Coding & Reimbursement

Overpaid? Send it back, and quickly.

The ACA obligates you to report and return within 60 days.

By Suzanne L. Corcoran

Recent actions by payers and law enforcement have changed the landscape regarding refunding overpayments — and not in ways that favor practices. Importantly, two recent precedents make it clear that you no longer can “investigate whether the overpayment is real” before determining that the 60-day window is implicated; it begins immediately. Here is an update on what you need to know.

Q. What is an overpayment?

A. An overpayment is money you should not have received, usually from a third-party payer, based on a claim you’ve submitted. It may be all or part of the payment you received. It may be the result of an inadvertent mistake or caused by intentional misrepresentation. It may be an isolated incident or a recurring problem. Overpayments could result from a variety of causes, with the principal reasons including:

1. Poor chart documentation that does not support the medical necessity for services

2. Upcoding

3. Overbilling

4. Unbundling.

Q. What happens when an overpayment is found?

A. If you know you have been overpaid, then you must refund that amount. There are serious consequences that may include fines and criminal exposure under Federal and/or State law. While you investigate a possible overpayment, remember that the “clock is ticking” from the moment you are notified of or discover it. Notably, the Patient Protection and Affordable Care Act requires providers to report and return overpayments within 60 days.

Q. How should we handle refunds?

A. When you send a refund check, Medicare needs to know:

1. Why the voluntary refund was made

2. How it was identified

3. What sampling techniques were employed

4. What steps were taken to assure that the issue leading to the overpayment was corrected

5. The dates the corrective action was in place

6. Specific claims involved in the inappropriate payments

7. Methodology used to arrive at the amount of the refund

8. Whether a full assessment was performed to determine the extent of the refund.

Voluntary refunds of overpayments should be directed to the payment correction unit of the Medicare Administrative Contractor (MAC), or to the specific department of a third-party payer that handles refunds. Always send refunds via registered mail, return receipt requested or some other method that tracks delivery and signature; be sure to keep a copy of all related correspondence.

Q. What about related copayments and deductibles?

A. The calculation of a refund can be intricate because it may contain several pieces. The refund to the payer is commonly followed by refunds to secondary payers or beneficiaries. Meticulous accounting is required to be sure that all the pieces are addressed.

Q. Is refunding an overpayment sufficient to address the problem?

A. No. You must pursue an investigation to determine if the overpayment is part of a larger problem. Then, you must educate staff and physicians about the proper way to obtain reimbursement so that the overpayment does not reoccur. You also might need to put new policies in place. We recommend a compliance plan.

Q. Does refunding an overpayment lead to an audit?

A. Maybe. Sending a check with a clear explanation that disposes of the overpayment issue should not lead to further review. However, it’s not off-base to be concerned that reporting a sizable overpayment might trigger an audit.

Q. Do we need an attorney to make a refund of an overpayment?

A. Not usually, but when a significant amount of money is involved, it may be advisable to arrange the refund through an attorney with expertise in health law. Also, if you suspect fraud, you should engage an attorney. Fraud is an intentional deception or misrepresentation made for personal gain. It is both a crime and a civil law violation. In some cases, the False Claims Act can be implicated.

Q. Should we report overpayments to the Office of Inspector General?

A. Overpayments that are the result of honest errors should not be reported to the OIG. Rather, the MAC or another third-party payer is the proper entity to handle refunds of overpayments. OM

REFERENCES

Suzanne L. Corcoran is vice president of Corcoran Consulting Group. She can be reached at (800) 399-6565 or www.corcoranccg.com.