Ask a billing office whether a payer is paying correctly and the honest answer is usually "the remittances post." Posting is not verification. A remittance that says allowed $96.40 posts just as cleanly whether the contract said $96.40 or $112.15, and if the expected amount is not in the system, nobody will ever know. In audits, we find that most practices have no fee schedule loaded for at least one of their top five payers, and that the Medicare schedule loaded is a year or two old.
June is a good time to fix this. Half the year has been paid, so the variance report will have enough lines to show patterns, and most commercial contracts allow recovery of underpayments for 12 to 24 months, so nothing from January is lost yet. Here is how we do the work.
Key takeaways
- Medicare has two conversion factors in 2026: $33.5675 for qualifying APM participants and $33.4009 for everyone else. Load the right one per provider.
- Read each commercial contract's compensation exhibit and record the base schedule year, modifier rules, reductions and escalator dates.
- Run the variance for January through May, on paid lines only, sorted by dollars and grouped by payer and code.
- Recover systematically: one spreadsheet per payer, a project number from provider relations, a letter citing the contract.
- Then run the report monthly. Underpayments found in 30 days are conversations; after 18 months they are write-offs.
Start with Medicare, which has two rates this year
For the first time, the 2026 Medicare Physician Fee Schedule has two conversion factors. Clinicians who are qualifying participants in an advanced alternative payment model are paid at $33.5675 per relative value unit, a 3.77 percent increase over 2025; everyone else is paid at $33.4009, a 3.26 percent increase. Both include the one-year 2.5 percent increase Congress enacted in last July's reconciliation law and a 0.49 percent budget neutrality adjustment; the difference between them is the statutory annual update, 0.75 percent for qualifying participants and 0.25 percent for the rest. Both also reflect the efficiency adjustment of negative 2.5 percent that CMS applied to the work RVUs and intraservice time of most non-time-based services, which is why a procedure-heavy practice may see less than a 3 percent increase on its actual mix. The 2 percent sequestration reduction still applies to the payment after the patient's coinsurance is calculated.
Load the correct conversion factor for each provider (most independent practices are at $33.4009), the 2026 RVU file, and your locality's geographic practice cost indices. Then check the loaded allowed amount for 99214 against the Medicare Administrative Contractor's published fee schedule lookup for your locality. If those two numbers do not match to the penny, the load is wrong and every downstream comparison will be too.
Then the commercial contracts
Most commercial contracts pay one of three ways: a percentage of a stated Medicare year (for example, 115 percent of the 2024 Medicare fee schedule for the practice's locality), a proprietary fee schedule attached to the contract as an exhibit, or a percentage of the payer's own fee schedule, which the contract may not include and which you must request. Read each contract's compensation exhibit and record, for each payer:
| Field | Why it matters |
|---|---|
| Base fee schedule and year | 115 percent of 2024 Medicare is not 115 percent of 2026 Medicare; the year is often frozen |
| Multiple procedure reduction rules | Many contracts follow Medicare (100 percent, then 50 percent); some do not |
| Modifier payment rules | Modifier 50 at 150 percent, assistant surgery at 16 percent, modifier 25 with or without reduction |
| Site-of-service differential | Whether office procedures pay non-facility rates |
| Annual escalator and effective date | A 3 percent increase effective March 1 that was never applied is a common finding |
| Timely filing and underpayment recovery windows | Determines how far back you can go |
Load each schedule into the practice management system as an expected-payment table. If your system does not support expected payments by payer, a spreadsheet with the top 50 codes by volume per payer covers most of the dollars. In our experience the top 50 codes account for 85 to 90 percent of allowed dollars at a typical office practice, so the spreadsheet is not a compromise; it is most of the answer.
Run the variance report
For dates of service January 1 through May 31, 2026, compare the payer's allowed amount on each line to the expected allowed amount. Exclude lines with patient responsibility issues, denials and non-covered services; you are looking at lines the payer paid, and asking whether it paid the right amount. Sort by variance dollars and group by payer and CPT code.
