Questions from the Internet #1: ERISA, Takebacks and so much more...

There are several medical coding and billing forums on the Internet and these forums are where people go to look for answers to problems that they are encountering. Monitoring these forums are experts in medical coding and billing, who are not paid to assist and guide those asking questions so they can find the answer to their problem. I have written this article covering one of those questions thus providing an answer. It is important to note that I have altered the names of the insurance companies and for privacy purposes the name of the person asking the question is removed. The question asked is quoted word for word.

The question I am addressing in this article is:

"We just received a bunch of EOB's back on a patient who is on a self-funded construction union plan. We are out of network with his insurance. The insurance is demanding a total of $500 back from us claiming they overpaid on dates of service from Feb. 2013-Dec. 2013.

Apparently on his plan, for out of network doctor he is limited to $100/visit max they'll pay and $1,000/year max they'll pay. He has a deductible and then it's 60/40.

In looking through all of the "this claim backs out this claim which backs out this claim" on the EOB's I am totally lost as to what they're trying to say they overpaid.

Regardless, we submitted the claims in good faith. They processed and paid probably 15-20 dates of service over this 10 month period on this patient that they are now saying they processed wrong. Okay, one claim I could see, mistakes happen but this many for this much money and it took them this long to figure it out?

Any advice on how to proceed, other than (or on top of) billing the patient?

Also, when it's an ERISA plan, if we refuse to refund the money and tell them to go after their member for it (which we all know they won't do), legally can they take the money back from future payments on the same patient? A different patient with the same plan? A different patient with the same insurance company but totally different employer?"

It is very important to note that anyone reading the post has no access to any of the documents that the poster is referring to and any response is based on what is posted in the question. We have many issues that are in this post but this is what we know. We have payment to a non-participating (non-contracted/out of network) provider. We have a refund demand, and we have ERISA. In this article and the next we will discuss each of these issues. For this article, we will discuss the refund part.

The poster asked whether something is legal for the insurance company to do and I never answer are legal questions. For one, I'm not a lawyer or a judge so I have no clue whether something is legal or not. Do we have a possible violation of the law? If so, what law? If there is something illegal, what can you do as a medical biller? We can suspect that we have a possible violation of the law but all we would be able to do is to ask a State regulator such as the insurance commissioner's office to investigate our suspicions. But before they will do that they will want rock solid proof. We cannot say that they are in violation of the law without proof because we don't want to open ourselves to a lawsuit for slander.

The question posted is more common than you would think. We will go over the insurance company's demand for the return of an overpayment first. The unknown is this; did they truly overpay the claims? Just because an insurance company says something doesn't make it fact, especially without providing any definitive proof. When a provider is non-participating, some insurance companies only pay their Usual, Reasonable, and Customary (UCR), but while the insurance company says "All we pay is our out of network or non-par UCR", this may not be correct as how they are supposed to pay. It may be possible that the patient's benefit plan requires them to pay 100% of the billed charges. You may find that they are supposed to pay a portion of their allowed amount AND the patient is supposed to pay a portion of the allowed amount, PLUS, the difference between the providers charge and the allowed amount. It takes research on your part to find the true payment guidelines. Some providers don't like to balance bill a patient and as a patient I can understand this, but some circumstances may require balance billing. A State law may prohibit balance billing, but sometimes State laws have no jurisdiction. For example, Florida has a no patient balance billing Statute. Balance billing is when a provider bills a patient for the difference between the providers charge and the insurance company's payment of less than billed charges. Balance billing is not collecting contractual amounts, deductibles, copayments or coinsurance. Florida's no balance billing law is 641.3154 and the language states as follows:

If a health maintenance organization is liable for services rendered to a subscriber by a provider, regardless of whether a contract exists between the organization and the provider, the organization is liable for payment of fees to the provider and the subscriber is not liable for payment of fees to the provider.

Sometimes the insurance company will demand the return of the claim payment, and then establish prohibitions such as informing the provider that he/she is prohibited from billing the patient. Using common sense, when the claim payment has been recouped, this means that the claim was never paid and that the insurance company does not accept liability for payment of the claim fees, therefore it should be permissible to bill the patient for the unpaid fees.

The situation in the question took place a little more than a year ago, so we're not talking about something old. An old refund demand can be denied using State law time limits when State law has jurisdiction. There are some clues as to what we need to do because in order to provide an answer, research must be done.

Is this a State law issue or a Federal law issue? We don't know and we can't assume. The poster mentions ERISA, but, is this an ERISA issue? It could be and we will discuss ERISA in part 2 of this article series. For this part, we will go over this problem using State law. I will show you what I do as a simple medical biller and not as a lawyer, using common sense and based on my experience in these situations.

