Underpayment recovery, in plain language.
The terms practices and billing teams run into when checking whether payers paid what they owe, from 835 remittances and allowed amounts to downcoding, bundling and the No Surprises Act.
835 / Electronic Remittance Advice (ERA)
An 835, also called an Electronic Remittance Advice (ERA), is the standard electronic file a payer sends to explain how it paid or adjusted each claim.
Allowed amount
The allowed amount is the maximum a payer will pay for a covered service, including both the payer’s payment and the patient’s share.
Claim adjustment reason code (CARC)
A claim adjustment reason code (CARC) is a standard code on a remittance that explains why a payer paid a claim line differently from what was billed.
Contingency-based recovery
Contingency-based recovery is a pricing model where the recovery firm is paid a percentage of the money it actually recovers, and nothing if it recovers nothing.
Contracted rate
A contracted rate is the amount a payer agreed in its contract to pay a provider for a specific service code.
Coordination of benefits (COB)
Coordination of benefits is the process payers use to decide which insurer pays first, and how much the second insurer owes, when a patient has more than one plan.
Downcoding
Downcoding is when a payer pays a claim as if a lower-level or less complex service code had been billed than the one the provider submitted.
Fee schedule error
A fee schedule error is an underpayment caused by the payer pricing a service from the wrong rate, such as an outdated fee schedule year or the wrong contract.
Incorrect bundling
Incorrect bundling is when a payer treats a separately payable service as included in another service and pays nothing for it.
Independent Dispute Resolution (IDR)
Independent Dispute Resolution is the federal arbitration process under the No Surprises Act that decides the payment for an out-of-network claim when a provider and a health plan cannot agree.
Modifier downcoding
Modifier downcoding is when a payer ignores or removes a modifier the provider billed, which lowers or denies the payment for the service.
No Surprises Act
The No Surprises Act is a federal law, in effect since January 1, 2022, that protects patients from surprise bills for certain out-of-network care and sets a process for providers and payers to resolve payment disputes.
Qualifying payment amount (QPA)
The qualifying payment amount (QPA) is generally a health plan’s median contracted rate for the same or a similar service in the same geographic area, used under the No Surprises Act.
Timely filing denial
A timely filing denial is when a payer refuses to pay a claim because it says the claim was submitted after the filing deadline in the contract or plan.
Underpayment
An underpayment is when a payer pays a claim for less than the amount it owes under the provider’s contract, fee schedule or the applicable law.
Underpayment appeal
An underpayment appeal is a formal request asking a payer to reprocess a paid claim and pay the difference between what it paid and what the contract requires.
Units reduction
A units reduction is when a payer pays for fewer units of a service than the provider billed.