Whether you are a patient or payer, dealing with overpayments is a frustrating experience that often leaves you wondering how to handle them. In today’s guide, we will discuss how to handle overpayments as a payer and as a patient. Moreover, we will explain the reasons for overpayments and offer tips on managing payer and patient overpayments.So let’s start:
What are “Overpayments” in Healthcare?
When a healthcare provider receives more payment than the actual cost of services provided to a patient, it’s called an overpayment. Overpayments can result in financial loss for patients or payers, an insurance company, or a government healthcare program.
Overpayments by Payers
Suppose payment is made by the payer, which can either be an insurance company or a government healthcare program to the healthcare provider. In that case, it is more than the agreed-upon amount for a particular service or claim. It’s considered an overpayment by the payer. There can be several reasons a payer may end up overpaying, such as coding mistakes or incorrect reimbursement calculations.
Let’s put it this way, a patient with insurance coverage gets a treatment from a healthcare provider, but the doctor’s office assigns the wrong code for the treatment and sends it to the patient’s payer. If the payer pays the total amount without questioning the bill to the healthcare provider, then it’s an overpayment by the payer.
If the payer later finds out that an overpayment has been made, they must immediately request the provider to refund the overpaid amount. The payer may have to provide the provider with an explanation of the overpayment and ask for reimbursement of the difference between the billed amount and the actual amount for the service or treatment provided to the patient.
Overpayments by Patients
Overpayments by patients refer to situations where patients pay more than the required amount for medical services or treatments they receive. It can occur for various reasons, such as billing errors, lack of clarity in healthcare pricing, or the complexity of insurance reimbursement processes.
For instance, if a patient visits a healthcare provider for preventative medical treatment. After the treatment, the provider’s billing department processes the charges. It generates an invoice for some other treatment that costs more than the treatment he receives. Then he eventually ends up overpaying, assuming that the bill he receives is accurate.
It’s important to know that an overpayment by a patient can be rectified in several ways. The patient can contact the healthcare provider’s billing department to inform them of the overpayment and provide evidence. The billing department will then investigate the matter and issue a refund for the excess amount.
Moreover, if a patient has insurance coverage, the overpayment can be reflected as a credit on his account. The excess amount will be adjusted against future medical bills or refunded upon request.
How Can A Healthcare Practice Prevent Overpayments?
A healthcare practice can take various steps to ensure the prevention of overpayments.
Following proper billing practices is one of the ways procedures can ensure that healthcare providers submit accurate and complete claims for reimbursement.
Moreover, practices should ensure accurate coding by assigning appropriate medical codes to reflect the healthcare services provided to patients, as it helps in bringing financial transparency and ensures that reimbursements are made correctly.
Having a robust auditing system is another way practices can identify payment errors to prevent overpayments while maintaining the integrity of the healthcare reimbursement system.
How Can A Healthcare Practice Handle Overpayments?
A healthcare practice usually handles overpayments following a systematic approach to ensure accurate and timely resolution. Here are the steps that a practice takes to handle matters involving overpayments.
Practices keep detailed records of all payments received that help them in identifying and reconciling overpayments.
By conducting regular financial reconciliations to compare the payments received against the services provided, practices find discrepancies to track overpayments.
Once a discrepancy is identified, practices determine if it’s really an overpayment or not by verifying the payment records.
Communication with Patients:
If an overpayment is found, the doctor’s office reaches out to the patient or payer to inform him of the situation.
Offer Refunds or Adjustments:
The patient or payer is offered options for resolving the overpayment issue, which include issuing a refund or adjusting the overpaid amount as a credit for future bills.
Follow Legal and Ethical Guidelines:
Practices must ensure that handling overpayments complies with legal and ethical guidelines.
It’s essential for the healthcare provider to clearly explain any adjustments made to the patient or payer’s account and provide him with updated statements reflecting the changes.
Update Financial Records:
Make necessary adjustments in the financial records, including billing and accounting systems, to reflect the overpayment resolution accurately.
Frequently Asked Questions (FAQs)
Are overpayments common in healthcare?
Yes, overpayments are common in healthcare, and they come as a challenge in revenue cycle management that ultimately impacts the financial health of the medical practice.
What are the common reasons for overpayment in healthcare?
Some common reasons for overpayment are billing errors, duplicate billing, upcoding, out-of-network charges, and incorrect payment posting.
What legal consequences can a healthcare provider face if he fails to refund a patient’s overpayment?
Suppose a healthcare provider doesn’t refund the overpayment he received from a patient. In that case, he might have to deal with severe consequences such as being held accountable under the False Claims Act, paying fines, and being excluded from government healthcare programs.
How can healthcare payers handle overpayments on their end?
Healthcare payers such as insurance companies or government health programs have a process to handle overpayments. These include identifying overpayment, investigating the cause, notifying the healthcare provider or beneficiary about the overpayment, and requesting repayment.