The Claim Was Paid. So Why Is Your Revenue Still Wrong?

A claim goes out. A payment comes back. The balance drops to zero, and the account closes. In most billing systems, that is where the story ends.

Nobody opens the remittance line by line, because there is nothing to chase. There is no denial, no rejection and no work item in anyone’s queue. The claim looks finished.

But a zero balance only tells you that your system reconciled what the payer sent against what the payer said it allowed. Unless your practice has expected reimbursement loaded and compared against payments, it does not tell you whether that allowed amount matches the contract you signed. If the allowed amount is lower than the contracted rate, the difference can be treated as a contractual adjustment and written off, often automatically.

Most practices know what they are owed on denied claims. Far fewer know what they are owed on claims that were paid, but paid incorrectly.

What a Short Payment Looks Like on the Remittance

On an electronic remittance (835), adjustments are reported with a group code and a reason code. The group code CO indicates a contractual obligation assigned to the provider, meaning the amount cannot be billed to the patient. CARC 45 is used when the charge exceeds the applicable fee schedule, maximum allowable, or contracted arrangement.

For most lines, that is exactly what should happen. The trouble is that the remittance can look perfectly normal whether the allowed amount is right or wrong. The difference only becomes visible when the payment is compared with the rate the contract actually requires.

How Often Are Paid Claims Actually Audited?

The size of the leakage varies widely by practice and payer mix, so an industry-wide percentage is less useful than a simple question: do your payments match your contracts?

A February 2025 MGMA Stat poll asked medical group leaders how often they audit payer payments against contracted rates. Thirty percent said monthly and 18% said quarterly. Another 30% said annually, and 23% chose “other.” The poll had 193 applicable responses.

The challenges respondents named were practical ones: limited staff time, difficulty loading contracts into practice management systems, reliance on manual processes, and the effort of tracking multiple fee schedules from different payers. In other words, the check is skipped because it is hard, not because it is unimportant.

Five Ways a Paid Claim Can Be Wrong

1. The payer pays below the contracted rate

The simplest version. The contract says one amount and the payer’s system pays another. An older Physicians Practice analysis noted that errors tend to enter when a contract is loaded into the payer’s adjudication system, a step that has often been manual.

On the remittance: allowed amounts a few percent short across a code family, or across every claim for one plan.

2. The wrong fee schedule or effective date is applied

Contracts change. Rates renew, escalators take effect, and fee schedules are updated. A payer that keeps paying a renewed contract at the previous year’s rates will shave every affected line by a small amount, and each claim still shows as paid.

On the remittance: a variance that begins on a specific date and stays constant afterward.

3. The payer maps your contract to the wrong plan or product

One payer often means several products, networks, and fee schedules. If your group is attached to the wrong product, or a plan is routed to a different network’s rates, the payment looks plausible. It is the right kind of number, just not the right number for your contract.

On the remittance: variances concentrated in one plan or product line while other plans from the same payer pay correctly.

4. Bundling and payer edits reduce payment

A reduced line is not automatically an underpayment. The test is what the contract says the payer may do.

Correct coding edits are a legitimate part of payment, and the CMS National Correct Coding Initiative publishes code pairs that should not be reported together unless a permitted modifier applies. Some payers add their own editing rules on top, and published payer policies show that certain plans may decline to honor bypass modifiers on specified code pairs. Whether that is valid depends on how your contract handles editing. Separate the reductions the contract allows from the ones it does not before disputing anything.

On the remittance: a second procedure paid at zero or a reduced rate, or an E/M with modifier 25 paid at a lower level.

5. An outdated contract term or amendment is still in force

A fee schedule is only part of a contract. Amendments, annual escalators, and carve-outs for specific services each have to be loaded separately. When one is missed, claims are paid under the terms that were loaded, and the claim still closes as paid. Industry case examples have described claims continuing to pay at a prior-year contract rate after renewal.

On the remittance: a whole category of service paid at the old rate after an amendment date.

One caution applies to all five. Some shortfalls are correct. If your contract pays the lesser of billed charges or the allowed amount, and your charge was lower, the payment is right. Filter these out first, or you will spend disputes on claims you would lose.

A Worked Example

For illustration only.

A group’s contract allows $128.00 for an established-patient office visit. Because of an amendment that was never loaded, one payer pays it at $118.40. The remittance reports the contractual adjustment, and the line posts as fully adjudicated. Nothing enters the denial work queue.

Only the contract comparison reveals the $9.60 variance: 7.5% on every visit. If that payer accounts for 6,000 of these visits a year, the practice is short $57,600 on one code from one payer, without a single denial.

Why Nobody Looks

Three habits keep this hidden. Work queues are built around denials, so paid claims never enter them. A line-by-line comparison needs the contract terms in a usable form, and those often live in a PDF, not in the billing system. And individual variances are small enough that no one investigates them until they are added up over a year.

How to Find It

Establish the contract baseline first. Before auditing any claim, record exactly what the contract says: the payer, the product, the provider or group, the effective date, the code, the modifier, the place of service, and the payment methodology. Without this, your team may compare a claim against the wrong fee schedule and create false variances of its own.

Build expected reimbursement. From that baseline, calculate the contracted amount expected for each line. Start with the payers that account for most of your collections, since a small percentage error costs the most there.

Compare at the line level. Claim totals average out errors. Match the allowed and paid amounts from each 835 to your expected amounts, one service line at a time.

Set a tolerance. Flag variances above a threshold you choose, so rounding differences do not bury the real problems.

Sort the variances by cause. Group them by payer, product, code, and date of service. A single wrongly loaded rate produces a pattern. Random noise does not.

Remove the valid ones. Lesser-of payments and reductions your contract permits should be excluded before anything is disputed.

Repeat on a schedule. Monthly keeps errors small. A yearly review finds twelve months of the same mistake.

When the review reveals a pattern, document it before approaching the payer. Keep the contract provision, expected amount, remittance detail, affected claims, and variance together. A clear record makes it easier to determine whether the issue is isolated or systemic and gives the practice a stronger basis for follow-up.

For practices that do not have the staff or systems to perform this analysis routinely, WCH can help review payer payments, identify recurring variances, and organize the documentation needed for payer follow-up.

Working the Variances

Handle systematic errors and one-off errors differently.

If a payer has the wrong rate loaded, disputing claim by claim is slow and often unnecessary. Take the pattern to your provider representative with the contract language, representative remittances, and a complete list of affected claims, and ask for the rate to be corrected and the claims reprocessed.

For one-off variances, a dispute supported by the specific contract language and representative remittances is easier to substantiate than a general complaint about payment. Check your contract for the dispute window before you start, because it varies and can be short.

Keep a record of what you found, what you disputed, and what came back. The same log becomes useful evidence at renewal.

What to Track

The percentage of paid lines that fall below the expected amount
The dollar variance as a share of expected reimbursement, by payer
The share of variances recovered, and how long recovery takes
How often the same cause returns after it has been fixed

If the same cause keeps returning, the fix is not being made at the source.

The Point

A denial tells you what the payer refused to pay. A payment audit tells you whether the payer paid what it agreed to pay. Those are not the same question, and most revenue cycles only ask the first one.

The first step costs very little. Pick one payer, take one month of remittances, and compare a single high-volume code against the contract.

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