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How to Tackle Insurers' "Takeback" Requests


Appealing a Request is Easier Than You Think

By David Doyle

For many billing companies, the following scenario may be all too familiar. You receive a letter from Medicare or another insurer stating that payment for services your client's practice provided was made in error. The doctor must now refund the money he or she mistakenly received from the insurer or see all future payments withheld until the insurance company recoups its money.

Many providers in this situation would prefer to write a check rather than spend time investigating the cause of the error or the insurer's assertion that the payment was made by mistake. However, fighting these so-called "takeback" requests – and winning – may be easier than you think.

Also known as "clawbacks," repayment requests are often initiated when insurers determine through their own bookkeeping methods that duplicate payments were made to a practice, the documentation does not support the level of coding used, the patient's coverage was terminated, or they simply made an administrative error.

Handling such requests can be an arduous task. A practice must dig through its billing records and the patient's file to either substantiate the insurer's claim or prepare for an appeal. However, there are steps you can take to make the process more manageable.

Know the regulations in your state. Some states' prompt payment laws require insurers to request repayments within a specified time period. In Indiana, for example, requests for refunds of overpayments must be made within two years of the initial payment (except in the case of fraud allegations). If the request is made after that time, a letter alerting the insurer to the fact it is in violation of the law should be the only action needed.

Respond immediately and ask for more information, if needed. Insurers must give their reasons for determining why the payment to the practice was improper. If initial correspondence does not make the insurer's case clear, request clarification. Send the request via certified mail so you can verify that it was received. Avoid having any phone conversations about the discrepancy, as it will be easier to understand the insurer's case if your communication is conducted in writing.

Identify a contact person. Disputes often remain unresolved because providers must go through several levels of red tape as they are transferred from one insurance company department or representative to another. If the initial repayment request does not list a contact person, call the insurer and ask for the name and phone number of a specific person or, at the very least, a specific department.

If you believe the insurer's request is not valid, appeal. Each payor has a specific process in place for filing an appeal, and it may include a template form. Refer to your contract for more details. An appeal letter or request should include the following items:

  • An acknowledgment of the overpayment recovery request
  • The patient's information, including date of service, claim number, and health insurance member ID
  • A detailed explanation for the rationale of the appeal and any supporting documentation, which may include copies of the patient's eligibility verification and dates of service, clinical documentation, remittance advice, explanation of benefits, claim submissions, and any relevant payor policies or guidelines being used by the payor for the request
  • Contact information for the physician or biller in charge of the appeal

There is a well-known case in which a hospital successfully fought back against a takeback request made by an insurer that made a mistake regarding the patient's insurance eligibility. The hospital proved that it had acted in good faith by checking eligibility and then delivering services to the patient. In an appeals court, the hospital won its right to keep the money it received from the insurer. Thus, some attorneys recommend the inclusion of case law in an appeal letter.

The American Medical Association suggests that practices keep logs of all interactions with payors, including takeback requests and appeals. The logs should include payor names, reasons for the takeback requests, dates of appeal attempts, and outcomes of the appeals. Using these logs, practices can identify trends or problems specific to certain payors.

If you verify that the insurer is in fact owed the money, do not delay paying it. If your state allows offsets, you want to do whatever it takes to avoid them, since they will cause additional administrative work regarding future claims. Also, if you determine on your own that an insurer has overpaid you, experts agree you should wait until the payor requests the money – which it likely will – or call the insurer to discuss the discrepancy and ask them to send you a formal repayment request. This is not some underhanded strategy to avoid paying back the money. Waiting for a request as opposed to proactively repaying the money simply ensures that your check will end up in the right hands and will be properly credited to your account.

Another way a practice can win against payors' takebacks is to prevent them from happening in the first place. The activity logs I mentioned earlier will help your billing staff identify any trends that may be causing the payment errors. These trends can then be used as leverage during your next contract negotiation with a payor. For example, establish time limits on takeback requests and have those written into the new contract. Finally, investing in a revenue cycle management (RCM) system that helps ensure clean claims and verifies patient eligibility will improve claims processing and reduce errors.

If your client's practice receives a takeback request, take the time to ensure the request is valid. In doing so, you can potentially save your client money.

David Doyle is the chief executive officer at CRT Medical Systems, a top 100 medical billing company serving clients throughout Michigan and the Midwest.

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