Medical billing problems and accidental overpayments can do more than just interrupt a consistent revenue stream, it can also affect your reputation with your patients as well as the community you serve. Not to mention that failing to return the extra payments from patients or their insurance provider can also leave you exposed to significant legal problems. In many overpayment cases, the consequences of failing to repay promptly can also impact a solo practice’s credit score, making it harder to acquire equipment and supplies in the future.

What Is Overpayment In Medical Billing?

Most overpayment issues occur when a patient or their insurance provider pays the healthcare providers a sum of money that is more than what they are owed per their reimbursement rate. This can happen for a variety of reasons. While most are accidental, some overpayments are intentional.

A medical provider that fails to return an overpayment, puts not only your revenue stream in danger but also your reputation. While some accidental medical coding errors are understandable, they still need to be corrected and the refunded amounts returned to all applicable parties.

It’s also worth bearing in mind that failure to refund or offer credits to a patient or insurance provider for an overpayment is also considered a criminal office. It is federally mandated under the 63 FR 70144 section of the law to follow these guidelines strictly.

What Causes Medical Billing Overpayments?

There are a few common causes of medical billing overpayments that medical providers need to make themselves aware of. Many of them tend to be more common with solo practitioners and small practices that don’t have a dedicated medical billing staff in-house.

Some of the most common causes of medical billing overpayments include:

  • Using outdated or inefficient medical billing technology.
  • Staff who are insufficiently trained in medical billing best practices.
  • Inefficient estimating tools.
  • Medical billing coding errors.
  • Coordination of benefits issues.
  • Failing to verify the patient’s coverage details during the intake or scheduling process.
  • How To Handle A Patient Overpayment

If a patient overpays for something like a copay, prescription, or specialized piece of medical equipment, it’s important to deal with the issue as promptly as possible. The longer you delay in rectifying the overpayment issues, the more damage can be done to your reputation, as well as leaving your practice increasingly vulnerable to legal action.

Start By Notifying The Patient Immediately

The sooner you notify the patient of an accidental overpayment the less damage will be done to your reputation both with the patient and the community. Most minor overpayment problems can be resolved by offering the patient a standing credit for future services. If they are unhappy with the credit or are no longer in your care, then you are legally obligated to repay the exact amount owed.

Timely Reimbursing A Patient

Sending a check to a patient who is dissatisfied with a credit or who is no longer in your care needs to be done as promptly as possible. In many states, a certified check needs to be delivered to the patient within 7 to 10 days to avoid potential legal complications.

Dealing With An Insurance Provider Overpayment

The technical details and legal ramifications can get a little more complicated when it comes to correcting an overpayment made by an insurance provider. In some overpayment cases, the insurance provider’s own internal auditing system might catch or red flag a claim that was accidentally overpaid to a medical provider. This might then trigger an official recoupment request.

In a situation like this, it’s important to ascertain the validity of the overpayment as quickly as possible. It’s usually best to directly contact the provider to ask for a clarification of the calculated sum and the claim processing.

If the insurance provider clearly proves there was an overpayment, they will file an official recoupment request. Repaying or “Refunding” that amount as soon as possible will go a long way toward limiting your legal vulnerability. Especially if the insurance provider is concerned that the overpayment might have been the result of intentionally fraudulent overpayment by the medical practitioner or an administrative staffer.

Once your practice receives a written recoupment request, and you can verify that the amount and the underlying cause of the overpayment, make sure to issue prompt payment to the insurance provider. In most states, this must be done within 30 to 60 days of the official recoupment request.

Make Sure To Document All Overpayments

Even a single overpayment issue can potentially become a very serious legal problem. Especially if the insurance provider is accusing your medical practice of fraud or if they are requesting an audit of your medical billing practices.

Keeping accurate documentation of all interactions and past overpayment issues is essential for proving your innocence in a legal action or insulating yourself from further legal action. This includes documenting the credits offered for the payment, as well as documented evidence including letters, notes, checks, and communication with the insurance providers. You might also want to go so far as to track and record the phone call.

Ways To Prevent Overpayments From Happening

If you’ve had problems in the past with overpayments occurring in your medical billing practices, or you simply want to avoid having them occur in the future, there are a few proactive steps you can take.

Use Up To Date Software

Outdated software and accidental coding errors that aren’t caught by the system are a common cause of a lot of overpayment issues and recoupment requests. Using the best available medical billing software reduces the chances of these errors occurring in the submitted claim.

Use Up To Date Code Books

Medical billing code books are updated from time to time with new codes that can cause errors if an older code is being used inappropriately.

Offer Staff Training Opportunities

If you have an administrative staff handling your medical billing services or you are a solo practitioner handling them yourself, make sure that all necessary parties are given up-to-date training on the medical industry’s best practices. This includes software training.

Outsource Your Medical Billing Services

Third-party medical billing agencies like Operant Billing Solutions have a highly trained and experienced staff that is well versed in the medical industry’s best practices. This is an extra set of expertly trained eyes that can catch the kind of medical billing errors that cause most overpayment problems in the first place.