States setting time limits on insurer claims "takebacks"

At least five states have passed or are considering legislation restricting health plans' ability to demand money back for apparently overpaid reimbursements.

By Julie A. Jacob, amednews staff. Jan. 28, 2002.

If it weren't frustrating enough waiting for an insurer to pay a claim, some doctors are experiencing the added aggravation of receiving payment for a claim and then years later having an insurer claim that it overpaid and demanding its money back.

That situation is called a takeback, and some state legislatures are trying to make sure that it doesn't turn into a big headache for physicians.

This year, the Florida and New Hampshire legislatures are considering bills that set time limits on insurer requests for repayments of overpaid claims. Those bills are similar to legislation that went into effect last year in Missouri and Utah and that will go into effect in Ohio this July.

Such provisions are already part of state prompt-pay laws in Kentucky and Maryland, according to the AMA's Advocacy Resource Center.

The bills in Florida and Utah also include provisions that require physicians to respond to insurer requests for claims takebacks within a certain number of days. John Knight, the Florida Medical Assn.'s general counsel, said that's only fair.

Many claims takeback provisions are included in states' prompt-pay laws.

"It's difficult to argue that an HMO had to pay the insurers in 35 days, but the physicians didn't," Knight said.

The trend toward states limiting the time in which insurers can request repayment of claims overpayments and the time in which physicians must respond to such requests indicate that state legislatures "are trying to be fair and address [the issue of claims payment] from both sides," said Rachel Morgan, a policy associate with the National Conference of State Legislatures' Health Policy Tracking Service.

"Just like [physicians] can't bill forever on end, it is the same sort of thing for insurers. ... [Legislatures] are trying to put some sort of limit on it," Morgan said.

Two-year limit in Ohio

In Ohio, a claims takeback provision is included in a prompt-pay bill that takes effect this July. The provision "essentially says that all claims are final after two years," said Tim Maglione, the Ohio State Medical Assn.'s senior director of government relations.

OSMA had wanted a one-year time limit, but the state health plan association lobbied for more time, he said.

Kelly McGivern, president of the Ohio Assn. of Health Plans, described the two-year time limit as reasonable. "We think the overall bill will help improve communications" between physicians and insurers, she said.

OSMA had been getting many complaints from physicians who said insurers were contacting them up to five years after a claim was paid demanding that physicians repay overpaid claims, either by sending a check or having that amount deducted from new claims, Maglione said.

Mike D'Eramo, executive administrator for MaternOhio Management Services, an alliance of 72 obstetrician-gynecologists in Columbus, called insurer requests for claims takebacks a problem.

"It's not quite as polite as a request for money," D'Eramo said. "It's more like, 'Well, we did some research, we overpaid you and we are taking the money now.' "

Insurer requests for takebacks are usually in the "few hundred dollars" range, said D'Eramo, who noted that it was a problem with almost all insurers in the state.

In Missouri, a prompt-pay law that went into effect last July includes a provision stating that insurers must request repayments within 12 months of the original claims payment.

While it's not a major issue in the state, "there were sporadic problems," said Tom Holloway, the Missouri State Medical Assn.'s director of government relations.

Catherine Edwards, executive director of the Missouri Assn. of Health Plans, which opposed the bill, said the health plan group's goal now is making sure the law includes "safeguards to prevent fraud" by physicians.

In Utah, a prompt-pay law that went into effect Sept. 1, 2001, includes a provision limiting insurer requests for claims takebacks to three years for coordination of benefits errors and 18 months for other reasons.

More legislation coming

In addition to bills enacted last year, some state legislatures are considering similar bills this year.

In New Hampshire, the state medical society supports a claims takeback bill, said Janet Monahan, the society's director of public affairs. The bill would ban "retroactive denials of previous paid claims" unless the insurer requests money back within one year of the original payment.

While insurer demands for claims takebacks are not a huge problem in New Hampshire, it does occur, physicians say.

Gary Woods, MD, an orthopedic surgeon in a 16-physician practice in Concord, thinks it "will become a bigger and bigger issue." The legislation is "more of a precautionary thing," he said. He noted that, although some insurer requests for overpayments were due to computer errors, in other cases insurers cut fees for procedures and then asked for money back on claims paid at the older, higher fee.

"We keep all of our old invoices, say 'No, we billed correctly,' and send the invoices back," Dr. Woods said.

In Florida, a Senate bill designed to close some loopholes in the state's prompt-pay law includes a provision limiting insurer claims takebacks to one year. The bill also includes another provision that requires physicians to either pay or contest the overpayment within 35 days.

Physician grievances about insurers requesting takebacks of overpaid claims three, four or even five years after a claim was paid "are a major complaint," said the FMA's Knight.