Regular auditing of payer payments crucial to ensure accurate reimbursement

As operational costs rise, ensuring that payers reimburse your practice at contracted rates is more important than ever. However, many organizations face ongoing discrepancies between expected and actual payments, leading to revenue leakage that can significantly impact financial stability.

Regular audits of payer payments versus contracted rates are essential to safeguarding revenue integrity and maintaining the financial health of healthcare organizations.

A Feb. 11, 2025, MGMA Stat poll found that nearly half (48%) of medical group practice leaders report auditing payer payments versus contracted rates either monthly (30%) or quarterly (18%), while another 30% do so annually and 23% responded “other.” The poll had 193 applicable responses.

The latest poll finds a slight uptick in the share of practice leaders who audit payments monthly, up from 26% in a January 2023 poll. This growing number of respondents compared to previous polls note they have stepped up their work due to increasingly common discrepancies in reimbursement versus contracted rates. “It’s ridiculous how often [payer] payments are incorrect,” one practice leader told MGMA. “Clinics [that] do not audit at least weekly are losing money.”

When asked about their organizations’ top challenges in auditing payer payments, MGMA Stat users noted:

• Staffing and bandwidth issues: Several respondents mentioned staffing limitations, time constraints and bandwidth challenges when handling audits. Some noted that they no longer conduct audits in-house due to resource constraints.
• Technology and system limitations: Issues with EHR and PM systems were cited, including difficulties in loading contracts, lack of effective auditing tools, and reliance on manual processes due to software limitations.
• Payer-related challenges: Respondents mentioned difficulties with payers, particularly managing multiple fee schedules from different insurers; transparency issues and underpayment concerns; and complexities with Medicare Advantage and out-of-network claims.

MGMA member benefit: Physician Fee Schedule Tool

Optimize your contract negotiations using MGMA’s Physician Fee Schedule Tool. This updated platform helps you compare fee schedule versions across years, customizing CMS fee schedules by locality and non-Medicare payment rate. Select top procedure codes by specialty, informed by MGMA data. Easily save, export and access custom tables via the web interface.

The importance of payment audits across payer types

Each payer has a particular reimbursement structure, and discrepancies can arise due to claim processing errors, contract misinterpretations, or outdated fee schedules. Without timely audits, providers may be underpaid without realizing it or face costly delays in identifying and rectifying payment shortfalls.

Payer payment audits are especially important for:

• Commercial insurers, which frequently update fee schedules and may apply different reimbursement methodologies.
• Medicare and Medicaid, where strict regulatory requirements and reimbursement rate changes can create billing challenges.
• Managed care organizations, which often use complex capitation models or bundled payment arrangements that require careful monitoring.

Risks of not auditing payments against contracted rates

Failing to audit payments can have several negative consequences:

• Revenue loss: Even small discrepancies in payment rates can add up to substantial losses over time, reducing overall revenue.
• Compliance risks: Inaccurate payments may lead to billing compliance issues, increasing the likelihood of payer audits and potential penalties.
• Cash flow disruptions: Unidentified underpayments can strain cash flow, making it harder for practices to manage expenses and invest in patient care.
• Weakened payer negotiations: If providers lack accurate data on payer payment performance, they may be at a disadvantage when renegotiating contracts.

Auditing payer payments: Key steps

To mitigate financial risk, establish a structured process for payer payment review against contracted rates. Here’s how:

1. Collect and maintain fee schedules. Ensure that the latest payer fee schedules are obtained and stored in a centralized system. Regularly update fee schedules to reflect contractual changes and reimbursement rate adjustments. Assign a team member or department to manage payer contracts and fee schedules to ensure consistency.

2. Monitor payments against contracted rates. Utilize practice management (PM) or revenue cycle management (RCM) systems to track payments. Set up automated alerts to flag discrepancies between payments received and contracted rates. Conduct periodic audits to identify trends in underpayments or denials.

3. Perform detailed payment audits. Conduct audits on a monthly, quarterly or semi-annual basis, depending on organizational capacity. Sample a representative portion of claims across different payers to assess accuracy. Identify patterns of errors such as incorrect adjustments, bundling issues, or payer-specific claim adjudication problems.

4. Engage with your payers to resolve discrepancies. Establish clear procedures for appealing underpayments and claim denials. Maintain documentation of audited claims and communications with payers. Leverage these reports to support renegotiations with insurers if persistent underpayments occur.

As reimbursement structures complexify and expenses rise, regularly auditing payer payments against contracted rates is no longer optional — it’s a necessity. Practices that establish effective auditing processes can enhance revenue integrity, improve financial stability and strengthen their ability to negotiate fair contracts with payers.

Join MGMA Stat

Your contributions are vital to MGMA’s ongoing work to provide great resources, education and advocacy for medical group leaders. Sign up for MGMA Stat to make your voice heard in our weekly polls. Simply text “STAT” to 33550 or visit mgma.com/mgma-stat. Polls will be sent to your phone via text message.