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What if Payers Don't Request Overpayments?


Everyone should know about CMS' rule about repaying overpayments within 60 days. What about private payers?

Several years ago, a colleague of mine worked with a group of eight surgeons that hadn't reviewed its credit balance report in several years. My colleague asked that the report be printed. It showed more than $70,000 of patient credit balances and plan overpayments. When asked why they had not been verified or refunded, the administrator replied, "Our policy is only to refund overpayments if payers or patients request them."

My colleague had the unpleasant job of telling the physicians about the risk issue they were facing. After uncovering several others, the administrator was let go.

Unless every email from CMS has mysteriously gotten stuck in your spam folder, you probably know that Medicare and Medicaid require providers to refund overpayments within 60 days of discovery. If you are not aware of this rule, please pause now and read this. Once you are done, do not pass go and do not attempt to collect $200. Instead, generate a credit balance report from your practice management system before the close of business today. Begin verifying and processing the refunds for valid Medicare and Medicaid overpayments immediately.

Although most practices are aware of the 60-day refund rule for government programs, many physicians ask me if there is a similar requirement for commercial, HMO, and PPO plans. The short answer is, yes. Once overpayments from these plans are discovered, a provider is required to refund them even if the payer does not request it.

The long answer is, when it comes to plans with which you have a written contract, you'll find that most agreements include a clause that outlines this requirement, along with the time period within which the practice must make the refund. For example, here's the clause in an Anthem Blue Cross Provider Agreement:

2.8 Adjustments for Incorrect Payments. When the Provider receives an excessive or mistaken payment, including, but not limited to payments for Claims where the Claim was miscoded or otherwise billed in error, whether or not the billing error was fraudulent, abusive or wasteful from Anthem, a Covered individual or a Plan, the Provider must promptly notify Anthem or the Plan and reimburse the appropriate entity within thirty (30) days, Anthem or the Plan may recover the overpayment through remittance adjustment or other recovery action, subject to the restrictions as set forth in the provider manual.

Notice that in this agreement, Anthem's policy of refunding within 30 days, which makes it even more aggressive than Medicare and Medicaid's 60-day requirement.

If any of your payer contracts read this way, review your refund procedures to make sure they support the swift return of overpayments after discovery. Best case, billing staff should verify and request a refund immediately after discovering the overpayment on the electronic remittance advice (ERA) report, or while posting payments, if your practice still does this task manually.

Finally, what if your practice is out of network with the plan? Are you still required to refund an overpayment?

Again the short answer is, yes, and the long answer is this: For payers your practice hasn't signed a written contract with, and therefore does not have an agreement with spiffy language like Anthem Blue Cross, the requirement reason lies in Section 6402 of the Affordable Care Act (ACA).

Although the ACA and its overpayment requirements seem to apply to only governmental payers, the ACA blurs the lines in Section 6402 by requiring that patients secure coverage and mandating the scope of coverage by third party payers. Thus, the ACA gives patients certain rights. And because overpayments impact patient deductibles and lifetime benefits, it seems that the ACA arguably requires providers to return any insurance overpayment under the patient rights part of the law. This is a bit of a bootstrap way of reaching the conclusion to refund overpayments for out of network claims, but that is how I read it.

So, whether your practice receives an overpayment from Medicare, Medicaid, commercial, HMO, PPPO, or for an out-of-network claim it has filed, your practice is obligated to refund the overpayment, regardless whether the payer requests it. Refund the payment within the timeframes stated in the contract, or in an otherwise timely manner (60 days or fewer). Doing so will keep you within billing compliance guidelines, and out of the courtroom.


Michael J. Sacopulos, JD is the founder and president of the Medical Risk Institute, a legal firm that advises physicians and healthcare organizations on compliance, regulatory, and contract issues. Known for his sharp wit and un-lawyerlike pragmatism, Michael - a.k.a., The Compliance Guy - speaks nationally and is sought after for his ability to turn mundane legal topics into entertaining educational sessions. Mike can be reached here.

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