How to Calculate Underpaid Amount in Prompt Pay Rules

 

 

 

 

Even if the insurance company pays on time but underpays you - if it doesn't pay in full by the statutory deadline, it still must pay you a penalty based on the number of days the payment is late and the underpaid amount of the claim.

Do you know how to calculate the underpaid amount? Use this formula.

Amount underpaid on the contracted rate   x  Billed charges = Underpaid amount
           Amount of contracted rate

Example

 

 Your billed charge for Procedure X

$1,500

 The amount of your contracted rate with ABC HMO for Procedure X

 $1,000

 ABC HMO paid you only

 $800

 The amount underpaid on the contracted rate

 $200

The HMO has underpaid by 20 percent. Multiply this by your billed charge to calculate the underpaid amount, which in this example is $300.

 

  $200    x  $1,500 = $300
$1,000

 

 


To find how the time frame affects the penalty amount, read the prompt pay rule (28 TAC §2185).

 

 

Return to e-tips sign-up page


Comment on this (Must be logged in to comment)

Add Comment

Text Only 2000 character limit

Looking for more?