Practice Management Alert
Deny Untimely Refund Requests
Don't let payers pressure your office into paying refund requests for mistakes they made on outdated claims they've already paid. Instead, deny their requests professionally, but firmly. If the payer insists on a refund from your office, you have three choices: refund the request and lose deserved payment from Medicare, ask the patient to pay for the services, or deny the request and face a potential conflict with the payer. Send Payers a Letter If you deny the payer's refund request, send the insurance company a letter outlining your reasons for not sending back the claim's payment. Your letter should explain that: You will find a sample letter outlining these stipulations in article 5. Establish Refund Deadlines One way to prevent untimely refund requests is to establish refund deadlines for insurance companies and include them in your contracts. If the payer still requests the refund, even after you've sent a letter, you can pay the request; write to other payers (i.e., Medicare, the patient) explaining the situation and ask for payment or request proof of why they can't pay (the latter, to present to the primary insurer requesting a refund); or take the insurance company to court.
Here is an example of the type of untimely refund request you should deny. A commercial payer requests a payment refund for a patient's visits during April and May 2001. At the time of treatment, the commercial payer was the patient's primary insurer, and Medicare was the secondary insurer. The commercial payer lets you know in a refund request that the patient had been on long-term disability since her last day of employment, three years prior, so Medicare, not the commercial payer, was the primary insurer during the dates of your services. At the time of filing the claim, however, you were not aware of this information. By the time the commercial payer lets you know the mistake and requests a payback the Medicare filing time limit has expired.
If you filed the claim "in good faith," and the payer made the error, the insurance company should seek reimbursement from the patient, says Greg Chadwick, a billing expert. (That is, of course if you have no take-back provisions in your contract with the payer, in which case, you would have to pay up). A practice acts "in good faith" when it provides services to a patient and presents to the insurer written proof of loss, usually on a claims form.
None of these sounds appealing, but under certain circumstances denying the request will save your practice money, both in the short and long runs. You'll keep the payment for that one claim and establish a precedent for handling future refund requests from that payer.
You could use the payer's timely filing deadlines as your refund period, one expert says. "What is good for the goose is good for the gander." If a payer's timely filing deadline is one year, then consider a refund request only if it's made within one year, he suggests.
Be aware that this solution only works if you're dealing with one insurance company or more than one with the same filing deadline. If the filing deadlines are different for each payer, then the solution may not work as well as with the example at the beginning of this article, Chadwick says. If the commercial payer's refund deadline, based on its filing deadlines, hasn't expired, but Medicare's filing deadline has, you will have to refund the commercial payer, and you won't be able to file with Medicare to receive payment.
You have to decide whether applying the refund deadlines based on timely filing deadlines is worthwhile, given that they work only under limited circumstances. Whatever you decide to do, at least deny the requested refund with the letter, if appropriate. "We can't make it easy for insurances to take money back, and we shouldn't be so quick to cut refund checks," Chadwick states.
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