Managing Payer and Patient Overpayments

1. Managing Payer and Patient Overpayments When a medical practice receives reimbursement over the payable amount for a service rendered, it’s called an overpayment. The payer usually makes the overpayment, but sometimes patients pay too much for a particular service too. In either case, promptly return the overpayment to the correct patient or payer. If a patient and payer pay more than required, notify them in writing as soon as you discover the overpayments. Processing and returning overpayments aren’t optional, it is a federal mandate (63 FR 70144, Dec. 18, 1998). Either deliberately or unintentionally withholding overpayment holds legal consequences. If not handled properly, overpayments create costly legal problems for you, payer, and your patients. In this article, we discussed how to manage payer and patient overpayments and correct procedures repay them. Why Do Overpayments Occur? Some of the common reasons for payer and patient overpayments are as follows: Wrong estimation: Some practices use estimation tools to decide patient responsibility, www.medicalbillersandcoders.com Copyright ©-2021 MBC. All Rights Reserved Call now 888-357-3226 (Toll Free) info@medicalbillersandcoders.com 1

2. some billing software also provides this feature, the wrong estimation could cause overpayments. Duplicate payments: Often your billing team will submit claim for the same service and sometimes payer will also pay for such duplicate claim. Bundled payments: Some of your billing team might claim for service which is part of the bundled payment program. Your practice may get paid under bundled payment program and as a separate service. Practice policy: Practices pre-collect amounts for every patient visit to ensure financial sustainability. Coordination of benefits issues with payers: Payers often pay duplicate claims because they’ve incorrectly coordinated benefits. Patient Overpayments Your billing team may make mistake and collect more from patients. For example, a patient came into a dermatologist’s office visit and paid his/her co-pay. During this visit, the provider removes a mole, which is considered surgery and doesn’t require a co-payment. That makes the co-pay into an overpayment. Once the practice realizes the co-pay should not have been collected, communicate with the patient and make an arrangement to repay. Please note that a provider cannot just keep the overpayment, even a small amount, that is illegal. In such a case, you can inform the patient about overpayment and its reason. If the patient has scheduled a new appointment, then the overpayment can be applied as a credit toward the next visit. If the patient doesn’t want to apply the money toward a future visit, you must return the overpayment. Immediately send the patient a check for the overpaid amount with a note explaining the overpayment. Payer Overpayments If you found out the payer paid more than expected, first determine if it is truly an www.medicalbillersandcoders.com Copyright ©-2021 MBC. All Rights Reserved Call now 888-357-3226 (Toll Free) info@medicalbillersandcoders.com 2

3. overpayment. Talk to the insurance rep and ask them to explain how they determined their payment amount and understand if they processed the claim correctly. If the payer confirms that they made an overpayment, they should reprocess the claim to show correct payment and send a request for the provider to return the overpayment. Sometimes the insurance rep will just ask the provider to return the overpayment over the telephone. In this case, ask them to request the money back with a written explanation. When you receive the written request, attach a check for the overpayment to the request and mail them to the address indicated on the request. If they don’t provide a specific address, send it to the claims department address but indicate ‘Attn: Overpayments’ on the envelope. If you receive a payment from an insurance carrier and the entire payment is wrong or not rightfully owed to the provider, write ‘void’ on the check. Then return it to the insurance carrier with an explanation of why the payment was not due. Investigate Overpayments In case of payer overpayments, if the payer states during the call that they processed the claim correctly and there was no overpayment, then you need to investigate further. Sometimes a patient has two insurance plans. The primary plan allows a certain amount, makes the payment, and then the secondary insurance processes the claim. A credit balance results when the secondary payer allows and pays a higher amount than the primary insurance carrier. This credit balance is not actually an overpayment. The amount contractually adjusted off from the primary insurance carrier was more than needed, based on the secondary insurance carrier’s payment. Therefore, there is not a true overpayment and no money needs to be returned. Sometimes a patient’s secondary insurance carrier is privately purchased insurance. They do not always follow the same guidelines as other insurance carriers. Often, they ignore the amount paid by the primary and make payment as if no other insurance is involved, resulting in overpayment. If that happens, the overpayment amount belongs to the patient because he/she purchased the other insurance plan. In such a case, the provider cannot just keep the money and the provider cannot collect more than was billed out for services. www.medicalbillersandcoders.com Copyright ©-2021 MBC. All Rights Reserved Call now 888-357-3226 (Toll Free) info@medicalbillersandcoders.com 3

4. To Summarize Whether it’s payer or patient overpayments, never ignore possible overpayments, always investigate received payments. If it is a true overpayment, determine whom the overpayment needs to be returned to, and then do what is necessary to return it. Managing payer and patient overpayments is not difficult, you just need expert billing team to investigate it. If you need any assistance to handle overpayments or for overall billing operations, we can assist you. To know more about our medical billing and coding services, contact us at info@medicalbillersandcoders.com/ 888-357-3226 www.medicalbillersandcoders.com Copyright ©-2021 MBC. All Rights Reserved Call now 888-357-3226 (Toll Free) info@medicalbillersandcoders.com 4