frequently asked questions
Where do I find the Medicare allowed amount for a code?
In the CMS Physician Fee Schedule lookup for your locality and year — use the non-facility or facility amount that matches where the service was performed. If you use our Medicare fee schedule figures anywhere else, keep the year consistent: an outdated allowed amount creates false underpayments.
Why does the checker allow a 2% tolerance?
Fee schedule updates mid-year, locality rounding and payer processing conventions routinely move a payment by a percent or two. The tolerance keeps the tool from flagging noise; a variance beyond 2%, repeated across claims for the same code, is the real signal.
What should I do about a confirmed underpayment?
Appeal the specific claims with the contract rate and the fee schedule page cited, then ask the payer to reprocess the whole code set — underpayments are almost never limited to the claim you happened to check. Document the pattern; it is also evidence at contract renewal.