Due to the complexity of the third-party medical payment system, insurance companies sometimes overpay or underpay anesthesia practices. If an insurance company overpays a practice, the payer might later ask the practice for a refund. It’s important that anesthesiologists and their staff know how to respond to requests for refunds.
The American Medical Association has created a guide for practitioners, called the Overpayment Recovery Toolkit, which lays out the procedure for responding to a request for a refund. The first thing that it is important to know is when or why a request for refund might be submitted. Sometimes an insurance company simply makes duplicate payments by mistake. Other times, two different insurers pay for a procedure when only one was actually responsible. This results from a failure to coordinate between payers. It could be that an insurance company pays for a patient whose plan doesn’t actually cover the procedure or service that was billed, or that the service was performed without the necessary preauthorization. In still other scenarios, an insurance company could end up paying for a procedure later deemed medically unnecessary. There are many factors that could lead to an overpayment. Any of these scenarios might prompt an insurance company to request a refund.
In especially vigilant practices, accountants may notice that insurance companies have overpaid and immediately call the company to ask them to send a refund request. This proactive approach allows anesthesia practices to maintain control over the timing of the refund request and to keep the “books clean,” as one participant in the Billing Office Issues discussion group on the Medical Group Management Association website notes.
In most instances, the practice does not reach out to the insurance company about an overpayment, but rather first learns that the payment has been botched when an insurance company submits a request for a refund for a certain amount of money. It’s important that anesthesiologists respond promptly to these requests: within a week or two, if no specific deadline is given. Even if no answer can be given immediately, practices should communicate with the insurance company and take steps towards resolving the issue.
It’s also imperative that the anesthesia practice checks to make sure that the request for refund was made within the appropriate time window. State statutes mandate the window of time in which a request for refund may be made. The time frames vary by state but could be within 6, 12, 18, 24, or 30 months of the date the original overpayment was received. If it is determined that the request for refund is invalid, the practice should appeal and submit a letter that fully explains the reason for appealing.
On the other hand, if it is determined that the request for refund is valid, managed care contracts permit the insurance companies to regain overpayment amount by paying less for future services. In other words, the insurance company can offset the amount by underpaying by the same amount as they overpaid. This system means that the anesthesia practice doesn’t have to cut a check to the insurance company, but rather receives less money for services rendered until the debt has been settled.
Without the knowledge of how to respond quickly and painlessly to insurance companies’ inevitable requests for refunds, anesthesia practices can end up wasting undue quantities of time and resources on resolving these issues of payment.