I will use the State law where I live and work. In Florida, we have two insurance laws and yes, I wrote, insurance laws. There is no medical billing law specifically. Why do we look at insurance laws? The claim we send is to have insurance benefits paid, ergo, insurance law. The first of the laws is commonly called commercial insurance. The other is an HMO insurance law. There is also workers compensation and personal injury protection which is auto accident insurance law.

The commercial insurance law that addresses refunds is 627.6131. The HMO insurance law is 641.3155. These laws call a refund demand a claim for an overpayment. Both of these laws have a timeframe for an insurance company to submit a claim to the doctor or provider, no different than a timeframe to have the provider send a claim to the insurance company. The timeframe shown in both of these laws is 30 months from the date of payment, not the date of service. The poster did not provide a date of payment. The poster mentioned dates of service for 2013. It is important that to know what to do we have to have information that is as accurate and complete as possible.

Now, did the insurance company submit a claim within 30 months from the date of payment? The poster mentions receiving EOBs mentioning alleged overpayments. Remember that we haven't seen these EOBs and what we have been provided opens the door to more questions. So, when you receive a claim or a letter asking to have a claim payment returned, look at the date of payment to see if the claim is within the time limits of your State law requirements. If it is past that timeframe, you have every right to deny their claim just as the insurance company will deny your claim if they received it past the time limit to send a claim. What I am saying is that there must be and there is equality in the language of the law. Some insurance companies will do their best to convince you that you have no say or choice in the refund demand. For this training purpose, let us say that the overpayment claim was documented in the notes of the EOB. I can take a personal opinion that the note was not an official claim for an overpayment, but, I'm sure that the lawyers for the insurance company will argue differently. Regardless of how I received notice of a refund demand, I cannot sit on it, ignore it and/or hope it will go away because it will not and I want it to go away in favor of my doctor and his/her patient.

The two State insurance laws do not identify how a claim from an insurance company is to be submitted or what is to be used when an insurance company submits a claim for an alleged overpayment. However, you have a limited time to respond to their claim and that doesn't mean that you automatically write a check but that is what the insurance company hopes and expects you to do. Why should you avoid writing a check automatically for the refund? The answer is simple. The insurance company could be wrong! In Florida, you have 45 days to pay, deny or contest their claim. The insurance company can offset their refund demand, but State law can prevent them from doing this but only when you tell them that they cannot offset or reduce payment. Also State law doesn't specify that they can only offset or reduce a claim payment for Steve Verno from claims they are processing for Jane Jones. Telling the insurance company "No, they can't offset or reduce" is a power that you control, but you lose that power when you don't respond as State law specifies.

This brings us to being due diligent with observing correspondence from the insurance company. For example, they send a claim or a letter to an address that doesn't exist for you. Their thinking is that if you don't get the letter or claim, you cannot respond by telling them that they cannot offset or reduce payment so that they can recoup their money from another claim. If a complaint is filed with State regulators, all the insurance company has to say is, "We sent the provider a claim" and then it is all over with! BUT, you can stop this if you can prove that they intentionally sent their claim or correspondence to an address that is not yours and that the insurance company knew your current address.

So where do you get your proof? Start with existing letters from that insurance company that documents your current address, checks sent to you by that insurance company that documents your current address, and EOBs documenting your current address. I cannot stress the importance of corresponding, in writing, with any overpayment notice. You have the power to say no if you have proof that the insurance company is wrong. You want your no to always be in writing. If you call the insurance company, they can say we never received any phone calls or if you have proof that you called them, they can say that there was no discussion about any refund demand. When you have it in writing and you have proof that they received your written correspondence, then it is no longer your word against theirs. Some regulators are very pro-insurance company.

Unfortunately, in the above question, we don't have any other information other than what was provided. Did the insurance company reduce a claim payment as a means of recouping the alleged overpayment? We don't know and don't ever guess. Did the insurance company offset their alleged overpayment? We have to look at the insurance law again. The provider has a right to ask for additional information if this is needed. In this case, we need to look at the patient's benefit manual. Why? Well we need to look at the definitive proof as to how the claim is supposed to be really paid. For all we know the claim was supposed to be paid at 100% of the billed charges. If this is so, then the $100 per claim payment that is in the post would be incorrect. The poster mentions 60/40. Unfortunately, this is insufficient information. Does this mean that the insurance company pays 60% of billed charges or 60% of their allowed amount? If there is a 60/40 claim payment per the patient's benefit plan, then looking at the health benefit manual will tell us if this is true. We would need to look at the payment EOB to see if the payment made was 60% of billed charges or 60% of the carrier allowable. As you can see, this can become highly complex when you don't have sufficient information or proof.

