A Clinical Practitioner's Rights in the Overpayment Recovery Process
Posted On June 5, 2019
In today’s complex healthcare landscape, physicians, practices and hospitals must be continually vigilant in navigating the regulatory and economic currents affecting the practice of medicine. A recent unwelcome trend involves public or private payers (i.e., health insurers) seeking repayment from practices for claims that have already been submitted and paid by the payer. In many cases, the payer’s auditors arrive on the practice’s doorstep with no prior notice and with demands for patient records and billing documentation.
In the following weeks or months, the practice will invariably receive a letter outlining billing errors identified and the corresponding amounts owed back to the payer, which often represent significant repayment totals. With budgets and margins already stretched thin on all fronts, practice leaders are often left scrambling to review their contract with the payer and wondering whether doing business with that particular payer is sustainable under these terms.
Medical professionals and organizations need to know their rights in these situations so that they can protect themselves appropriately through all stages of the payer audit and payment recovery process. In South Carolina, practices are afforded certain rights under the South Carolina Health Care Financial Recovery and Protection Act (SC Code §§ 38-59-200 et seq) when payers initiate recovery actions related to claims that have already been paid, including requirements of the notice provided to the practice, the limitation on the lookback period for recovery of paid claims, and oversight and enforcement by the South Carolina Department of Insurance.
Requirements of Notice to the Practice
Under the Act, in order to initiate payment recovery efforts, the payer must send the practice a written notice at least 30 business days in advance. This notice must include information related to the claims the payer is disputing, including the patient name(s), service date(s), payment(s) made by the payer, a reasonably specific explanation of the change in payment and, if applicable, the terms of the appeals process, including a stated deadline.
Limitation of Lookback Period
Further, the Act limits the lookback period for the any payment recovery efforts to no more than 18 months after the initial payment is received by the practice unless certain requirements are met. The exceptions to the rule are if the overpayment recovery efforts are (1) based upon a reasonable belief of fraud or other intentional misconduct, (2) required by a self-insurance plan, or (3) required by a state or federal government program.
Enforcement by South Carolina Department of Insurance
In addition, the South Carolina Department of Insurance is given the authority to enforce the provisions of the Act, which includes ordering a payer in violation to cease and desist, correct errant business practices and/or make any payments due back to the practice. If the payer does not comply within 30 days, the Department may impose further penalties upon the payer, including a fine of up to $30,000, suspension or revocation of the payer’s authority to do business in South Carolina, or both.
Clinical practitioners should be aware of these rights under South Carolina law that protect them during the audit and payment recovery process. Assuming the payer’s notice letter includes an appeals process to dispute the overpayment claims, the practice should be sure to meet all deadlines and document having done so (e.g., certified letter or email read receipt). The practice’s initial goal should be to bring the matter to an agreeable resolution directly with the payer, but a complaint to the South Carolina Department of Insurance may be a necessary line of defense. Practices and practitioners are not powerless against arbitrary payment recovery practices, and have the ability to stand their ground and even push back under the protection afforded by state law.