Practice Management Alert

To Prevent Compliance Problems, Make Refunds Promptly

Practices that conduct retrospective audits often find such a review gives them a complete picture of the billing process, including coding, documentation, charge posting and payment posting. However, such a review can raise questions about what to do when an error is found.
 
If you've been overpaid, you must refund the money whether it is a one-time error or a mistake that you've been making for a long period. In its Final Compliance Program Guidance for Individual and Small Group Physician Practices, published in October 2000, the federal Office of the Inspector General (OIG) states, "In regard to overpayment issues, it is advised that the physician practice take appropriate corrective action, including prompt payment identification and repayment of any overpayment to the affected payer."
 
"Whenever you accept what you know is not yours, and you accept it willfully, that's fraud. All you have to do to protect yourself is do the right thing. We tell clients that if you overpaid someone, you would want your money back, and the insurers are no different," says John Bauer, FACMPME, MBA, CPA, managing member of Aspen Consulting Group, a medical practice consulting company in Strongsville, Ohio.
Steps to Handle Errors That Produce Overpayment
When you find an error that caused overpayment, follow Bauer's recommendations:
 
1. Evaluate the mistake and determine the reason why the claim was wrong and how it occurred. Make sure you actually made a mistake. Pull the medical record, check the documentation, and examine how the claim was billed.
 
2. Make sure your staff and physicians learn from the mistake and correct whatever caused it. For example, if you have a lot of elderly patients who pay the entire bill every time they receive a statement, causing credit balances and necessitating refunds, maybe the practice needs to learn from that, Bauer says. A corrective action in this case could be changing the billing process so those patients don't receive a statement until after their insurance has paid.
 
3. Categorize the refunds by the reason for them. This permits tracking the kinds of overpayments you are returning so you can head off problems.
 
4. Make the refund. Many practices make the mistake of holding on to refunds due payers as retribution for payer payment delays. The check should be written as soon as you've evaluated the mistake and according to your policy on refunds. For example, your practice's policy could be that when an incorrect payment is identified, refund checks are issued within 30 days.
 
To make the refund payment, send a letter stating you are making a refund, the reason for the refund, what the mistake was, and how you've corrected it. Attach to the letter the explanation of benefits (EOB) from the original claim [...]
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