This article was originally published on hbma.org.
Usually when you find that crumpled $20 bill in the pocket of your favorite pair of jeans, you get a smile on your face. It is an unexpected find. Maybe you remember how it got there. Maybe you don’t. Regardless, it is in your jeans, and it is yours now – even if it might not have been yours in the first place!
But, when that extra money shows up in your client’s jeans and you are doing the laundry, then we have a problem. A billing company has to figure out if those are actually the client’s jeans, who owns that money, how it got there, whether it should actually be a $10 bill, and whether it was even supposed to be in that particular pair of jeans in the first place. Then, based on what you find out, you may have to tell your client they can’t keep the money.
Good luck!
However, the underlying principle here is one we’ve all been taught since childhood: we should return what does not belong to us. The government’s perspective on this is simple: when a client receives money to which they are not entitled, the billing company’s role is to help the provider find the proper owner and assist the provider in returning the money. As the Office of the Inspector General (OIG) states, “Billing companies should institute procedures to provide for timely and accurate reporting to both the provider and the healthcare program of overpayments.”
As such, processing and returning overpayments is not optional, it is a federal mandate (see 63 FR 70144, Dec. 18, 1998). If not handled properly, overpayments can create costly ramifications for your clients and you.
What’s the Cause?
Let’s first look at why overpayments happen and what you should do to handle them. There are four main contributors to overpayments in the healthcare industry: the patient, the healthcare provider, the billing company, and the payor. Each can contribute to overpayments in different ways. Causes arise in a variety of situations, including the use of incorrect patient demographics, miscalculating deductibles, applying claims to the wrong account, using incorrect contract payment rates, or receiving duplicate payments. In light of all these possibilities, identifying the cause of an overpayment is not always easy.
Since payments in today’s world often end up dumped together into a large electronic holding tank, overpayments can become challenging to identify and sort through – particularly amidst the constant pressure to get new payments posted and fresh bills out the door. In fact, the pressure of performing “new work” is often the very reason billing companies miss signals that an overpayment has occurred. Lacking an immediate return on investment, sorting through overpayments frequently becomes that much less of a priority, which only makes the neglected stack grow higher. This is a cruel cycle, but a very common one. However, as we’ll see, it is not one to be avoided.
Identifying and Returning Overpayments
WHAT THE OIG SAYS
In 1998, the OIG issued specific compliance guidance for billing companies. In it, the OIG assigned to billing companies the responsibility for identifying and assisting your clients in the return of overpayments. As a billing company, you are tasked with working with your clients to investigate anything you know to be amiss, which includes the investigation of overpayments. If evidence of misconduct (e.g., unreported overpayments) is found on the part of one of your clients, the OIG outlines a proper initial response:
- Refrain from submitting those claims that appear questionable.
- Notify your client in writing within 30 days of discovering the questionable payment.
- Work with your client to satisfactorily resolve the suspected misconduct.
But after completing these steps, the OIG advises that additional action may be needed if your client’s misconduct continues and takes a turn toward the intentional or fraudulent. In this case, the OIG instructs you to do one of the following three things:
- Refrain from submitting any false or inappropriate claims.
- Terminate your contract with said client immediately.
- Report the misconduct to the appropriate federal or state authorities no later than 60 days after identifying credible evidence of a violation or by the date on which a corresponding cost report was due.
For many years, this guidance set the standard for billing companies.
GOVERNMENT REPAYMENTS – THE FINAL RULE
However, when the Affordable Care Act was passed in 2010, it created an express duty that individual and institutional healthcare providers report and return “overpayments” received from Medicare or Medicaid to the government “by the later of” 60 days after the date on which the overpayment was “identified” or by the date on which a corresponding cost report was due.
This reporting requirement became commonly known as the 60-Day Rule, but there were a number of unanswered questions relating to the concepts of “identifying” an overpayment and what a person must do when it became aware of an overpayment.