Contrary to popular belief, overpayments are not welcome and can put a burden on billings and collections. "Surgery centers don't want to be overpaid," advises Andrea Woodell.
"The accurate payment amount has to be determined and the difference has to be agreed upon and returned to the payer. It's time consuming and costly to keep touching the claims."
Woodell stresses to clients that overpayments are critically important because many of the contracts have language stating that if they are overpaid it should be reported to the payer and paid back within 30 days. Even if the payer doesn't request a refund, the majority of contracts require a refund be issued.
Conversely, not refunding habitual overpayments can quickly add up to hundreds of thousands of dollars. Many states allow payers to go back three to five years to collect overpayments. A payer may hire an outside auditor to look for cash in the form of overpaid claims, typically attributed to the payers' inability to administer their own contract terms accurately. No one wants to be on the receiving end of a letter stating they owe $250,000 back to payer xyz and recoupments will begin in 30 days. "It's a manpower intensive business," said Woodell, "and when ASCs lack expertise or staffing, or don't have the protocols and processes in place to manage overpayments, it's a lose-lose situation."
1. Determine if the overpayment request is legitimate - "When a payer requests a refund, do your research," advises Woodell. "Initial research is required to determine if the refund request is legitimate." It is not uncommon for a self-funded group to hire a repricer who in turn requests a discount or refund not contractually supported. They just ask, and a facility with inexperienced staff may refund the monies, accepting the request as legitimate without performing their own due diligence.
The refund request may be appealed by the facility if a payer sends it because a claim was missing, required authorization for service or was deemed medically unnecessary. In such cases, the center can provide supporting documentation to the contrary.
If the refund request is considered legitimate, Woodell summarizes the next two steps centers should take prior to returning overpayment:
2. Determine if the overpayment amount is accurate – Start by calling the payer. "Ask the payer to explain how they determined the payment amount," said Woodell, "then find out if the payer processed the claim correctly. While we have made significant improvement in cleaning up the language in fee schedules, many still have verbiage that is confusing, misleading and open to multiple interpretations."
3. Get the correct paperwork – If the payer confirms that they overpaid through a written request, and your contract supports their logic, send the refund back to the payer within the appropriate timeframe per contract requirements. "Whether we're dealing with clients, patients or payers, open communication always goes a long way," said Woodell.
Determining overpayment is one issue, but according to Woodell, getting to the root of the matter is another. "I am currently working with a center that has overpayment concerns. I am modeling what they are being paid, what contractually we think they should be getting, and then working with them to get a new contract that tightens up the language and absolves them from recoupment," said Woodell.
While there are consequences for non-payment, Woodell maintains that refunds don't have to be difficult. "It's all about establishing protocols," added Woodell, "and at Regent Surgical Health we have them in place for overpayment to ensure that we stay compliant and continue to foster long lasting relationships with payers."
Is your center struggling with overpayments? Regent Surgical Health can help. Call us today at 708-492-0531.
Vice President of Managed Care Andrea Woodell negotiates payer contracts on behalf of Regent Surgical Health's clients, attaining aggressive gains for both existing and new partners. For 20 years, Andrea has negotiated on behalf of health care providers and professionals, working in tandem with business offices to enhance collections. In this blog post, Woodell offers insights on how best to manage overpayments from payers.
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