How Malakos Healthcare Solutions Recovered $94,000 in Underpayments for a Pain Management Practice Through Payment Reconciliation

Practice type: Interventional pain management Providers: 1 pain management physician, 1 CRNA Location: United States Monthly claim volume: Approximately 650 claims per month Situation at engagement: Payment posting managed in-house with no contracted rate reconciliation Discovery method: Free billing audit initiated by the practice owner Timeline: 6 months from audit to full reconciliation program running Total underpayments recovered: $94,000 across 18 months of retroactive review (Underpayments for a Pain Management Practice)

How This Started

The practice owner had been in solo pain management practice for eleven years. He had a physician anesthesiologist colleague — the CRNA — who joined the practice four years ago. The patient volume was solid, the procedures were high-complexity and high-value, and collections were stable.

He didn’t contact Malakos because something was obviously wrong. He contacted us because a colleague had mentioned, at a state medical society meeting, that her billing company had recently recovered $60,000 from a single payer through a payment dispute process she’d never heard of before.

“She described it as a contracted rate reconciliation,” he told us. “And I realized I had no idea what my contracted rates actually were. I knew roughly what certain payers paid me. But I’d never compared a payment to the contract.”

That was the beginning.

The Audit — What We Found

When Malakos conducted the initial billing audit, the practice’s collections process looked standard: claims submitted, ERAs received, ERA auto-posted in the EHR billing system, contractual adjustments applied automatically, balances zeroed out. Clean. Efficient. And completely unverified.

The auto-posting workflow had been set up by the previous billing software vendor. Contractual adjustment amounts were drawn from a fee schedule table in the system that hadn’t been updated since 2021. Every payment that arrived was processed against a three-year-old fee schedule — and whatever the difference was between the payment and the 2021 allowable was written off as a contractual adjustment.

When we compared the practice’s current payer contracts against the auto-posted adjustments, the discrepancies were systematic and substantial.

Payer A — Aetna Commercial (Largest Commercial Payer, 28% of Volume)

Aetna’s contract with this practice had been renegotiated in 2023. The new contract increased allowed amounts by approximately 8% across most interventional pain procedure codes. The billing system’s fee schedule table had never been updated to reflect the new contract.

Result: Every Aetna claim since the 2023 contract update had been auto-posted against the old (lower) allowed amounts. The difference between what Aetna was contractually required to pay and what was being posted as the contracted amount was being written off as a standard contractual adjustment.

The practice had been accepting payment at old contract rates for over two years — not because Aetna was underpaying, but because the system was reconciling against a fee schedule that no longer matched the current contract.

18-month underpayment on Aetna claims: $31,400.

Payer B — BCBS Commercial Plan (Second Largest Commercial Payer, 22% of Volume)

The BCBS contract specified a 50% reduction on secondary procedure units when multiple interventional procedures were billed in a single session. Pain management procedures frequently involve multiple same-session services — an epidural steroid injection plus imaging guidance, or a facet injection at multiple levels.

A six-month ERA review showed that BCBS was applying a 55–60% reduction on secondary procedure units rather than the contracted 50%. The overapplication wasn’t consistent — it appeared on specific procedure combinations and not others — which made it invisible without systematic comparison.

The most affected combination: transforaminal ESI (CPT 64483) plus imaging guidance (CPT 77003) billed same-session. On these claims, BCBS was applying a 58% reduction on the imaging guidance allowable instead of 50%. The 8% difference on each qualifying claim was small. Across 18 months of billing at the practice’s ESI volume, it added up.

18-month underpayment on BCBS secondary procedure reductions: $22,800.

Payer C — Medicare Advantage Plan (Third Party Payer, 19% of Volume)

This Medicare Advantage plan had a participation agreement that referenced a fee schedule indexed to Medicare rates. The contract specified reimbursement at 105% of the applicable Medicare Physician Fee Schedule rate.

When we pulled the actual payment amounts from the prior 12 months of ERA data and compared them to 105% of the applicable Medicare allowables, 23 CPT codes showed consistent payment at exactly 100% of Medicare — not 105%. The billing system had been reconciling these claims against the Medicare rate (100%) because that was the fee schedule reference in the system, and the 5% differential was being absorbed into the contractual adjustment line on every applicable claim.

The practice had a contract that explicitly promised 105% of Medicare rates. It had been paid 100% on affected codes for at least a year. The difference — 5% of Medicare allowable across all applicable MA claims — had been silently written off as part of routine payment posting for every billing cycle.

12-month underpayment on Medicare Advantage claims: $28,600.

Payer D — Workers’ Compensation Carrier (Intermittent Payer, 8% of Volume)

Workers’ compensation billing operates differently from commercial insurance — fee schedules are state-mandated, not contractually negotiated. WC carriers are required to pay the state fee schedule rate for covered services.

A review of WC payment history identified a pattern: for interventional procedures performed under fluoroscopic guidance, the WC carrier was consistently paying the procedure code at the state fee schedule rate but not separately reimbursing the imaging guidance code (77003) despite the state fee schedule listing 77003 as a separately billable service.

