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Understanding Overpayment Recovery Requests

What is an overpayment recovery request?

State laws and regulations protect the rights of payers, physicians and other health care providers. The laws and regulations ultimately work to preserve the financial stability of the health care industry.  One type of regulation is the overpayment.

According to CMS, the overpayment recovery request is triggered when a health care provider receives an overpayment of $10 or more in excess of amounts due and payable.1 Governed by federal law, once an overpayment has been identified, the amount becomes a debt owed by the health care provider to the federal government and CMS is mandated to recover all identified overpayments. CMS uses several different methods to recover overpayment including:

  1. reducing other payments currently owed to the provider
  2. withholding or setting off against future payments to the provider
  3. any other manner reducing or affecting the future claim payments to the provider


What are my rights when receiving an overpayment recovery request?

A provider has the right to receive payment for the services he or she provides unless CMS or the payer can show that the provider has received funds in excess of amounts due and payable.


Once the overpayment recovery process is initiated, CMS is required to send the provider a demand letter requesting payment. The provider has the right to submit a rebuttal statement within 15 calendar days from the date of the demand letter. Among other things, the rebuttal statement should contain evidence that supports why the recoupment is inappropriate. It is important to note that the rebuttal statement is not the same as an appeal. Thirty calendar days after the date of the first demand letter, a second demand letter may be sent if no response has been received from the provider.3


On the provider side, a provider has the right to initiate an appeal by sending a redetermination request within 30 calendar days from the date of the demand letter. During the redetermination process, a qualified employee of the payer conducts an independent review of the decision. If the redetermination request is filed within 30 calendar days from the date of the demand letter, the initial recoupment process will cease.  However, if a redetermination request is not timely filed, the recoupment procedures will begin on day 41, unless the full payment is received within 40 calendar days after the date of the first demand letter.4


Within 120 days, an Intent to Refer letter will be sent to the provider notifying him or her that any amount not yet recouped may be eligible for referral to the Department of Treasury for offset or collection.5


How far back can a payer seek recoupment on an overpaid claim?

Timelines for payers to seek recoupment on overpaid claims vary from state to state, and often contain exceptions where the payer has evidence of fraud, abuse or misrepresentation.


Submitting a quarterly Credit Balance Report (Form CMS-838) as required by Medicare allows a provider to address any improper or excess payment for claims on a quarterly basis. It allows the provider to identify any credit balance, or any amount determined to be refundable to Medicare periodically throughout the year.6


Another form that helps alleviate any overpayment surprises is the Home Health Agency Cost Report, an annual cost report that’s submitted to a Medicare Administrative Contractor (MAC). The cost report contains provider information such as facility characteristics, utilization data, cost and charges by cost center (in total and for Medicare), Medicare settlement data, and financial statement data.7


The timely filing of these two forms helps a provider avoid situations that may prompt future overpayment recovery requests from payers and it allows a provider to better respond to an overpayment recoupment request.


What are the reasons for an overpayment recovery request from a payer on a previously paid claim?

The presence of one or more of the four conditions will trigger the overpayment recovery process8:

  1. Duplicate submission of the same service or claim
  2. Payment was made to the incorrect payee
  3. Payment for excluded or medically unnecessary services, or
  4. A pattern of furnishing and billing for excessive or non-covered services.


How can the use of a home care software solution reduce the number of overpayment recovery requests?

The most powerful and easy-to-use home care software solution that empowers home health agencies to ensure JACHO, CHAP and ACHC compliant is Axxess.  The fully integrated software provides solutions that ensures real-time regulatory compliance; allows users to pass regulatory audits with ease; adopts best-practices; and grow your business worry-free.9


How do I know when the payer overpayment recovery requests that I receive are compliant with the Medicare Claims Processing Manual?

The Medicare Claims Processing Manual contains several chapters and thousands of pages, however having a general understanding of the manual allows a provider to better navigate Medicare fee-for-service claims.


More importantly, ensuring that an overpayment recovery request is compliant might require the assistance of an attorney. In most cases, there are other factors that an attorney can use to help a provider achieve the most desirable results while providing the necessary legal advice to properly handle a refund request.


[1] http://www.cgsmedicare.com/jc/claims/overpay.html

[2] http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/overpaymentbrochure508-09.pdf

[3] http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/MedicareAppealsProcess.pdf

[4] http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/overpaymentbrochure508-09.pdf

[5] http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM6183.pdf

[6] https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/fin106c12.pdf

[7] http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/CostReports/index.html?redirect=/costreports/

[8] http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/overpaymentbrochure508-09.pdf

[9] www.axxess.com


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