What is a healthcare 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.
Underpayments are different from denials. A denied claim is visibly unpaid and usually gets worked. An underpaid claim is paid, just not in full, so it often posts and closes without anyone noticing the shortfall.
Common causes include the wrong fee schedule year, a dropped modifier, a service bundled into another, fewer units paid than billed, and secondary payer calculation errors. Individually the gaps are often small; across thousands of claims they add up to a meaningful share of revenue.
How to spot it
- Compare the allowed amount on each remittance line with the rate your contract sets for that code, place of service and date of service.
- Watch for contractual adjustments (group code CO) that are larger than your contract implies.
How Vareo helps
Vareo checks every line of your 835 remittances against your payer contracts, finds underpayments like this, and handles the appeals and follow-up. You pay only a share of what is recovered.
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Last updated October 11, 2026