August 3, 2010 Feature

When Health Plans Demand Repayment

Clinicians beware: Receiving payment for claims from private health plans or government health care programs does not necessarily close the accounting books on those claims. Speech-language pathologists and audiologists need to be aware that even after they receive payment for claims, those claims may still be subject to future audits. And if the payer denies a claim in a subsequent audit, the payer may require the clinician to return the payment.

Medicare

Contractors process and pay claims under Medicare Parts A and B. These contractors include Medicare Administrative Contractors (MACs), carriers, and fiscal intermediaries (FIs). Federal regulations allow Medicare contractors to reopen and examine a claim within specified periods of time:

  • Within one year from the date of the initial determination or redetermination (or first level of appeal) for any reason.
  • Within four years from the date of the initial determination or redetermination for "good cause."
  • At any time if there is evidence of fraud.

"Good cause" can be established in two ways: 1) if there is new and material evidence that was not available or known at the time of the initial decision and that may result in a different conclusion; and 2) if evidence that was considered in making the determination or decision clearly shows that an error was made at the time of the decision.

Medicare-participating SLPs and audiologists also should be aware of Recovery Audit Contractors (RACs), which identify improper payments (both overpayments and underpayments) made on health care services claims. Initially part of a three-year demonstration project, RACs are now permanent. The RACs' look-back period is limited to three years from when the claim was paid, and they cannot review claims paid prior to Oct. 1, 2007.

RACs are in the process of auditing claims in Medicare regions C (South) and D (West), specifically screening hospital clinic claims to detect if "untimed" procedure codes were billed more than once per day for an individual patient. Because most codes for speech-language services are untimed, the RAC audits will likely include speech-language procedure codes.

Upcoming RAC reviews also may target audiology services. During the demonstration project, RACs recovered $1.4 million from providers, including audiologists, for overpayment of vestibular function testing in Florida.

The Centers for Medicare and Medicaid Services (CMS) will periodically approve new issues for RAC review. These issues will be posted to the RAC website, which includes additional information about RAC operations. 

Medicaid 

State Medicaid programs also may audit paid claims within time periods specified by the state law and Medicaid agency regulations. Medicaid Integrity Contractors (MICs), which are equivalent to the Medicare RACs, identify and recover overpayments. MICs are part of the Medicaid Integrity Program and were established by the Deficit Reduction Act of 2005. The look-back period for MICs is set by state law. SLPs have recently reported MIC audits on services such as sensory integration.

Private Health Plans 

Private health plans also review paid claims. As with Medicare and Medicaid, health plans can re-examine claims they have paid providers and change their payment decisions. Private payers—like the public health care programs—also are vested in audits, given that $68 billion is lost annually to health care fraud, according to the National Health Care Anti-Fraud Association. Providers need to be aware of the nature of audits, look-back laws that limit the time a payer can ask for repayment, and how to minimize negative audit outcomes.

It is important to understand today's health care environment. For example, according to "The Business of Health Care Provider Audits [PDF]," an article in the December 2006/January 2007 Today's Chiropractic Lifestyle, "insurers have decided to go after the reimbursements after they are paid" to meet profit expectations. The authors claim that payers have turned audits into "revenue streams"—they collect claims data and generate reports that "automatically pinpoint providers that are doing something differently from the pack." Provider audit triggers might include, for example, using Correct Coding Initiative rules (CMS edits that control which code pairs can and cannot be billed on the same day), date range duplicates, re-bundling, procedure repetition, unusual procedure rates, and geographic improbabilities to detect unusual patterns.

The article also lists sample billing violations that identify providers as targets for audits, including code jamming (inserting fake diagnosis codes to get insurance coverage), billing for non-covered services, billing for services that are not reasonable and necessary, routine waiver of co-payments, and billing third-party insurance only. The authors advise providers to develop a system that stores claims data and generates reports, much as insurers do, and to manage audit risk by monitoring billing and claims before submission.

Additionally, providers should review payer contracts. "You should not agree to contractual terms that would put you at open-ended, retroactive risk," asserts Gil Weber in his article, "Limiting a Payer's Ability to Unilaterally Deduct or Offset Disputed Amounts from Future Payment" (Podiatry Management, August 2006). "Otherwise, how can you afford to treat any patient if every one of your claims is subject to unrestricted, retroactive cancellation by a payer at any time in the future?"

Weber says, "It is outrageous for the payer to retroactively deny eligibility, remove itself from all financial responsibility," and then tell health care providers to "go chase the patient or some other insurer for payment." Providers could, for example, agree to allow a payer to deny payment after previously authorizing services, but only if the provider is informed promptly. The notice period should be kept short enough so your practice still has a reasonable opportunity to seek payment from the patient.

State Statutes of Limitation 

Finally, a number of states have a statute of limitations on an insurer's retroactive claim denial, according to a report from the Connecticut Office of Legislative Research. These states include:

  • Alabama: One year after initial claim payment (no limit for fraudulent or duplicate payment).
  • Florida: 30 months after payment of the claim for health maintenance organizations (unless the provider is convicted of fraud).
  • Georgia: Within 18 months of the date of service or discharge, if the provider submits the claim within 90 days of the last date of service or discharge.
  • Maryland: Six months after the date the health care provider was paid (unless the claim was fraudulent, improperly coded, or duplicate).
  • New Hampshire: 18 months from the date of payment (unless the claim is fraudulent, duplicate, for services not rendered, for services covered by a government program, subject to an adjustment with another payer, or subject of legal action).
  • Rhode Island: No more than two years after the claims were initially paid (unless claims are submitted fraudulently, reflect a pattern of inappropriate billing, relate to coordination of benefits, or are subject to any federal law that permits reviews beyond two years).
  • Tennessee: 18 months after the date the claim was paid; however, if an insurer verifies that a patient is covered, and if the provider renders services in reliance on this verification, then the time period in which the insurer can retroactively deny a claim on the basis that the patient is not a covered person is six months. Exceptions: fraud.
  • Texas: Within 180 days after the claim is received; any additional payment due a provider or any refund due the insurer must be made 30 days after completion of the audit.
  • Virginia: One year from the date the claim was paid, or per contract terms (except for fraudulent claims, duplicate claims, or services not rendered).
  • West Virginia: One year from the date the claim was paid if the provider already was paid or did not render the services, the provider was not entitled to reimbursement, the service was not covered by the health plan, or the insured was not eligible for reimbursement (no time limit applies if the claim is fraudulent or contains material misrepresentations).

Kate Romanow, director of health care regulatory advocacy, can be reached at kromanow@asha.org.

Janet McCarty , MEd, CCC-SLP, private health plans advisor, can be reached at jmccarty@asha.org.

cite as: Romanow, K.  & McCarty , J. (2010, August 03). When Health Plans Demand Repayment. The ASHA Leader.

  

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