The Issue of Overpayments and How to Handle Them

The Issue of Overpayments and How to Handle Them

When extra money shows up when you are doing the laundry, it’s an unexpected good thing. You may not always remember how it got there, but it is yours now that you found it. However, when extra money comes from billing, and you have no idea how it got there, it is an issue of overpayment. According to the Office of Inspector General (OIG), billing companies must institute procedures that provide for accurate and timely reporting to both the healthcare program of overpayments and the provider who receives the money.

 

The federal government maintains that when a provider/office receives money to which they are not entitled the billing company should find the proper owner and assist in the return of the money. Processing and returning overpayments is not optional, and this is a federal mandate. If not handled right, overpayments will create costly issues for the billing company and the provider.

 

What is the Cause?

 

Medical billing personnel should first look at why overpayments happen, and what should be done to handle them. There are four common contributors to overpayments: the healthcare provider, the patient, the billing company, and the payer. Any or all can contribute to the overpayment process. Causes include:

 

  • Using incorrect contract payment rates
  • Miscalculating deductibles
  • Use of incorrect patient demographics
  • Applying claims to the wrong account
  • Receiving duplicate payments
  • Using incorrect contract payment rates

 

In today’s healthcare industry, payments often end up dumped together in a large electronic pile. Therefore, overpayments are hard to identify and process, especially with the constant pressure to get new payments posted, new billing statements issues, and new claims processed. The “new work” is often the reason a billing company misses the overpayment.

 

Identifying and Returning Overpayments

 

The OIG has issued specific compliance guidelines for medical billing companies. The billing party is responsible for identifying and assisting clients return overpayments. In addition, billing personnel work with the providers and healthcare facilities to investigate anything known to be amiss. In the evidence of misconduct, such as an unreported overpayment, the OIG says to:

 

  • Refrain from submitting claims that are questionable.
  • Notify the client in writing within 30 days of the questionable payment receipt.
  • Work with the client to resolve the misconduct.
  • Refrain from submitting inappropriate claims.

 

The Affordable Care Act was passed in 2010, creating an express duty that healthcare providers report and return any and all overpayments received from the Medicare or Medicaid programs. This was to be done within 60 days from the date of the overpayment. In 2016, the Centers for Medicare & Medicaid Services (CMS) published the “Final Rule” to clarify the 60-Day Rule. The Final Rule stats that an overpayment has not been identified until the supplier/provider/facility has determined evidence of an overpayment. CMS believes reasonable diligence includes proactive compliance activities by billing professionals as well as timely investigations made in response to the overpayment.

 

The False Claims Act and Fraud and Enforcement Recovery Act

 

Overpayment reporting typically first falls to the provider or healthcare facility. If the provider does not act, a billing company has the responsibility. According to the False Claims Act, any person or group who knowingly causes or presents a false claim can be held liable. The liability is imposed for presentment of a claim, without having any proof of awareness by the submitting party.

 

With the Fraud and Enforcement Recovery Act of 2009 (FERA), the legislation expanded and eliminated the requirement for intent to be established. FERA proposes with a “reverse false claims provision” that a third-party billing company has knowledge of an overpayment, the decision to continue working with the client who does not issue refunds could be called “knowingly and improperly avoiding or decreasing an obligation to refund monies.” The billing company may be implicated regarding overpayments if billers fail to make the client aware or address the problem.

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