Medical billing professionals and small practices that are handling their own medical billing services often have to deal with Insurance Recoupment and Refund issues. This can significantly affect a practice’s revenue stream, and could also carry potential legal ramifications.

What Is Insurance Recoupment?

Most insurance providers will request a refund if there is an issue with an overpayment. This request is called recoupment.

Insurance Recoupments Can Occur For The Following Reasons

  • The insurance provider is not aware of the patient’s additional insurance plan
  • A duplicate payment was made for the same service code
  • A duplicate payment was made for the same service date
  • A duplicate claim was made in error
  • The payment for a claim was for an ineligible beneficiary
  • The payment for a service or treatment occurred after the termination of the patient’s plan
  • An accidental payment was sent to the wrong health care provider
  • A medical billing error was made when calculating the patient’s deductible
  • A payment has been made for a supply or service that was not covered in the patient’s plan

How Does The Recoupment Process Work?

Some recoupment processes are relatively straightforward, while others can be more complicated. In a few rare cases, legal action is taken by the medical provider or the insurance provider to help deal with a miscommunication or an impasse. Most of the time, the recoupment process starts with a written request for repayment. This might be accompanied by a phone call, e-mail, or other electronic communication to alert the medical insurance provider that an error occurred.

Most insurance providers will allow a response time of 30 to 60 days after the initial mailing was sent. The response time is typically included in the written request to ensure that the medical insurance provider is aware of the imposed deadline. If the response is not received in the acceptable window of time the insurance provider will then take a more proactive approach. This typically involves transferring the case to Defense Health Agency (DHA) who will actively handle the insurance claim management collection process.

If the medical provider believes that the claim is indeed invalid, an appeal can be filed to further evaluate the decision. Though the Defense Health Agency’s claim collection has different alternatives for recoupment.

Alternative Claim Collection Methods Available To The DHA

If the medical provider fails to respond, or files an appeal and refuses to take further action the Defense Health Agency might take one or more of the following actions.

  • Filing for litigation or legal action against the medical provider in a court of law.
  • Recovering the recoupment amount from the medical provider’s retirement fund or federal funding.
  • Subtracting the overpayment amount from upcoming submitted claims.
  • Notifying credit bureaus to alter your credit score
  • A Medical Providers Options For Refuting A Recoupment Claim
  • Medical providers who believe the recoupment request is authentically invalid have a few options that they can take to help reverse the decision, reach an alternative resolution, or perhaps strengthen their appeal.

This starts with requesting all the documentation from the insurance provider relating to the recoupment request. This starts with information about the patient’s account, the patient’s play details, and the procedure codes used in the medical billing process, as well as verifying the service date.

The medical provider who is contesting the recoupment request can then cross-check the contract terms to ensure that the recoupment request was made within the established guidelines.
It’s also a good idea to check with the insurance commissioner about your state laws, as soon as possible after receiving the contested recoupment request. A few states apply stricter timelines for recouping funds, which can affect a possible legal process, should it occur later.

When analyzing the documents, the medical provider needs to identify the areas where the breach of contract occurred. This is a critical step for assessing which party is liable for the recoupment, and to what degree the agreement needs to be honored financially.

Should this analysis reveal that the recoupment request was triggered because the beneficiary has another insurance plan, it can help the medical provider avoid legal consequences.

What Is A Medical Billing Refund?

A medical billing refund is a technical process of returning the excess money in the specified amount that the party, medical provider, patient, or other responsible parties owes according to the recoupment request. In some refund cases, a medical provider’s reputation can be affected and it can potentially leave them vulnerable to litigation if the correct amount is not refunded promptly.

There are a few things medical providers can do to help prevent recurring recoupment requests as well as sparing the headaches that come with paying a medical billing refund back to the insurance provider.

Dealing With Refunds To Patients

There are some cases, where the analytics of a recoupment request indicate that a patient overpaid a specific amount and that they are qualified to receive a refund. This can happen if the patient’s plan has changed in the copay amount or if the patient needed medical equipment or supplies that weren’t covered under their old plan, but are not covered in their new medical insurance policy.

In times like this, it’s important to contact the patient as soon as possible. Then offer the patient a credit which can be applied to a future service. If the patient is no longer using your services, offer to send them a check within 10 days from the contact. This will go a long way toward protecting you from further legal consequences.

Ways To Reduce Recoupment Requests & Refunds

  • Update your in-house administrative software & medical billing protocols
  • Offer administrative staff retraining.
  • Improve patient intake and information collection processes.
  • Verify a patient’s coverage as part of the scheduling process.
  • Outsource your practice’s medical billing practices to a third-party specialist or agency.

Outsourcing Medical Billing To A Third Party Helps Reduce Recoupment & Refunds

A lot of small practices often find that their focus is better spent treating patients than it is dealing with administrative tasks like medical billing. Rather than hiring and training additional administrative staff, a lot of small practices that have experience recoupment issues in the past will outsource their medical billing services to a third-party agency like Operant Billing Solutions.

Not only does this free up more time for treating patients, but it also gives you the peace of mind that comes with knowing highly trained and experienced professionals who are using the medical billing industry’s best practices to avoid future recoupment requests and refunds.