Every healthcare provider understands the frustration of unpaid or denied claims. But what often goes unnoticed is the silent drain of underpaid insurance claims. These slow revenue leaks can be just as damaging as outright denials.
Unlike denials, underpayments are harder to spot. They’re buried in line items and hidden in complex payer contracts. High health insurance underpayment rates often go undetected for years. Yet, they have a direct impact on your financial stability.
That’s why Rivet Health has taken a deeper look at the issue. Our latest research reveals what’s really happening with health insurance underpayment rates and how you can finally level the playing field with payers.
The healthcare industry grapples with a significant challenge: underpayments from payers. This issue directly affects a provider’s bottom line, often leading to substantial and unnecessary revenue loss. If you are already dealing with issues like rising labor costs, increased regulation, and tight margins, underpayments compound the financial crunch.
In many cases, these underpayments are viewed as the “cost of doing business.” But the reality is far more serious. Even a small percentage of lost revenue adds up to huge sums left uncollected. That’s why you can’t afford to ignore high health insurance underpayment rates.
High health insurance underpayment rates aren’t a new problem. Industry analysts have been sounding the alarm for years. However, the concerns often get overshadowed by healthcare denial rates, which are also shockingly high.
While you certainly can’t ignore denial rates, you need to be concerned about underpayments, too. Industry sources highlight just how widespread and costly the issue has become. These statistics reflect the general scale of the problem. (Rivet’s new, specific findings, which are covered in the next section, offer more clarity.)
The Medical Group Management Association (MGMA) reports that healthcare organizations can experience a net revenue loss of 7 to 11% due to various factors, including underpayments and denials. This benchmark demonstrates that underpayment is a persistent issue across practices and systems of all sizes.
Is your organization facing high health insurance underpayment rates? How are they impacting your bottom line? If you lack visibility into underpayment trends, you may not even have a clear view into how severe the issue has become. That can be even more dangerous to the long-term financial health of your business.
Becker’s Hospital Review further estimates that providers lose 1 to 3% of their net revenue annually due to underpayments. Roughly 11% of all claims are underpaid or denied. For any practice, these losses can mean the difference between reinvesting in growth and struggling to cover operational costs.
Together, these figures show the scope of the challenge. But because they’re broad averages, they don’t give providers visibility into their own contacts and claims. That’s where Rivet’s new research brings clarity to the underpayment problem. Here’s a closer look at just how much revenue you may be missing.
At Rivet, we understand the complexities of payer contracts and the nuances of claims processing. Every contract has its own rules, fee schedules, and reimbursement structures. These complexities make it nearly impossible for you to manually detect when payers are not meeting their obligations.
Our advanced analytics and robust systems are designed to identify and address these underpayment issues head-on. By using technology that integrates with your existing ERM and contract data, Rivet helps you see clearly where revenue leakage is happening — and more importantly, gives you the tools to do something about it.
Traditional revenue cycle teams rarely have the bandwidth to review every line item on every claim. But underpayments are often hidden at this granular level. Rivet’s analysis consistently reveals that 2.5 to 3% of all billed line items are underpaid. While this number may sound small, it represents a systemic issue across nearly every commercial payer.
What makes Rivet’s approach different is precision. Instead of lumping underpayments into vague categories, Rivet pinpoints exactly where the payer fell short and by how much. This level of detail allows you to move away from anecdotal frustration and toward actionable data (e.g., here are 300 claims that show underpayments).
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When underpayments are uncovered, the average shortfall is $38 per line item. At first glance, that may not seem alarming. But that’s the deceptive part of underpaid claims. Multiply $38 by thousands of line items across hundreds of providers. When you do, you’ll see that the total quickly reaches hundreds of thousands or even millions of dollars per year.
For example, a midsized medical group submitting 20,000 claims a month could experience a conservative 2.5% underpayment rate. Even if only 500 of those line items are short by $38, that’s $19,000 in lost revenue in just one month. And that’s for just one group.
Identifying these issues with Rivet is the first step to stopping the bleed. Download an ebook to learn more about how Rivet Health helps clients overcome high health insurance underpayment rates.
Identifying underpayments is just the beginning. The next step is using that information to prevent future losses and strengthen payer contracts. This is where Rivet’s Payer Performance solution transforms raw data into negotiating power.
By modeling contract changes and comparing reimbursement rates against current benchmarks, Rivet equips you with the context you need to negotiate from a position of strength. You’ll no longer be relying on outdated data or accepting payers’ proposed rates. You can see how your contracted terms stack up against what other organizations in your market are being paid and negotiate for fair terms.
Health insurance underpayment rates drain billions from providers every year. With Rivet’s Payer Performance, you can:
Ready to find out what you can achieve with Rivet Health? Schedule a demo with Rivet Health to learn more about Payer Performance.
