The Rise of Overpayment Demands and How to Protect Your Healthcare Business

Are you seeing this? Most healthcare providers I talk to these days concur -- there is a significant rise in overpayment demands from payers of all kinds, commercial plans as well as Medicare/Medicaid managed care plans. While the overpayment or recoupment process is not new, many healthcare providers are seeing these communications more frequently, more aggressively, and with very limited, if any valid basis for the demand. These letters often come with strongly worded language, the preemptive use of the term “fraud” and are intimidating to receive, especially when citing statutes, violations of the provider agreement and more legalese. Many will insist on offsetting the amount from future payments if you do not respond timely.

What can be done?

While I am finding myself more frequently taking on payers in these demands and would love to get a win that simply puts an end to these, the reality is that is not going to happen overnight. Insurance companies serve their shareholders who want to get a dividend (e.g., hold on to their cash as long as possible). What you can do, is know your own audit risks in advance and defend yourself. 

Coding audits can be tedious and costly to implement. That said, their value when needed, almost always outweighs their cost. Finding the right audit partner is key to maximizing the value proposition. The quickest way to prioritize your focus area when deciding what to audit is to follow the money. What are your top 10-20 billing codes by reimbursement amount over the last 12 months? Similarly, what are your top 10-20 utilized billing codes by unit/volume over that same timeframe? Finally, look at those top codes by payer to see who might care about how much money they pay out in reimbursements to your business. It’s these dollars that if put in jeopardy, are likely to stymie your business. Thus, they are the ones you want to protect. 

The scope and focus of many of the overpayments/recoupments have to do with the following: 

1. Medical necessity – does your medical record support the diagnosis and billing level codes you chose? Cloned notes and overuse of EMR templates can be difficult to defend.

2. Modifiers – did you use, or should you have used a modifier on your procedure(s) that might affect the reimbursement amount? 

The inverse way to review your risk areas is to look at your denial patterns. Are you receiving a lot of denials on certain services/providers/locations? Note that not all denials are a zero pay. Some are a reduction in pay (e.g., you billed a 99214, but you got paid for a 99213.)

Artificial intelligence

(AI) is playing a larger and larger role in how payers are analyzing their own data for trends and other key insights. It’s not perfect, but it has created a quick way for payers to dig into issues that may be problematic. As they say, the best defense is a good offense. Your offense is your own knowledge about where your business stands in the realm of billing compliance. 

There are many great coding experts out there who can give you a birds’ eye view (and yes, birds’ eye means only reviewing a limited number of records early on to avoid the slippery “valid statistical sample” slope) of your general strategy on the chess board we call revenue cycle management. 

If your healthcare business has received an overpayment demand or recoupment notice, contact me for assistance in responding and coordinating your efforts. There is an advantage to having your healthcare attorney involved where attorney-client privilege can protect you as you navigate your own internal investigation and findings.

CONTACT