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Voluntary Overpayments

By:  Wyn Staheli, Director of Research
Published:  June 21st, 2016

When a claim has been determined to have been paid more than the allowed amount, it is considered an overpayment. The action to be taken depends on if the overpayment is discovered by the payer or the healthcare provider.

PAYER INITIATED

Post-payment reviews are now a part of the reimbursement process. As a result, these reviews often result in a payer determining that a claim was paid in error. When a payer discovers this overpayment, generally a letter is sent to the provider explaining the situation along with the amount owed and the date that a refund is due.

DO NOT IGNORE an overpayment letter. This is not a voluntary situation. Providers have only two choices:

  1. Immediately begin the appeals process, or
  2. return the funds to the payer by the due date.

Note: many payers have their own Overpayment Forms which MUST be used when sending reimbursement. The letter may include an overpayment form. If not, check their website for their overpayment policy or look for a 'refund form'. This ensures that the overpayment request is correctly handled.

SELF-DISCOVERY

Self-audits should now be a part of every healthcare provider's compliance efforts. If an overpayment is discovered by a provider, they should promptly initiate a voluntary overpayment refund. Since providers only have 60 days to return the money or potentially face “false claim” charges, it is legally in your best interest to quickly return overpayments.

Some providers have expressed concerns that sending a refund check will initiate a further review by the payer and “flag” them as a target. However, one healthcare attorney stated that in the cases he has been involved in, voluntary overpayment refunds actually benefited the provider because it demonstrated a good faith effort to remain in compliance.

HOW TO

In some cases, it may be possible to quickly resolve an overpayment issue with a telephone call, but this may vary by payer. If additional correspondence is needed, be sure to use a cover letter and the appropriate form to ensure that any payment submitted to the payer is properly applied.

Also, include any additional documentation which may be needed to support the overpayment refund.

LETTER:

It is prudent to include a special cover letter which includes phrases such as:

  • While performing a self-audit, we discovered an error.
  • We have taken the following corrective actions to ensure that this does not happen again.
  • Enclosed is a check to return this overpayment.

FORMS:

Always check the payer's website to see if they have a specific form that should be used to accompany overpayment refunds. For example, Medicare Administrative Contractors have required forms, but the forms are different for different jurisdictions as well as the type of plan (i.e. Part B, DME).

See the "References" link below for a sample Voluntary Overpayment Refund Form which could be used if the payer does not have one.


References:

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