Healthcare and Finance Overpayments and How You Can Recover From Them

Overpayments are one of the many issues organizations in different industries need to deal with. In healthcare, overpayment describes a situation where a payment amount an organization receives is more than the amount charged for the service. Overpayment can come from patients and insurance companies. It may not sound like a huge deal but if the overpayment is not resolved, serious consequences can occur. Here is a short guide on overpayments and how you can recover from them.

How Does Overpayment Occur

From technology to billing, there are a number of reasons why overpayments occur. Before the overpayment recovery process can be addressed, here are a few different overpayment situations health service providers may experience.

Incorrect Billing

No one is perfect and it can be easy to make an error when billing someone. In some instances, a case rate adjudication error could occur. In other words, a bill could be contracted at $100,000 but the patient may receive an incorrect bill of $150,000 due to miscommunication within the healthcare provider’s practice. Although the contracted rate of $100,000 is correct, the patient may end up paying $150,000 without realizing the error. Besides billing errors in practices, insurance companies could pay duplicate claims due to an information error input.

Small Sums of Money

Not all overpayments are large sums of money. In some instances, there may be overpayments of a few dollars. This may seem like a small amount but over time these small errors can turn into a large amount.

Improper CPT of HCPCS Coding

Errors can occur from the back office of a physician group. For example, improper CPT of HCPCS coding is a common source of error. Coding standards allow for good workflow in terms of claims processing, but with over 75,000 CPT codes it is easy to select the wrong one. For example, a patient could require surgery in one eye – although the correct surgical procedure takes place, two claims could be submitted due to each eye being coded. This could be an honest mistake, but without paying close attention it could turn into a recurring error.

Bad Policy

Due to bad policy, some providers may pre-collect sums of money. The reason some practices pre-collect money is to try to protect themselves financially.

The Impact of Overpayment

Medical service providers are legally obliged to process and return overpayments. In the United States, this is a federal mandate and there are serious, legal consequences if providers fail to comply. Once you have discovered an overpayment, it is best to address this issue immediately.

Recovering From Overpayment

Cover your practice by contacting the patient straight away and explaining the situation. You can then offer to settle this overpayment with a method that suits you both, such as writing a cheque to the patient or arranging for the sum of money to go straight into their account. When refunding overpayments via credit card, ensure you refund the amount to the card the patient originally used. To recover from an overpayment made by an insurance company, make sure you contact them in writing and keep copies for future reference.