Practice Management Alert

Discovering an overpayment or credit balance in your billing office isn't the same as discovering a $20 bill you forgot you'd shoved into your jeans pocket: You can't simply view it as a bit of good fortune and be on your merry way.
 
If you take that approach, you could be setting yourself up for a huge fall down the road. On the other hand, scrambling to return the money could be a mistake as well. You need to proceed "more deliberately" than that when facing tough billing issues like overpayments and credit balances, urged attorney Wayne Miller with the Compliance Law Group in Los Angeles, speaking at a recent teleconference sponsored by The Coding Institute.
 
The first thing you should do when you discover you've been paid too much on a claim is to consult your practice's compliance plan and financial policies and procedures. That document should include a plan for handling such situations. "The key is to have a written policy and follow it consistently," advised Miller.
 
Aside from overpayments, billing offices also have to worry about credit balances - and contrary to popular belief, the two are not necessarily one and the same, Miller said. True, a credit balance can result from an overpayment, but that's not always the case. It could result from a simple accounting error, you could have been paid twice for the same service or there could have been a co-payment collection mistake, among other possibilities, he noted. Many billing offices simply keep a credit balance on their books, or ignore it altogether, which is a huge mistake, Miller said. It's important that you uncover the reason behind the credit balance, fix the problem and prevent it from recurring in the future. An overpayment results when the insurance carrier has paid you more money than it should have for a particular claim. CMS takes a strict view of providers' obligation to return all overpayments, Miller noted. In fact, failing to do so can result in civil money penalties, fraud investigations or even exclusion from the program, he warned. "What could have been a small issue could mushroom into a very big issue" for a provider that holds onto an overpayment from Medicare, he emphasized.
 
Providers' obligation to return overpayments from commercial carriers isn't as cut-and-dried as it is with Medicare/Medicaid, and often depends on state laws and managed care contract provisions, Miller pointed out. In fact, some states say if you billed in good faith, you don't have to refund a commercial overpayment at all, he said. But it's important that you know your state laws and payer contract provisions before deciding how to respond.
 
So what should you do if you determine you have an overpayment that you [...]