Define 'underpayment' in the context of healthcare revenue cycle.

In the context of healthcare revenue cycle, 'underpayment' specifically refers to receiving less reimbursement than expected for the services rendered. This situation arises when the amount paid by a payer (such as an insurance company or government entity) is less than what the healthcare provider anticipated based on the contracted rates, especially when the provider has followed all guidelines and submitted accurate claims.

Understanding underpayment is crucial for healthcare organizations as it directly affects their revenue and financial sustainability. Managing and mitigating underpayments involves meticulous billing practices, contract negotiations, and appeals to ensure that providers are compensated fairly for the care provided. Addressing underpayments effectively contributes to the overall efficiency of the revenue cycle, ensuring that resources are available for patient care and operational needs.