What you will find, in our experience, falls into a few buckets. Payers still on last year's fee schedule after a contract escalator took effect. Multiple-procedure reductions applied to codes exempt from them. A modifier 25 reduction the contract does not allow. Bilateral procedures paid at 100 percent instead of 150. An old, lower rate on a single code that was mis-keyed when the payer loaded the contract. Individually, $8 to $40 a line. Across five months and a busy practice, five figures.
A worked example
Consider a three-provider gastroenterology practice that loads its four largest contracts in June and runs the variance for January through May.
| Payer | Finding | Lines affected | Average shortfall | Five-month variance |
|---|---|---|---|---|
| Payer 1 (largest commercial) | March 1 escalator of 4.1 percent not applied to colonoscopy codes | 620 | $23 | About $14,000 |
| Payer 2 | Screening colonoscopy with modifier 33 paid at the diagnostic rate | 140 | $61 | About $8,500 |
| Payer 3 | No variance found | 0 | $0 | |
| Payer 4 | Contract references "the payer's standard fee schedule" with no exhibit; nothing can be checked until it is produced | Unknown | Unknown | Unknown |
The first payer is a bulk reprocessing request: one call, one spreadsheet, one project number. The second is a policy dispute that takes a contract citation and a conversation with the payer's medical director, because the payer will argue its reimbursement policy governs. The third is good news and worth noting, because it tells you the loading method works. The fourth is the finding most practices skip and should not: a written request for the fee schedule, with a date, starts the clock on the payer's obligation to produce it, and until it arrives you are paying that payer's rates on faith.
Recovering the money
- Group the underpaid lines by payer and root cause. One spreadsheet per payer, with claim numbers, dates of service, paid, expected and variance.
- Call provider relations, describe the pattern, and ask for a project number. Systematic underpayments are usually reprocessed in bulk once the payer acknowledges the cause; do not appeal 620 claims individually.
- Follow with a letter citing the contract section, the escalator date and the spreadsheet. Keep the recovery window in mind; some contracts limit the practice to 12 months while allowing the payer 24 to recoup.
- Fix your side. If the mis-keyed code was in your own charge master, or the modifier was yours, correct it forward.
- Set the variance report to run monthly. Underpayments found within 30 days are conversations; underpayments found after 18 months are write-offs.
Keeping the tables current
A fee schedule table is only useful if someone owns it. Assign one person to update Medicare each January (and mid-year if Congress acts, as it did in 2025), to load each commercial escalator on its effective date, and to record the date and source of every change. Put the contract renewal dates and escalator dates on the same calendar as the code set updates. The practices that find underpayments every quarter are not cleverer than the ones that never find any; they are the ones where the expected amounts are right.
Our RCM audit loads the top contracts and runs this variance analysis as a standard step, and our billing clients receive the variance report monthly. Rates are on the pricing page.
Questions we hear
The contract says a percentage of Medicare. Which Medicare?
Whatever year and locality the contract names. If it names none, ask the payer in writing which schedule they use and load that. Ambiguity favors the payer until you resolve it.
We found underpayments but the payer says the contract was amended. What now?
Ask for the amendment and the signature. Payers do send unilateral amendments with 30- or 60-day objection windows, and practices often miss them. If you cannot find it and they cannot produce it, the original terms govern. This is a contract question; involve counsel if the dollars are large.
Our system shows an expected amount already. Can we trust it?
Check where it came from. Many systems populate "expected" from the payer's own historical allowed amounts, which means the expected amount is whatever the payer paid last time, including the underpayment. An expected-payment table has to come from the contract, not from the remittance history.
What to do this month
- Load the 2026 Medicare conversion factor, RVU file and locality indices, and verify 99214 to the penny against the MAC lookup.
- Pull the compensation exhibit from each of your top five contracts and fill in the six fields above.
- Build the expected-payment table, or the top-50 spreadsheet, for each payer.
- Run the January through May variance on paid lines and sort by dollars.
- Open a reprocessing project with the payer showing the largest systematic shortfall, and send the written fee schedule request to any payer whose contract has no exhibit.
- Name the owner of the fee schedule tables and put the escalator dates on the calendar.
