Step 1: write down the line’s inputs Copy link
From the claim and the remittance, note the code and its modifiers, the units, the date of service, the ZIP code where the service was performed, the place of service (an office, or a facility such as a hospital or ambulatory surgical center), whether the billing provider participates in Medicare, and whether a nurse practitioner, physician assistant or clinical nurse specialist billed it under their own NPI. Each of these changes the expected amount.
Step 2: work out the expected allowed amount Copy link
Check the code’s status indicator first: it decides whether there is a national amount at all. Then apply the PFS formula with the release in effect on the date of service, the locality of the service ZIP, and the RVUs for the setting. Apply any adjustments the claim calls for, listed in the table below. The rate calculator does all of this from the same inputs and shows each step.
Step 3: compare allowed first, then paid Copy link
Compare your expected amount with the allowed amount on the remittance. If they match, the fee schedule was applied correctly. The paid amount is lower than allowed on almost every line, for reasons that are not underpayments: the Part B deductible, the patient’s 20% coinsurance, and sequestration, which comes off Medicare’s 80% share and works out to roughly 1.6% of the full allowed amount.
Where an expected amount usually goes wrong Copy link
When your expected amount and the remittance’s allowed amount differ, one of these inputs is usually the reason. Check them in this order:
| Input | What goes wrong | Effect on the amount |
|---|---|---|
| Locality | Priced at the billing office’s locality instead of the service location’s, or a ZIP that spans two localities resolved by guesswork | Different GPCIs |
| Setting | Office (non-facility) rate expected for a service performed in a hospital or ASC, or the reverse | Different practice expense RVU |
| Release | A different quarter’s file used for the date of service, or a same-quarter revision missed | Different RVUs or conversion factor |
| Participation | Participating amount expected on a non-participating claim | Non-participating amount is 95% |
| Rendering practitioner | Physician amount expected for an NP, PA or CNS billing under their own NPI | 85% of the physician amount |
| Same-day procedures | Full amount expected for a second or later procedure | Multiple-procedure reduction, usually to 50% |
| Payment modifiers | -26, -TC, -50, -62, -80 or AS not reflected | Component amount or a percentage |
| Imaging technical component | Fee schedule amount expected where the OPPS cap binds | Paid at the lower capped amount |
A worked example Copy link
Take CPT 99213 in an office in Chicago, IL in Q4 2026. The expected allowed amount is $99.63. Priced at the facility rate, the same visit is $61.70. Priced in the Suburban Chicago locality, it is $99.13. On a non-participating claim it is $94.65, 95% of the participating amount. Four different “right” answers, each correct for different inputs, which is why the inputs come first. Open this example in the calculator and enter the remittance’s allowed and paid amounts to compare.
If the gap is still there Copy link
An allowed amount that still differs once every input matches the claim is a question for the Medicare Administrative Contractor that processed it. Bring the evidence for your figure: the release, the locality, the setting, and the CMS file rows behind each input. Every amount on this site names them.
Remittance line check Copy link
Enter your expected allowed amount and the remittance’s figures. For CPT 99213 in an office in Chicago, IL, an expected allowed amount of $99.63 with the deductible met should pay $78.11: Medicare’s 80% is $79.70, less a 2% sequestration reduction on that share. To price the expected amount for your own code, use the rate calculator.
- Allowed vs expected
- —
- Payment that allowed should produce
- —
- Paid vs that payment
- —
Assumes a 2% sequestration reduction on Medicare’s share and no secondary payer. Differences under a few cents are rounding.
Frequently asked Copy link
Why is the Medicare paid amount lower than the allowed amount?
The Part B deductible, the patient’s 20% coinsurance, and sequestration all come off the allowed amount before payment. None of them is an underpayment. Compare the allowed amount with your expected amount instead.
Which locality decides the Medicare amount?
The payment locality of the ZIP code where the service was performed. A ZIP that spans two localities needs the full ZIP+4 to resolve.
Does the date of service or the date the claim was filed decide the rate?
The date of service. The amount comes from the fee schedule release in effect on that date, including any revision CMS made partway through the quarter.
Sources Copy link
- CMS Physician Fee Schedule overview (cms.gov)
- CMS Medicare Claims Processing Manual (Pub. 100-04)
- CMS ZIP Code to Carrier Locality File (cms.gov)
- Budget Control Act sequestration provisions
Written from primary CMS sources—see how we source, compute, and verify everything on this site.
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