Sometimes a provider is reimbursed too much money for the services provided which results in an overpayment. Sometimes the overpayment is made by the insurance carrier and sometimes it is made by the patient. In either case, it is important that the overpayment be returned to the appropriate person or carrier.
If a patient pays more than they are required to the patient must be notified as soon as the overpayment is discovered. The overpayment can be applied to a future visit if the patient will be returning but only if the patient agrees to that. The provider can not just indefinitely hold onto the money.
An example would be if a patient came in for an office visit and paid a co-pay. The provider ends up removing a mole which is considered surgery and doesn’t require a co-pay resulting in an overpayment. Once the office realizes the co-pay should not have been collected they can do one of two things.
1. Notify the patient of the overpayment. If the patient will be returning the office can suggest that they apply it as a credit toward the next visit. If the patient doesn’t want to apply it toward a future visit, the overpayment must be returned.
2. Send the patient a check for the overpaid amount with a note explaining the overpayment.
In any case a provider cannot just keep the overpayment. That is illegal.
If an insurance carrier makes an over payment it is important to first determine if it is truly an over payment. Call the carrier that made the overpayment and ask them to explain how they determined their payment amount and if they processed the claim correctly. If they confirm that they did make an overpayment they should reprocess the claim to show correct payment and send a request for the provider to return the overpayment.
Sometimes they will just ask the provider over the phone to return the overpayment. Personally I always ask them to request the money back with a written explanation. When you receive the written request for the overpayment attach a check for the overpayment to the request and send it to the address indicated on the request. If they don’t provide an address send it to the claims address but indicate “Attn: Overpayments”.
If you receive a payment from an insurance carrier and the entire payment is wrong or not rightfully due to the provider write “void” on the check and return it to the insurance carrier with an explanation of why the payment was not due. For example if the payment is for a patient that was not seen by the provider, write “void” on the check and attach a note saying “This patient was not seen in our office.”
If they state during the call that they processed the claim correctly and that there was no overpayment then you need to determine if there truly was an overpayment. Sometimes a patient has two insurance plans. The primary allows a certain amount and then makes payment Then the secondary processes the claim and allows a higher amount than the primary insurance carrier which results in a credit balance.
This is not actually an overpayment. The amount contractually adjusted off from the primary insurance carrier was more than needed to be adjusted off based on the secondary insurance carrier’s payment. Therefore there is not a true overpayment and no money needs to be returned. The patient’s balance just needs to be adjusted to offset the credit.
Sometimes a patient’s secondary insurance carrier is a privately purchased insurance. They do not always follow the same guidelines as other insurance carriers. Many times they ignore the amount paid by the primary and make payment as if no other insurance is involved resulting in an overpayment. In this case the overpayment amount belongs to the patient since they purchased the other insurance plan. The provider cannot just keep the money. The provider cannot collect more than he or she billed out for their services.
It is important that overpayments are not ignored. First determine if it is a true overpayment. If it is, determine who the overpayment needs to be returned to and then do what is necessary to return it. Remember only credit it to a future visit with the patient’s permission.