The practice had been billing 77003 on WC claims. The carrier was posting the imaging guidance payment at zero without issuing a denial — the ERA showed the procedure paid, the guidance paid at $0.00 with an adjustment code, and a zero balance. Because no denial was generated, nobody had flagged it as a problem.

12-month underpayment on WC imaging guidance codes: $11,200.

Audit Summary

Payer	Issue	18-Month Underpayment
Aetna Commercial	Fee schedule not updated post-contract renegotiation	$31,400
BCBS Commercial	Multiple procedure reduction above contracted percentage	$22,800
Medicare Advantage	Payment at 100% Medicare vs. contracted 105%	$28,600
Workers’ Compensation	Imaging guidance paid at $0 without denial	$11,200
Total		$94,000

The practice owner’s response when we presented these findings was quiet for a moment.

“This money was in my contract. Literally in writing. And I was writing it off.”

Yes. Not because the payers were acting in bad faith in every case — the Aetna situation was a billing system error the practice had created, not a payer intentionally underpaying. The BCBS reduction percentage was the payer applying a rate that exceeded the contract. The Medicare Advantage situation was a payer paying at a rate below the contract. The WC situation was a carrier using a $0 payment instead of a formal denial to effectively avoid paying a separately billable code.

Each had a different cause. All four had the same result: money owed to the practice that was being written off every month because no one was comparing what arrived to what was owed.

The Reconciliation Program — How We Built It

After the audit, Malakos implemented a structured payment reconciliation program for the practice. This wasn’t a one-time fix — it was a systematic change to how payments were posted and verified.

Step 1 — Current Contract Assembly

We collected the current signed participation agreements from every payer in the practice’s mix — not the old fee schedule tables in the billing system, but the actual executed contracts. For payers where the contract had been amended or renegotiated, we identified the current effective rate schedule.

This sounds basic. For most practices, it isn’t. The current contracts were in the practice manager’s email, in a filing cabinet, in a vendor portal, and in a few cases had to be re-requested from the payer because the practice didn’t have a current copy. Building a complete contract file was two weeks of administrative work that the practice had never done systematically.

Step 2 — Fee Schedule Verification and Update

We compared every CPT code in the practice’s charge master against the contracted allowables in each payer agreement. For Aetna, the 2023 renegotiated rates were loaded into the billing system’s fee schedule table — replacing the 2021 rates that had been generating incorrect auto-posting for two years.

For the Medicare Advantage plan, we documented the 105% contractual rate and built a post-payment verification step specifically for MA claims.

Step 3 — ERA Review Workflow

Every ERA received is now reviewed against contracted rates before adjustments are posted — not just auto-posted. The review process:

For standard commercial claims: Payment per code compared to contracted allowable. When payment equals allowable, adjustment is posted normally. When payment falls below allowable (before contractual adjustments), the variance is flagged.

For multiple procedure claims: Secondary procedure reduction percentages checked against the contracted reduction rate for that specific payer. BCBS’s secondary procedure reductions are now verified against the 50% contracted rate on every multi-procedure pain management session.

For Medicare Advantage claims: Payments compared to 105% of the applicable MPFS rate for every code on every claim. Payments at 100% that should be at 105% are flagged immediately.

For WC claims: Every WC ERA reviewed for imaging guidance code payment specifically. When 77003 appears with a $0 payment and no formal denial, a dispute is initiated the same business day.

Step 4 — Dispute Filing Process

When a payment variance is identified, the dispute is filed within five business days. The dispute documentation includes:

The specific claim(s) affected
The CPT code(s) with the underpayment
The contracted rate per the participation agreement (with contract page reference)
The actual payment amount
The calculated underpayment
A request for corrected payment on all affected claims within the payer’s dispute resolution window

For payers with online dispute portals, disputes are filed electronically with attached documentation. For payers requiring written dispute submissions, formal letters are prepared with supporting contract documentation.

Step 5 — Dispute Tracking and Escalation

Every open dispute is tracked with: submission date, payer, claim(s) involved, underpayment amount, and expected resolution timeline. Disputes not resolved within the payer’s standard resolution window (typically 30–60 days) are escalated — first to the payer’s provider relations department, then to the state insurance commissioner’s office for commercial payer contract violations that aren’t resolved through internal dispute channels.

The Recovery — 6 Months After Implementation

Aetna — $31,400 retroactive underpayment: We submitted a formal retroactive underpayment dispute to Aetna covering 24 months of claims under the new contract rate. Aetna’s contracts typically allow 12-month retroactive disputes; we also filed under the Prompt Pay Act provisions applicable in the practice’s state for the period beyond 12 months. Aetna acknowledged the fee schedule discrepancy as a billing system error and processed corrected payments covering 18 months of claims — $28,200 recovered. The 6-month period outside the dispute window ($3,200) was documented as unrecoverable.

