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  • Writer's pictureMuhammad Sair Khan

Offsets and Take-backs - MENTAL HEALTH INSURANCE LAWs



Insurers are always looking for reasons to deny claims—and keep their provider payouts to a minimum. The most recent tactic is through refund requests. Insurers have been retroactively denying claims, then demanding the money back from providers. In some cases, they even withhold funds from providers for claims that were paid over years prior.


Are insurers hoping that providers will automatically send money back to rid the recoupments?


Your facility may have experienced this practice before. You may have received a letter from the insurer, stating that you were overpaid for services previously rendered. The letter may demand money back (often thousands of dollars) immediately. If you do not provide the money, the insurer may deny future claims or offset benefit payments for current patients.


In other cases, you may receive zero-pay EOB’s (explanation of benefits) for services that you recently provided. After investigating the zero-pay claim, you may find out that the insurance company is withholding the funds until you pay back the money they say you owe.


As a honest business owner, you likely don’t mind paying back money that was overpaid. If a service is coded incorrectly or submitted twice, it’s reasonable for them to ask you to return the money.


But often, we find that take-backs and offsets are not the provider's error. They are the result of insurer error only—yet providers are the ones who pay the price.


Why Take-backs and Offsets May Be Illegal


As early as 1974, U.S. courts began siding with providers in cases against insurers seeking refunds for claims they had already paid. These courts commonly held that as long as the provider made no errors in billing, delivered the service that was paid for, and did not know that the claim should not have been paid, the insurer was at fault and the money was not to be returned. These courts prevented insurers from demanding money back.


Despite these multiple court opinions, insurers still use take-back and offset practices. However, more recent cases have expanded facility’s legal options when it comes to fighting against these practices.


ERISA and Your Legal Argument


The Employee Retirement Income Security Act (ERISA) of 1974 sets minimum guidelines for private health insurance plans offered by employers. The guidelines protect plan participants, including their right to plan information, a grievance and appeals process, and the right to sue for benefits.


Court cases as recent as 2013 and 2014 have found that take-backs and offsets violate the ERISA rights of plan participants. If an insurer does not provide a proper appeals process, beginning with notification of owed funds, they can be sued for trying to take back claims payments. Even if the insurer believes the provider or patient committed fraud in submitting the original claims, they cannot unilaterally demand the money back—they must allow for an appeals process.


Your facility has the right to fight demands for refunds and repayments—and you have a good chance of winning those appeals. However, this is no easy feat. It requires time to research the claim and verify that an additional payment was in fact made. You also need to gather documentation that supports your claim, draft an appeal letter and follow-up to make sure it is handled appropriately. This is troubling when in the meantime, your currently owed funds are being compromised.


Take-backs, offsets, and other insurer practices can be enough to put your facility in financial trouble—or even out of business. That’s why it is vital you work with an experienced team who can recognize these practices at their origin and knows the correct action to take to ensure you receive payments you are due.


At Datapro Billing, our staff has decades of experience working with the health insurers. We have helped our clients navigate changing policies and work with them to ensure they receive payment for their services. Find out how we can help your facility. Schedule a complimentary 15-minute consultation with Datapro experts by calling 805-579-3537 or contacting us online.

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