Notes on payer behavior

Medicare Advantage paid you below Medicare rates. What you're actually owed, and how to dispute it

Clearia · October 2026 · Medicare Advantage, underpayments, appeals

A Medicare Advantage underpayment is an MA plan paying less than it owes. What it owes depends on one fact. If you have no contract with the plan, federal rules generally require it to pay what original Medicare would have paid, less the patient's cost sharing. If you're contracted, the contract sets the rate, even when that rate is below Medicare.

That one fact, contracted or not, decides everything else: what the right number is, which document proves it, where the dispute goes, and how long you have. Practices get this wrong in both directions. Some contracted practices dispute payments that match a below-Medicare contract. More often, non-contracted practices accept a plan's "out-of-network rate" that comes in under the Medicare fee schedule, because nobody checked the fee schedule.

Contracted or not: the question that decides the rest

Contract status is plan by plan, and sometimes product by product. A practice can be in network for a payer's commercial plans and out of network for its MA plan, or contracted for the HMO and not the PPO. Check the specific MA plan on the claim before anything else.

What "the original Medicare amount" actually means

For a non-contracted physician practice, the benchmark is what a Medicare contractor would have allowed for the same claim. That's more specific than "the Medicare rate." It means:

• The right year. The fee schedule in effect on the date of service, including mid-year updates.
• The right locality. Medicare pays different amounts by geographic locality. Florida's are below.
• The right setting. Non-facility rates for the office, facility rates for hospital and surgery-center settings, driven by the place of service on the claim.
• Your Medicare status. A Medicare-participating physician is measured against the participating amount. A non-participating physician is measured against the lower non-participating amount.
• The same payment rules. Multiple-procedure reductions, bilateral rules, and other original Medicare logic apply, just as they would on a Medicare claim.

Then subtract the patient's MA cost sharing, which the plan's benefit sets, not original Medicare's. CMS publishes a payment guide for plans on out-of-network payments, and its dispute-resolution page expects plans to resolve these disputes promptly. If a plan's out-of-network payment doesn't reconcile to the fee schedule, ask for its pricing in writing.

For contracted practices the check is different. Read the reimbursement clause. "100% of the current Medicare fee schedule" and "100% of the 2024 Medicare fee schedule" pay very different amounts by 2026. Common contract-side errors: an outdated fee-schedule year, the wrong locality, facility rates applied to office visits, or a percentage loaded wrong.

Florida's three Medicare payment localities

Florida's physician fee schedule has three payment localities, published by First Coast Service Options, the state's Medicare contractor. Payment differs among them for the same code.

The so-what is simple. A Miami-Dade practice priced off locality 99 is underpaid on every line, by the same percentage, every month. That's a pattern finding, not a claim-by-claim one, and it's the first thing worth checking on an MA remittance from a South Florida practice.

How to spot it on the 835

1. Isolate the MA lines. Sort remittances by payer and plan. An MA plan can pay under a different payer ID than the same company's commercial plans.
2. Price the benchmark. For each code, pull the fee schedule amount for the date of service and your locality from First Coast's fee schedule files, or the contract rate if you're contracted.
3. Compare the allowed amount, not the paid amount. Allowed is paid plus patient cost sharing. The gap between allowed and the benchmark is the underpayment. It usually hides inside a routine CO-45 adjustment, so the line looks closed.
4. Read the other adjustments. A 2% sequestration line (CARC 253) is worth checking against your contract. A CARC 150 or a changed procedure code is a downcode, a separate dispute (E/M downcoding, explained). Remark codes like N381 point you back to the contract (remark codes, decoded).
5. Count by pattern. Same plan, same code, same shortfall percentage. One rule is producing it, and one dispute can address it.

The dispute path

Non-contracted, paid but short. This is a payment dispute, not an appeal. File it with the plan's provider payment dispute process, in writing, with the claim, the plan's remittance, and your calculation of the original Medicare amount for the date of service and locality. Cite 42 CFR 422.214. CMS used to run an independent payment dispute contractor for these cases; plan materials report that it stopped accepting them after January 31, 2014, so the plan's own process is the main route now. Check CMS's current "Provider Payment Dispute Resolution for Non-Contracted Providers" page before relying on that.

Non-contracted, denied with zero payment. This is an appeal. Request a reconsideration within 60 days of the notice, with a signed waiver of liability, which protects the patient from being billed. If the plan upholds its denial, the rules require it to send the case to CMS's independent review entity. The payment dispute process can't be used for zero-pay denials.

Contracted. Your contract governs. Use the dispute and appeal steps in the agreement and the plan's provider manual, and calculate against the contract's rate clause, not against Medicare. Federal law bars CMS from interfering in rate negotiations between plans and providers, so CMS won't referee a contract rate. Check whether your agreement ends in arbitration if the internal levels fail.

The Florida angle

Florida's provider-payment statutes don't reach Medicare Advantage. Federal MA rules supersede state law other than licensing and solvency laws (42 CFR 422.402), and Florida Blue's own manual says Medicare Advantage claims are not subject to sections 627.6131 and 641.3155. So the 20, 90 and 120-day clocks, the 12% interest, and the 12-month underpayment window in §627.6131 don't apply to MA lines. Florida's state claim dispute program at AHCA also excludes plans the state doesn't regulate.

What applies instead: 42 CFR 422.214 for what you're owed if you're out of network, 42 CFR 422.520 for prompt payment and interest, the federal appeal rules for denials, and your contract for everything else. Fewer tools than on a fully insured commercial claim. Still enough to recover a locality or fee-schedule error, because the arithmetic is public.

What it means for your practice

Start with a list: every MA plan you're paid by, and whether you're contracted with each one. For the non-contracted plans, reprice a quarter of lines against the fee schedule for your locality. For the contracted ones, reprice against the contract clause and check the fee-schedule year. Either way, a short payment repeats, and a repeated one is worth a dispute. That reprice is part of what our team runs in Clearia's diagnostic, along with administrative denials and downcoding.

Sources

42 CFR 422.214 (services furnished by noncontract providers) · 42 CFR 422.520 (prompt payment) · 42 CFR 422.582 and 422.590 (reconsideration requests and forwarding to the independent entity) · 42 CFR 422.402 (federal preemption of state law) · Social Security Act §1854(a)(6)(B)(iii) (noninterference in plan and provider negotiations) · CMS, Provider Payment Dispute Resolution for Non-Contracted Providers (with the MA Payment Guide for Out of Network Payments) · First Coast Service Options, Florida payment localities by county and fee schedules · Florida Blue Manual for Physicians and Providers (Medicare Advantage appeals; Florida-law applicability), summarized in our Florida Blue payer profile · §408.7057 and §627.6131, Florida Statutes. Retrieved October 2026.