Difference Between Overpayment and Underpayment In Medical Billing

Overpayment in medical billing is when patients or insurance companies pay more than they are entitled to the healthcare providers for the services rendered. On the other hand, an underpayment in medical billing is defined as receiving a lower amount than the value of a claim to be settled. Both can result in a poor revenue stream for healthcare practices and affect their billing cycles.

Read the blog to understand the difference between overpayment and underpayment in medical billing, common causes, and how healthcare providers can prevent these issues.

What are Overpayments and Underpayments?

As discussed above, underpayments happen when a provider is reimbursed less than the expected amount of a claim and overpayments occur when the healthcare providers receive more than the expected amount of a claim. Both of these issues can occur from errors, negligence, or even fraud in the billing process.

Let us understand in detail what drives overpayments and underpayment issues for providers. A detailed understanding can help providers figure out an effective solution to overcome the challenges of overpayments and underpayments.

Here are some of the most common causes of overpayments and underpayments in the healthcare industry:

Billing Issues/Errors

There may be a genuine billing issue or error due to which an overpayment or underpayment may occur. It may be intentional or unintentional. As a healthcare provider, one must regularly analyze the reasons for billing issues to come up with an effective solution.

Miscalculations By the Payer

Overpayment and underpayment billing issues may also occur as a result of miscalculation by the payer. But, in that case, the payer usually contacts the medical practice to confirm the amount, and hence, this is a rare scenario.

Outdated Technology

Your practice must have outdated technology and software that are not efficient enough to ensure the utmost accuracy in the billing process, which may potentially lead to an overpayment or underpayment issue.

Poor Policies

Pre-billing for medical procedures that are yet to be performed by the healthcare provider can also cause overpayment or underpayment issues. Therefore, practices should follow a systematic way to perform the billing process to avoid such mistakes.

Inadequate Documentation

Each information in the medical claim should be accurate, and the billing team must review the claims thoroughly before submission. Due to incorrect information on a claim, a healthcare provider may be over or under billed, affecting the overall revenue stream.

How to Prevent Overpayments and Underpayments in Medical Billing?

Up-to-Date Coding

Medical coders handling your practice’s billing process should be certified and have an in-depth knowledge about the latest codes. It will prevent the entering of a wrong code for a procedure and keep your practice away from overpayment and underpayment issues.

Give Proper Training to Your Staff

If you have an in-house team for medical billing, make sure the team is provided regular training on the best practices followed by the healthcare industry to prevent overpayment and underpayment issues.

Use Up-to-date Softwares

An outdated software may fail to identify overpayment or underpayment error. Therefore, billing experts always recommend using up-to-date software for medical billing needs to reduce the chances of overpayment and underpayment errors while submitting claims.

Outsource Your Medical Billing Services

Medical billing professionals who are well-versed with the medical terminologies as well as the healthcare industry’s best practices can identify such kind of billing errors prior claim submission and prevent the hassle at the very first place.

Capline Healthcare Management. a renowned medical billing company in the United States, offers a wide range of healthcare management services, including revenue cycle management, to help healthcare providers implement the best practices and ensure only accurate claims are submitted on time, free from billing errors. Our experts ensure that all payments are reviewed and claim appeals are filed soon in case of an overpayment or underpayment issue.