BCBS — $22,800 retroactive underpayment: BCBS’s dispute process for overapplied multiple procedure reductions required contract documentation showing the specified 50% rate. We submitted 8 months of ERA data with the variance calculation and the contract language specifying 50%. BCBS accepted the dispute on 6 months of claims and disputed the calculation on 2 months. Total recovered: $18,400. The 2-month contested period ($4,400) was escalated to the payer’s formal dispute resolution process — still pending at 6-month mark.

Medicare Advantage — $28,600 retroactive underpayment: The MA plan’s dispute process was the most formal. We filed a written dispute with the plan’s provider dispute department, including the participation agreement language specifying 105% of MPFS, twelve months of ERA data showing 100% payment on affected codes, and a calculated underpayment summary by CPT code. The plan acknowledged the contractual discrepancy and processed corrected payments for 12 months of claims. Total recovered: $26,800. $1,800 involved claims outside the plan’s retroactive dispute window.

Workers’ Compensation — $11,200 retroactive underpayment: WC disputes are handled differently than commercial disputes — through the state’s workers’ compensation fee schedule dispute process. We filed formal dispute documentation for 8 months of WC claims where imaging guidance had been paid at $0 without formal denial. The state WC board’s dispute process confirmed that 77003 was a separately billable service under the state fee schedule and directed the carrier to process corrected payments. All $11,200 recovered.

Total recovered at 6-month mark: $84,600 of the $94,000 identified

The remaining $9,400 involved claims in the contested BCBS period and Aetna claims outside the dispute window. These were documented and the BCBS escalation was ongoing.

Ongoing Results — What Payment Reconciliation Looks Like Now

At the 12-month mark after full implementation, the payment reconciliation program had changed the financial profile of payment posting in two measurable ways.

No underpayments written off without review. Every payment variance is identified at posting and either confirmed as a legitimate contractual adjustment or flagged for dispute within the same billing cycle. The category of “underpayment accepted because nobody checked” has been eliminated from the billing workflow.

Monthly underpayment recovery averaging $4,200. New underpayments — primarily BCBS secondary procedure reductions at incorrect percentages and occasional Medicare Advantage rate discrepancies — are being identified and disputed monthly. The retroactive recovery was a one-time event. The ongoing recovery reflects a payment environment where payer payment accuracy is monitored continuously.

Contract file maintained as a living document. When contract amendments are received, the fee schedule tables in the billing system are updated within 30 days of the effective date. The Aetna situation — two years of incorrect posting because a contract update wasn’t loaded — will not recur.

The practice owner’s 12-month assessment:

“The $94,000 was obviously significant. But what changed more fundamentally is that I now know what my contracts say and whether my payments reflect them. For eleven years I posted payments and assumed they were correct. I never had any reason to question them because nobody had ever shown me they were wrong. Now we check every payment. That’s not a special project. That’s just how billing works here now.”

Key Takeaways

Contracted rate reconciliation is not optional — it’s the only way to identify underpayments. Payers do not volunteer corrections when they underpay. Auto-posting workflows accept whatever arrives without comparison. The difference between a payment that’s correct and one that isn’t is invisible until someone compares the payment to the contract.

Fee schedule tables must be updated when contracts change. Contract renegotiations don’t automatically update billing system fee schedules. When a new contract is signed, the fee schedule table update must happen within the same 30-day window — not eventually, not when someone notices the numbers look off.

Multiple procedure reduction percentages are the most common underpayment in pain management. Every interventional pain practice billing multiple procedures per session is at risk for overapplied secondary procedure reductions. The contracted reduction percentage varies by payer. Verifying it on every multi-procedure session ERA is the only way to catch overapplication.

Workers’ compensation $0 payments without denial are a specific billing tactic — not an accident. When a WC carrier pays a claim at $0 on a specific code without issuing a formal denial, there is no denial to appeal. The billing system shows a zero balance. The revenue is gone unless someone specifically identifies the $0 payment and initiates a dispute through the WC dispute process. This requires a billing team that reviews WC ERAs line by line, not just balance to zero.

Retroactive dispute windows are real recovery opportunities. Most commercial payers allow 12–18 month retroactive dispute windows for underpayments. When a systematic underpayment is identified, the retroactive period is where the largest recovery occurs — the ongoing correction prevents future underpayments, but the retroactive recovery is where the accumulated loss is addressed.

Does Your Practice Have Underpayments You Don’t Know About?

If your practice bills multiple procedures per session, has had a contract renegotiation in the past two years, bills a Medicare Advantage plan, or manages workers’ compensation claims — there is a meaningful probability that underpayments are being written off in your billing operation right now.

The only way to know is to compare your actual payment history against your actual contracted rates. That’s what a Malakos billing audit does — and it’s free.

No commitment. No obligation. Just a clear picture of what your payers are paying you vs. what your contracts say they should.

Schedule Your Free Pain Management Billing Audit

📞 +1 (307) 441-3431 ✉️ support@malakoshcs.com 📍 Cheyenne, Wyoming — Serving interventional pain practices across the United States

This case study represents outcomes from a real payment reconciliation engagement. Practice identifying details have been generalized to protect confidentiality.