Some Major Reasons for Underpayment of Claims

Posted by Ecareindia on March 19th, 2014

Several healthcare entities in the US are making a ‘full-court press’ to incorporate the recurring revolutionary healthcare changes in their billing processes. By the time they implement these changes, the normal workflow of medical coding services get affected. Issues like erroneous coding, lack of time for insurance eligibility verification, claim denials and more arise resulting in underpayments in due course. Underpayments are adding to the pressure while healthcare entities face a tough time due to HHS sequestration cuts, rise in technology & software up-gradation costs, PQRS implementation and the impending SGR payment cut. According to the American Medical Association’s National Health Insurer Report Card, the payment accuracy rates among the Payers have slashed to 62.08%. To find a solution to this issue, let’s first analyze some major reasons that cause underpayments:

Inaccurate Charge Master: Charge entry in medical billing is a very important portion, so healthcare entities should maintain an error-free Charge Master. Right from clinical procedures and charge descriptions to modifiers and price list, everything should be entered accurately. Failing to update the Charge Master periodically with new procedures and codes may lead to incorrect charge entry in medical billing that causes underpayments. Therefore, regular audits must be conducted in the Charge Master database.

Improper Coding: Since the coding and charge entry processes go hand-in-hand, healthcare entities should make sure that they show additional care in these two areas. Healthcare codes and related fees are being revised every year, so they have to be updated for accurate medical coding services. Failing to add a modifier and choosing a generic code rather than a specific one can also result in underpayments.

Coordination of Benefits (COB): It is applicable to patients who are covered by more than one health insurance plan. As per the patients’ policy, COB provisions determine the primary and secondary carriers. The primary carrier bears most of the medical expenses covered under the plan, while the secondary carrier takes care of the payable balance. Checking a patient’s COB is very important which can be done through insurance eligibility verification. Healthcare entities that fail to perform this task may receive underpayment for a claim.

In Network/Out of Network: Whether healthcare entities fall inside or outside a Payer’s network, payment challenges are equally likely in both the cases. To avoid underpayments, healthcare entities must undergo the credentialing process and perform re-credentialing periodically.

If healthcare entities evaluate all these reasons causing underpayments beforehand, it will be easier for them to minimize the extent of underpayments. Getting extra help from a reputed and experienced offshore medical billing company like e-care will help healthcare entities manage the revenue cycle.

About e-care India:

e-care India is one of the renowned offshore medical billing companies in India that promises the above mentioned benefits with total customer satisfaction. With 14 years of experience in the industry, e-care’s 3 offshore medical billing delivery centers have been providing end-to-end medical coding services seamlessly to its clients. To know more about e-care and its services, log on to

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