How do you handle overpayments in medical billing?

Asked by: Preston Hammes  |  Last update: March 3, 2025
Score: 4.4/5 (57 votes)

When the payer acknowledges the overpayment, they should reprocess the claim and request the return of the excess amount. Once the provider receives the request, he should immediately issue a refund check to the address provided in the request.

What happens if I overpay a medical bill?

If the insurance provider clearly proves there was an overpayment, they will file an official recoupment request. Repaying or “Refunding” that amount as soon as possible will go a long way toward limiting your legal vulnerability.

How do you deal with overpayments?

When a business receives an overpayment, it is required to notify the customer and to offer to refund the excess amount or apply it as a credit toward a future invoice. The agreed-upon resolution should be documented and implemented quickly.

How should our practice handle patient overpayments credit balances?

As for what a doctor should do with credits the answer is simple, though perhaps not what a dentist wants to hear: refund them to the patients. A doctor should take every reasonable effort to locate a patient and refund the positive balance.

How to handle insurance overpayments?

Immediately take the following steps:
  1. Send a letter to the insurance company making them aware an erroneous overpayment was made. ...
  2. Allow the payer at least 30 days to respond. ...
  3. Once instructions are received, make sure the refund is submitted with all required information to ensure proper credit.

Underpayments & Overpayments

40 related questions found

How to handle patient overpayments and refunds?

Patient Overpayments
  1. Notify the patient about the overpayment. If the patient is returning, it can be offered as a credit for his future visits. If the patient declines the offer, the extra payment should be returned to him.
  2. Send a check to the patient immediately, including a note explaining the overpayment.

What happens if insurance overpays you?

How the Overpayment is Handled Depends on the Situation. In some situations, they may allow you to keep the funds if you incur other damages related to your claim. However, they may also ask you to fill out a form returning the excess money to their agency.

How to resolve credit balance in medical billing?

Best Practices For Credit Balance Resolution
  1. Identify true overpayments.
  2. Work balances from the oldest to newest.
  3. Analyze credit balances using : ...
  4. Identify if the patient is an eligible medical beneficiary.
  5. Check if medical payment rules apply.
  6. Identify Primary payer and other liable insurers.

How do you account for customer overpayments?

In this case please take the following steps:
  1. Create a Billing for the customer. Set the GL Account on the Billing Line to sales or miscellaneous revenue account. Post the Billing.
  2. Navigate to the Cash Receipt with the overpayment. Apply the balance of the Cash Receipt to the overpayment.

How do you handle billing errors?

  1. 1 Acknowledge the error. The first step to handle a billing error is to acknowledge it and apologize to the customer. ...
  2. 2 Correct the error. ...
  3. 3 Compensate the customer. ...
  4. 4 Prevent future errors. ...
  5. 5 Follow up with the customer. ...
  6. 6 Build a relationship with the customer. ...
  7. 7 Here's what else to consider.

What to do if a client overpays you?

  1. 1 – Confirm that the customer has paid too much. If a customer contacts you with a problem like this, have a look at the invoice in question and check your bank records. ...
  2. 2 – Match the invoice to the overpayment. ...
  3. 3 – Account for the overpayment. ...
  4. 4 – Create a credit note. ...
  5. 5 – Match the credit note with the refund.

How to handle employee overpayments?

How To Correct a Payroll Overpayment
  1. Step 1: Gather Data. Before taking any action to correct overpaid wages, you'll need to get your facts straight. ...
  2. Step 2: Check State Laws and Company Policies. ...
  3. Step 3: Notify the Employee. ...
  4. Step 4: Discuss Repayment Options with the Employee. ...
  5. Step 5: Adjust your payroll.

Am I obligated to pay back an overpayment?

The general rule is that if an employer has overpaid an employee, the overpayment of wages should be repaid even if the mistake was the employer's. In other words, the employer is legally entitled to recover any salary overpayment from the employee.

What is the CMS rule for overpayments?

Indeed, in CMS's view expressed in the Final Rule, quantification is no longer a component of "identification." As CMS now explains, "once a person has identified an overpayment, … the person has 60 days to report and return [it], even if the person has not yet calculated the precise amount of the overpayment at the ...

What are unethical billing practices?

These may include sudden and significant bill increases without transparent explanations, discrepancies between agreed-upon rates and invoiced amounts, and vague or inconsistent billing practices.

What is the No Surprises Act?

The No Surprises Act protects consumers who get coverage through their employer (including a federal, state, or local government), through the Health Insurance Marketplace® or directly through an individual health plan, beginning January 2022, these rules will: Ban surprise billing for emergency services.

How do you fight overpayments?

If you do not agree that you have been overpaid, or if you believe the amount is incorrect, you can appeal by filing Form SSA-561, Request for Reconsideration. You should explain why you think you have not been overpaid or why you think the amount is not correct.

How will you resolve if there is a patient's overpayment or credit on an account?

If the patient overpays, the provider representative should investigate to ensure the credit is correct. If there are no other outstanding services, the patient should be refunded immediately.

Do I have to return an overpayment?

If you unreasonably refuse to repay the overpayment and you still work for the employer/agency, then in law they could take the money from your wages without your permission. If you have left the employer/agency, they could bring a civil claim for recovery of the overpayment as a debt.

How do I fix my medical billing?

Your health insurer will review your complaint and should tell the provider to stop billing you. If you do not agree with your health insurer's response or would like help from the California Department of Insurance to fix the problem, you can file a complaint with us online or by calling 1-800-927-4357.

What is the back-end function in medical billing?

The back-end revenue cycle for healthcare providers is a complex process involving multiple steps and stakeholders. It begins with the patient visit, which includes scheduling appointments, verifying insurance coverage, collecting payments, submitting claims to insurers, and processing reimbursements.

How would you handle an overpayment from the insurance carrier?

Talk to the insurance rep and ask them to explain how they determined their payment amount and understand if they processed the claim correctly. If the payer confirms that they made an overpayment, they should reprocess the claim to show correct payment and send a request for the provider to return the overpayment.

How do you handle overpayments?

When overpayments occur, the employer and employee should discuss and agree on a repayment arrangement. If the employee agrees to repay the money, a written agreement should be made which sets out the: reason for the overpayment. amount of money overpaid.

How long does an insurance company have to recoup an overpayment?

California law allows health plans, their delegated groups and health insurers 365 days from the date of payment to request a refund, except in cases of fraud or misrepresentation.

What if an insurance company pays you money by mistake?

If the insurance company asks you to return the overpayment and you do not, it could file a lawsuit. If the insurance company wins, you may end up having to pay the money back, plus legal fees and possibly interest.