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Refund of Overpayments
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Refund of Overpayments

 

 

If not already, sooner or later, your practice will receive an overpayment (more reimbursement for a service than is allowed).  Generally, it is an oversight on behalf of the insurance company but if regular occurrence happens within your practice, expect to be investigated for fraud.

 

Whatever happens, notify the carrier immediately and send the excess payment back.  It is a debt owed to the insurance company, and should not be taken lightly.  Medicare will charge the provider accrued interest from the time the original check was sent to the provider and can take up to three years to initiate a refund request.  That’s a lot of interest to pay!

 

Even if it was the insurance carriers error, generally, the physician is considered to be the one “at fault” if he or she knowingly accepts an overpayment.  Go figure!

 

By law, the IRS, Social Security Administration and CMS, can request a refund at any time within one year of discovering an overpayment. 

 

If there is no response to the initial request for a refund, a second letter can be sent out within 45 days.  If the refund is not made within 40 days of the date of the initial refund request, the overpayment amount plus accrued interest, will be taken out of any other benefits that are payable to the provider.  This is known as an “offset” (a real menace when balancing the accounts receivable!).  The interest rate is the higher of either the private consumer rate (PCR) or the current value of funds (CVF).

 

If no refund is made or no money recovered by offset within 75 days of the follow-up letter or after a provider’s appeal is denied, the case can be referred to the Department of Justice.  When a Provider is being sued by the Department of Justice….. this is big time bad news!

 

Most times, the person administering the accounts receivable will be able to tell at a glance if there has been an overpayment made. 

 

However, should this not be the case and a refund request has been received, you will need to appeal immediately.

 

Send a written explanation of your objections and evidence supporting it within 30 days of the initial refund request.  At this time, you also may request either a hearing or review depending on the amount in question.  You will have to ask the particular insurance carrier what their amount limits are.  Medicare has the limit of $100.00 (if under $100 you can ask for a hearing if over $100 you can ask for a review). 

 

Beware: even though it can take up to six months for a review or hearing to be     finalized, an offset can happen “before” a final decision has been made by the investigator. A provider can request that an offset “not” be initiated by notifying the carrier of the reasons this should not be done with evidence to substantiate the reason, within 15 days of receiving the initial demand letter.  Note: this is separate from a request for an appeal.    

 

 

Repayment Plans:

    

Every insurance carrier has their own set of rules.  However, you can use the Medicare rules as guidance.    

    

For providers who must refund large amounts ($1,000.00 or more) and cannot pay it all back within 30 days of the first Medicare demand letter due to severe financial hardship, an extended repayment plan may be offered.  The payment deadlines for extended repayment are based on the amount to be repaid, as follows:

 

        $5,000.00 or less: within two months

        $5,000 - $25,000: within three months

        $25,000 - $100,000: within four months

        $100,000 or more: within six months

    

Requests for payment extensions must be sent to the regional office for approval.  The supporting documentation varies depending on whether the provider is a sole proprietor or a corporate entity. 

    

Whatever happens remember: Honesty is the Best Policy and always contact the insurance carrier to confirm their specific rules for appealing, repaying, offsetting and extensions.

 

 

Remember…..

Always Create A Paper Trail!