Medical Billing and Practice Management Tips: How to Handle Overpayment and Refund Demands

What constitutes an overpayment? An overpayment is when your medical office receives money, or payments from an insurance company, patient, or both, that exceeds the amount of charges that are produced for a visit or medical services. For example, the patient had an ear-lavage with removal of impacted cerumen, the charge is $100. The doctor is reimbursed a total amount of $150 from the health insurance company. The $50 is the amount that was overpaid.

There can be many reasons for an overpayment. The patient may have multiple insurance plans. Plan A pays $50, Plan B pays 30 and the patient pays $70.

The doctor cannot keep the overpayment. An investigator or auditor could consider the action of keeping overpayments as possible fraud because his medical billing misrepresented the charges. If the insurance company says that the patient had other insurance, you might have the right to demand that they provide proof of this (laws may vary from state to state).

Some insurance companies use professional debt collection agencies to perform refund demands. Some of these companies can be very aggressive with trying to collect the money.  With some debt collection agencies, the agent calling makes their money based on what they individually collect, so some debt collectors can be abrasive and downright abusive. It is always best to not get involved into any detailed discussions over the phone.

Instead ask for details of their claim/demand in writing and also respond in writing sent by Certified Mail/Return Receipt, which prevents the "we never got your letter" excuse.  In addition, if the office needs to file a complaint or lawsuit, there is proof that a response was sent and it was received.  This is important, because it shifts the preponderance to your side to make the case. Now, the insurance company or debt collection agency can no longer state the office never responded.

Steven M. Verno, a highly experienced Certified Master Medical Coder and Certified Master Medical Biller and Medical Coding/Billing Instructor in Florida, who also serves our Medical Billing Community Forum as a volunteer forum moderator has elaborated in great detail on medical billing and coding issues, challenges and common misconceptions and given examples and tips to remedy some of the unforeseen issues that can arise in medical billing and practice management.

Anyone in the medical billing discipline can join the forum and read Steve's comments and training primers for free, including training primers on overpayments, refunds, deductibles, uninsured and self pay, however, a username and password registration is required to access the "deeper" parts of the forum. If you have questions, please post them into the Medical Billing Community Forum. We will see you there.