The $14,000 Your Practice Lost Last Quarter Because Nobody Reconciled the Payments

A dental practice owner in Perth showed me something that changed how I think about insurance reimbursement. She had been with the same major health fund for seven years. The contract specified reimbursement rates for every procedure code. She trusted the fund to pay according to the contract.

She did not verify.

When we sat down to reconcile three months of payments against her contracted rates, we found that 23 of the 340 claims paid in that period had been reimbursed below the contracted rate. Not by much — typically $8-$25 per claim. Small enough that nobody would notice on any individual payment. Large enough, in aggregate, that the practice had been underpaid by $4,200 over three months.

Annualised, that is $16,800 in revenue the practice earned, was contractually entitled to, and never received — because nobody checked whether the payments matched the contract.

The health fund’s response when confronted with the discrepancy was revealing: “We’ll review and adjust.” No explanation for why the rates were incorrect. No apology. Just a quiet correction. The underpayment had been occurring for at least eighteen months before anyone noticed, representing over $25,000 in cumulative short-payments.

This is not fraud. It is systematic imprecision in payer payment systems, combined with the knowledge that most practices never verify individual payment amounts against contracted rates. The payers benefit from the imprecision. The practices absorb the loss.

The Reconciliation Gap

The mathematics of reimbursement reconciliation are straightforward but tedious, which is precisely why most practices skip it.

A dental practice seeing 40 patients per day, five days per week, generates roughly 800-1,000 claims per month. Each claim may have multiple procedure codes. Each procedure code has a contracted rate that varies by payer. Verifying that each payment matches the contracted rate requires comparing thousands of line items per month against fee schedules that differ across eight to fifteen payers.

No practice does this manually. The volume is too high and the per-claim variance is too small to justify the time. So practices accept the payments as posted, resolve the obvious errors (complete denials, zero payments), and let the subtle underpayments flow through undetected.

The payers know this. Their payment systems are not designed to underpay systematically — but they are not designed to ensure accuracy either. When errors occur, they are random in direction (some overpayments, some underpayments), but the practice only catches the overpayments (because the payer will claw those back) and rarely catches the underpayments.

Where Reconciliation Breaks Down

The reconciliation process in most practices follows a predictable pattern of diminishing effort:

Week 1 of a new process: The billing coordinator reconciles every payment against the fee schedule. She finds three underpayments totaling $87. She files appeals. She feels productive.

Week 4: The coordinator reconciles most payments. A few slip through because she was handling patient billing questions. She catches one significant underpayment. She files an appeal. The three appeals from week 1 have not been resolved.

Week 8: The coordinator reconciles payments when she has time. She focuses on large payments and spot-checks the smaller ones. She has six outstanding appeals, none resolved. The appeal process feels futile.

Week 12: Reconciliation has stopped. The coordinator is overwhelmed with daily billing, patient questions, and claim submissions. The reconciliation spreadsheet has not been updated in three weeks. Payments are posted and accepted as-is.

This is the lifecycle of manual reconciliation in every practice I have consulted with. The process is too labour-intensive to sustain without automation, and the per-claim variance is too small to create urgency on any individual item. It is only when the cumulative impact is calculated — quarterly or annually — that the magnitude of the leakage becomes apparent.

The Fee Schedule Verification Problem

Before you can reconcile payments, you need to know what you should be paid. This requires maintaining an accurate, current copy of your contracted fee schedule with every payer.

This sounds simple. It is not.

Payer fee schedules change. Contracts are renegotiated. New procedure codes are added. Existing codes are rebased. And the notifications of these changes vary from a formal contract amendment to a buried line in a provider bulletin to no notification at all.

Many practices operate with fee schedules that are two or three years out of date. They are reconciling payments against rates that no longer apply. Underpayments go undetected because the practice is comparing to the wrong benchmark.

The first step in any reconciliation program is to obtain and document the current contracted fee schedule from every payer. Contact each payer’s provider relations department and request your current fee schedule in writing. Store it centrally. Note the effective date. Set a reminder to re-verify annually and whenever the contract renews.

The Appeal Process

When an underpayment is identified and verified, the practice must appeal — and the appeal process is designed to be just inconvenient enough that many practices do not bother.

Each payer has its own appeal submission requirements, its own forms, its own documentation requirements, and its own timeframes. Some require the appeal within 60 days of the payment. Some allow 90 days. Some require a specific form. Others accept a letter. Some require the original claim attached. Others require the contract language citing the applicable rate.

This administrative friction is not accidental. Every barrier to appeal increases the percentage of underpayments that go unchallenged. And unchallenged underpayments become accepted payments — the payer keeps the money, the practice absorbs the loss.

Automated appeal tracking does not eliminate the administrative burden of filing appeals. But it ensures that every identified underpayment gets a follow-up action, that appeal deadlines are tracked, and that the practice does not voluntarily forfeit revenue by letting a deadline expire.

The Contract Negotiation Advantage

The data from systematic reconciliation has a strategic value beyond recovering individual underpayments. It provides the evidence base for contract negotiations.

When a payer contract comes up for renewal, most practices negotiate from a position of limited information. They know their volume with the payer. They know the current rates. They have a general sense of whether the relationship is profitable.

With reconciliation data, the practice knows: the payer’s payment accuracy rate, the average days to payment, the total underpayment amount over the past year, the most frequently underpaid procedure codes, and the payer’s appeal response time and success rate.

This data transforms the negotiation. Instead of “we’d like higher rates,” the conversation becomes: “Your payment accuracy on our top 20 procedure codes is 96.3%, which means we’re absorbing $12,000 annually in underpayments. Your average payment time is 47 days versus our payer average of 32 days. We need contracted rates that reflect the administrative cost of reconciling your payments.”

Payers respond to data. They do not respond to feelings. The practice that brings reconciliation data to a contract negotiation is the practice that gets better terms.

Building Reconciliation Into the Revenue Cycle

Reimbursement reconciliation should not be a separate project. It should be a step in the existing revenue cycle: claim submitted, payment received, payment reconciled, discrepancies flagged, appeals filed.

The practices that sustain reconciliation long-term are the ones that integrate it into the daily payment posting workflow rather than treating it as a periodic audit. When posting payments becomes “post and verify” rather than just “post,” the incremental effort per claim is small — seconds, not minutes — and the cumulative accuracy improvement is significant.

The revenue you have already earned, for work you have already performed, under contracts that specify the exact amount you should be paid — collecting that revenue is not aggressive or adversarial. It is arithmetic. The payer agreed to pay a rate. You verified the rate was paid. When it was not, you asked for the difference. There is nothing to apologise for in that process, and the practice that systematises it will recover thousands of dollars annually that would otherwise quietly disappear.