I have seen some patient benefit plans where the insurance company is supposed to pay out of network providers 60% of their allowed amount but there is nothing documented in the benefit manual to indicate the insurance company's allowed amount. This can vary even within the same insurance company. I've seen twenty or more different allowables for the same service! Some were 100% of the charges, some were 125% of the Medicare allowable and some were the Medicaid allowable. This did not look good for the insurance company when they argued that all they were supposed to pay was 60% of the Medicare allowable. It was very embarrassing for them when they were shown copies of their EOBs which differed from what they were saying to an inspector from the federal government. State law allows the provider the right to deny the claim or to contest the claim for overpayment. This is no different than when an insurance company denies claims we send to them. The language of the insurance laws, 627.6131 and 641.3155 states the following:

A provider that denies or contests a health insurer's claim for overpayment or any portion of a claim shall notify the health insurer, in writing, within 35 days after the provider receives the claim that the claim for overpayment is contested or denied.

Most of the claims I receive are well beyond the claim timeframe in my State law. As a result, I deny their claim for being sent beyond the time limits and I deny their claim after I research when they made their payment which was usually more than 30 months the date that they made their payment. They can give all the excuses in the world as to why they are demanding the benefit payment back but it doesn't matter. My state law has a time limit and I use that. I also inform them they are prohibited from offsetting or reducing payment from a claim they are processing. More on offsetting or reducing will be provided later in this article.

While the poster doesn't mention if the insurance company reduced the claim payment as a means of recouping their refund demand, as a learning tool, we will say, the insurance company did perform an offset or already took back the overpayment from a claim that was processed. Using common sense, if the insurance company performed an automatic takeback, the provider has been denied their right to contest or deny the overpayment in addition to being denied their right to inform the insurance company that they cannot perform an offset without the provider's written permission.

Once the insurance company has performed an automatic takeback, it leaves the provider with virtually no options. However, it does provide the provider with solid evidence to file a grievance with State regulators and to ask that State regulators order the insurance company to return the offset amount. A State law violation may be sufficient to allow the State to revoke an insurance company's license to sell insurance as well as open the insurance company to a lawsuit for a possible violation of the provider's rights to deny, contest and to deny the offset of the claim payment on the patient whose claim they offset. That patient may or may not wish to file a lawsuit against their insurance company regarding their claim rights and a possible contract breach. This does not take into consideration situations where the provider has a contract with an insurance company. That contract with the provider may contain language which allows the insurance company to automatically perform a takeback without notifying the provider. If the provider signed the contract leaving that language in the contract, common sense tells us that the provider has given permission so that the insurance company can do this.

The language of the Florida State insurance law does not specifically state that the insurance company is prohibited from taking back the benefit overpayment for one patient from a completely different patient. What is important is that the provider has the right to contest or deny the claim for overpayment and has the right to communicate to the insurance company that an automatic takeback or reduction is prohibited without the provider's written permission to do so. The provider should exercise that right. The Florida State insurance law language regarding offsetting which states the following:

The health insurer may not reduce payment to the provider for other services unless the provider agrees to the reduction in writing or fails to respond to the health insurer's overpayment claim as required by this paragraph.

So how would I handle this if this is what happened? Keeping in mind that I am not a lawyer but I would firstly make a copy of all of the EOBs removing all patient information so that I do not violate the patient's privacy. First, if their claim was sent beyond the 30 month time limit, I would deny their claim using that time limit. I would also communicate that the insurance company is prohibited from reducing or offsetting their refund claim. If they performed an automatic takeback and I found this on the EOB, I would send a letter to my State Insurance Commissioner. I would show proof using the EOB that the insurance company may have violated Florida Statute 627.6131 or 641.3155 by denying you the right to contest or deny their claim. Also by offsetting, the insurance company may be in violation of State law by denying you the right to inform them that reducing a claim payment or offsetting as a means of recouping their alleged overpayment as specified in State law language. In simple terms, the insurance company played judge, jury and executioner, thereby denying you due process that the law allows. For one thing, the insurance company said they think that they overpaid but they provided no proof that an overpayment was actually made. For all we know, the original claim was paid correctly which is why State law allows you to contest or deny their claim. My letter to the insurance commissioner, using simple common sense, would be worded as follows. (Naturally a real insurance company name is not being used and I will use my name as the patient).

Dear (Name of Insurance Commissioner),

On (dates), we provided medically necessary medical care to Steve Verno who is a member of ABC Insurance Company ("ABC"). This medical care was non-emergent, was provided at Mr. Verno's personal request, and in good faith. Mr. Verno provided us with proof that he had covered services with ABC Insurance that would pay for the covered service we provided to Mr. Verno. We have provided a copy of Mr. Verno's health benefit manual showing that the medical care that we billed to ABC insurance was covered as a payable service under his health benefit contract with ABC Insurance.

