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


 Your billed charge for Procedure X


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


 ABC HMO paid you only


 The amount underpaid on the contracted rate


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


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


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Last Updated On

November 17, 2021

Originally Published On

March 23, 2010