Paid Doesn't Always Mean Paid Correctly

Your denial rate is low. Payments arrive. The billing report looks healthy. There is still one question worth asking: did the practice receive what it was entitled to receive under the applicable agreement?

A claim marked “paid” answers a status question. It does not necessarily answer the contract question. For a finance leader, reviewing payment accuracy can be valuable even when the denial workflow is already performing well.

Compare against the right number

The billed charge is usually a poor starting point for an underpayment calculation. You need the applicable allowed amount, the payer’s share, and a clear understanding of valid adjustments.

CMS describes how remittance advice reports adjustments and distinguishes contractual obligations from patient responsibility. That is why a difference between a charge and a payer payment is not automatically missing revenue. Read CMS’s explanation of payment and remittance advice.

Consider a deliberately simple, illustrative case:

Item	Amount
Billed charge	$1,500
Contractually allowed amount	$1,000
Valid patient responsibility	$200
Expected payer payment	$800
Actual payer payment	$720
Difference to investigate	$80

The review candidate is $80, not $780. Even then, a reviewer must confirm the contract version, service details, and any other applicable adjustments before treating it as recoverable. Patient balances need their own appropriate collection process; they should not be relabeled as payer underpayments.

Build an expected-payment record

An effective review needs more than an uploaded contract PDF. We recommend linking each payment calculation to the specific terms used: effective date, payer and product, relevant provider or location, procedure and modifier, units, and any applicable payment methodology.

If a required term is missing or ambiguous, label the amount unverified. A precise-looking number derived from incomplete terms is not stronger evidence than an honest exception requiring review.

MGMA’s guidance on auditing payer payments highlights the importance of checking reimbursement against contracted rates and maintaining current fee schedules. Operationally, someone must own keeping those references usable when contracts change.

Turn a variance into an owned action

A useful underpayment workflow has four stages:

1. Identify. Compare expected and actual payment and group similar exceptions.
2. Validate. Review the contract evidence, claim details, remittance, and adjustments. Remove false positives.
3. Pursue. Assign an owner to the appropriate correction or appeal process, using the payer’s applicable requirements and deadlines.
4. Reconcile. Match any additional payment to the original finding. Close the case with a recorded outcome.

Each stage should have its own dollar figure. “Identified,” “validated,” “submitted,” and “recovered” are not interchangeable. An appeal sent is progress; it is not money in the bank.

Prioritize patterns, not only large claims

One large variance deserves attention. A smaller repeated discrepancy may deserve a different response: a batch review and a conversation about the underlying payment configuration. Grouping by payer, service, contract version, and reason can help distinguish isolated corrections from recurring problems.

The review should also consider the work required to pursue a finding. Set practical review priorities with the team, while preserving obligations under applicable contracts and rules. Do not let a dashboard’s headline opportunity obscure the uncertainty or cost of recovery.

Keep contract performance separate from contract strategy

Two questions often get combined: “Are we being paid according to our agreement?” and “Is this a good agreement?” The first is payment accuracy. The second involves future negotiation, service economics, and alternatives.

Both can matter, but a modeled improvement from renegotiating a contract is not recovered cash. Neither is a proposed procurement saving an RCM collection. Keep these categories separate so leadership can see what has been realized, what is in progress, and what is only a scenario.

At Kairos, financial leakage is the broader lens: find a defensible opportunity, give it an owner, and measure the outcome. Underpayment work must be scoped to the contract and remittance data actually available. Start a conversation about where that review could fit alongside your existing revenue-cycle team.