A Case-by-Case Analysis is Necessary
Many medical providers and billing companies are seeing a spike in the number of refund requests received on commercial insurance accounts.
Most prevalent among these requests involve third parties which carriers retain to audit accounts for incorrect payments. Due to the increased use of such outside auditing companies, providers and billers need to have an internal policy for assessing whether the claim was paid correctly or not and a plan for responding to unsubstantiated requests for refunds.
“With regard to commercial carriers, our position has been we have a responsibility to ensure the accuracy of the money received. If the carrier claims they have overpaid and if it is due and owing, we recommend returning it. If it is not due and owing, you have to tell them why.”
“Basically, the carriers policy will indicate if it is due and owing. If the policy says if the physician has to do X, Y and Z and get paid, and that is what the physician did, then the benefits are due and owing,” said Andrew Wachler, of Wachler and Kopson, P.C. Wachler and Kopson, a Royal Oak, Michigan-based law firm, specializes in health care consulting.
Wachler states that there are many refund situations where the providers might have a right to retain the requested funds. The most obvious, he states, are situations where there is a dispute over the extent or existence of coverage for the treatment.
“The provider may argue that there is not a policy exclusion or limitation regarding the treatment rendered, particularly if you precertified the treatment and relied on that precertification when making the treatment decision.”
Many court cases address the issue of insurers seeking funds paid the beneficiaries and third-party beneficiaries. The South Texas Law Review indicates that many courts have recognized the provider’s right to dispute a refund request. An article entitled, “The Retention of Insurance Overpayment by Health Care Providers,” states the following about this subject.
“Overpayments or payments otherwise mistakenly made by an insurer may be retained by a health care provider who is innocent, acts in good faith without prior knowledge of the mistake, and makes no misrepresentation to the insurer, provided the amount retained relates only to the amount actually due for services rendered. Overpayments may also be retained despite knowledge by the health care provider of a potential dispute in coverage if the health care provider changes its position in reliance on continued payment. The continuation of health care service in reliance on continued payments may constitute a sufficient change in position. Other principles may, on a case-by-case basis, justify retention of an overpayment – these principles would be in the nature of equitable estoppel, failure by the insurer to act earlier, absence of an unconscionable loss, absence of an unjust enrichment, and other rules developed under the law of restitution.”
Maryland is one of the few states which has enacted a law regarding refund attempts. The Maryland insurance code has a statute governing retroactive denials of paid claims.
Based on this information, providers should not immediately refund requested benefits to the insurance carrier. Each refund request must be thoroughly researched to determine the accuracy of the payment in question. This may require seeking additional information from the carrier and patient regarding benefits. If you believe you are entitled to the payment, Wachler states that you should send a written response to the carrier explaining your position in regards to the request.
“Put it in writing. If you are going to deal with an insurance carrier, put it in writing. If it is not documented, it did not happen.”
If you are unable to resolve the dispute, many law firms, including Wachler and Kopson, have an audit program to assist providers in determining their right to retain disputed benefit payments. Wachler stated they have also recently put together a credit balance plan for physician offices.
There is also a number of insurance recovery tools available on the internet to assist with providers when putting together a refund review plan. Power of Appeals Software contains a number of appeal letter templates which can be utilized in responding to a refund request. For information about the software visit www.powerofappeals.com
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