Physician practices frequently have to deal with allegations that they have received overpayments from commercial and governmental payers. Attempting to determine the validity of alleged overpayments can divert significant time from direct patient care, which results in lost practice revenue. All too frequently, overpayment demands are made in the most general terms; the practice is not given the specific information—such as dates of service, patient names, or individual claims—which would enable the practice to determine independently the validity of the demand. Overpayment demands may also be intimidating, particularly when the amounts alleged are significant. Such amounts are frequently the result of "extrapolated" audits. Sizable demands may also reflect a payer’s contention that alleged overpayments have been occurring over many years.The AMA has created "Questions to consider when addressing payer overpayment recovery requests on individual claims" to help you handle overpayment recovery issues.
Repayment is even more important now, since the Patient Protection and Affordable Care Act (ACA) imposed a new Medicare repayment obligation on physicians and providers. Under the ACA, a physician practice must report and repay a Medicare overpayment no later than sixty (60) days after the date on which the practice identified the overpayment. Failure to report and repay the overpayment within this deadline may result in significant monetary and administrative penalties. Physician practices should have in place procedures for repaying identified overpayments to all payers as a matter of good business practice.
For more information on AMA’s advocacy with respect to the 60-day repayment obligation, refer to the Fraud and Abuse section on the Advocacy with the Administration webpage.
Overpayment allegations can frequently be successfully challenged. Insurers may, for example, request overpayments of dubious legitimacy, hoping that the practice will simply concede. Although thismay resolve a particular set of allegations, ready acquiescence may fix the practice as an "easy mark" to which an insurer may return with further demands. Informed opposition, even if not always entirely successful, may lead the practice to develop a better process for identifying overpayments,, as well as confirm for the insurer that the practice is not an "easy mark."
Federal and state regulations may help practices oppose or otherwise limit the effectiveness of overpayment demands. For example, a number of states limit the "look back" period over which insurers may claim overpayments. Many states also require insurers to provide specific information enabling physicians to determine independently the validity of demands prior to recoupment. The AMA has also successfully lobbied for significant limitations on the authority that certain government contractors (for instance, Medicare and Medicaid Recovery Audit Contractors) may exercise when pursing physician practices for alleged overpayments.
Read more about the AMA’s advocacy with respect to the Medicare and Medicaid Recovery Audit Contractor Programs.
Inaccurate payments, whether they be overpayments or underpayments, require physicians and payers to rework claims. Revisiting claims that could have been paid correctly the first time greatly increases administrative costs incurred by physicians, payers and the health care delivery system as a whole. Tremendous savings may be achieved by reducing payment errors and improving the rate of first pass accuracy. The National Health Insurer Report Card (NHIRC) documents these payment errors so that both physicians and participating health insurers can improve their administrative efficiency.
The AMA has developed a number of resources to help physician practices analyze the legitimacy of, and possibly defend against, overpayment allegations. The National Managed Care Contract contains provisions dealing with overpayment demands made by managed care organizations. The National Managed Care Contract Database comprises all state regulations governing overpayments, as well as Issue Brief IX, which is designed to help physicians negotiate overpayment provisions and analyze the legitimacy of overpayment demands.