Healthcare Underpayments: A Guide for Providers
Updated: July 16, 2025 · Published: July 17, 2025 · Reading time: ~5 min
What healthcare underpayments are, why they happen, how much revenue providers typically lose, and how automation and recovery services help you detect and recoup the difference.
On this page
- Definition & Scope
- Financial Impact
- Real-World Examples
- How Automation Helps
- Underpayment Recovery Services
- Sources
Definition & Scope
Healthcare underpayments occur when providers receive less than the contracted amount for services delivered.
Common causes include contract misinterpretation, coding or documentation errors, outdated fee schedules, or system mismatches between payers and practice management platforms.
The Financial Impact
Annual revenue leakage from underpayments often ranges from 1–3% of net revenue, and some organizations have seen losses as high as ~11% when the problem goes undetected.
- 1–3% — typical net revenue leakage
- ~11% — observed in severe cases
- Contract mismatches — a top driver
Real-World Examples
BCBS of Alabama ordered to pay $2.8 billion to hospitals for underpayments.
UnitedHealthcare required to pay $91.2 million to Envision Healthcare via arbitration.
A radiology group identified $1.1 million in underpayments from a single payer after implementing automated detection.
Figures summarized from cases discussed in the guide and related MD Clarity resources.
How Automation Helps
Modern revenue cycle tools—like MD Clarity’s RevFind—digitize your payer contracts, then compare every payment to contracted terms to flag shortfalls immediately.
- Automated, line-level comparison of payments vs. digitized contract terms
- Dashboards by payer, CPT/HCPCS, provider, site, and time period
- Trend analysis to pinpoint recurring issues and systemic bottlenecks
- Worklists and evidence packs to streamline appeals and recovery
Underpayment Recovery Services
Beyond software, MD Clarity offers specialists who analyze flagged items, engage payers, and help optimize workflows to reduce future leakage.
- Analyst review of high-value variances
- Payer outreach and escalation support
- Root-cause remediation recommendations for long-term prevention
Sources
- MD Clarity — Healthcare Underpayments: A Guide for Providers
- MD Clarity — Underpayment Recovery Services
Dates reflect the guide’s listed update (July 16, 2025) and publish (July 17, 2025).