We are non-contracted providers with ABC Insurance company and ABC is well aware of our non-participating status. Mr. Verno has a contractual requirement to submit his own claim to ABC. We extended a courtesy to Mr. Verno with our submission of his coded claim. We submitted Mr. Verno's clean claim well within the claim submission timeframe outlined in Florida Statute 627.6131. ABC paid the claim on (date), thereby providing proof that the claim was submitted within the Florida Statute claim submission timeframe and that the claim payment proved that the service was covered as a payable service. When you look at Page (X) of Mr. Verno's benefit manual, you can see that this covered service is to be paid $X.XX. The ABC Explanation of Benefit form, dated (date), which is attachment #2, shows that this covered service was paid correctly.

On (date), we also provided medical care to Jane Jones. That medical care was also a covered service with ABC Insurance. The claim for Jane Jones was also submitted as a courtesy within timely filing limits as specified in FS 627.6131. As you can see from the ABC EOB, dated (date), ABC has reduced the claim payment. The remarks section of the EOB shows that the offset was due to an overpayment that they made. The EOB does not identify the patient whose claim was allegedly overpaid. This lack of information and lack of proof is a clear indicator that this claim should be denied or contested.

ABC Insurance never submitted a claim for an overpayment as defined in Florida Statute 627.6131 (6)(a)1. If you look at FS 627.6131(6)(a)1, you can see that it clearly states that All claims for overpayment must be submitted to a provider within 30 months after the health insurer's payment of the claim.

It is our opinion that notification on an EOB does not suffice as a proper claim. The same section of Florida law also states that a provider must pay, deny, or contest the health insurer's claim for overpayment within 40 days after the receipt of the claim. It appears that ABC may have violated State law by denying us our right to deny or contest their overpayment statement.

You can see that the EOB state that ABC is supposed to pay is $100 per claim. As I've shown on the claim for Mr. Verno, ABC is supposed to pay 100% of billed charges. If you look at the benefit manual for Ms. Jones, you can see that her benefit plan also requires ABC to pay 100% of billed charges. It is our opinion that ABC paid the claim correctly pursuant to their contract with their member and as such, our right to deny or contest their claim, as specified in Florida Law, because Florida Statute 627.6131 (6)(a)2 states the following: A provider that denies or contests a health insurer's claim for overpayment or any portion of a claim shall notify the health insurer, in writing, within 35 days after the provider receives the claim that the claim for overpayment is contested or denied. It opens the door to how many other Florida providers that ABC has done this to.

Lastly, if you look at Florida Statute 617.6131(6)(a)3 it states the following: "The health insurer may not reduce payment to the provider for other services unless the provider agrees to the reduction in writing or fails to respond to the health insurer's overpayment claim as required by this paragraph." If you look at the ABC EOB for Ms. Jones, you can see that ABC has automatically reduced payment to us. By this reduction, ABC Insurance may have violated Florida law as well as our right to inform ABC that they cannot reduce or offset their payment.

We recommend that ABC Insurance be ordered to return the offset payment to us and any other provider which had claims payments reduced. We also recommend that ABC insurance be ordered to cease and desist with their practice of (a) claim submission in the notes of a claim explanation of benefit form for a different patient, and (b) to submit claims in a proper manner as outlined in Florida law as well as to allow a provider their right to contest or deny said claim. It is our recommendation that ABC Insurance be ordered to cease and desist from automatically offsetting their refund demand from claims submitted to them, and last we recommend that ABC insurance be informed that if they cannot comply with State law requirements, their license to sell insurance, within the State of Florida be revoked as well as their ability to operate as an insurance company within the State of Florida be terminated. In the event of termination, patients who paid ABC Insurance premiums have those premiums be refunded to those patients.


Name of provider

Before you write to the regulatory agencies, work with the insurance company to try and resolve the problem.

1. When you receive a refund demand, check to see that it was submitted in a timely manner according to your State Insurance law. If it is untimely, deny the claim for that reason and prove the reason for your denial. If it is timely, see if they are wrong. Make sure that applicable laws are used.

2. If State law allows, communicate that the insurance company cannot reduce or offset without your written approval and you do not give it.

3. If the refund is due to an overpayment, prove you are right and they are wrong, using the benefit manual to show how the benefit was supposed to be paid.

4. If they have already offset, show them your State law language which allows you to appeal and you have been denied the ability to inform them that they cannot offset or reduce. Allow them time to correct this.

5. Send everything in writing, attaching rock solid proof, by Certified Mail/Return Receipt.

6. Do not procrastinate! Respond to the insurance company within State law time limits, and respond in writing to the CEO, at the corporate office by Certified Mail/Return Receipt. Never threaten, always reason, stick to the facts, and submit proof you are right and they are wrong!

7. Use the regulatory agencies as a last resort correction method. You have to prove you are right and they are wrong and you gave the insurance company the chance to fix the problem.

While the question may look simple, it may be more complicated than the poster ever imagined. We have limited information and we don't have access to documentation which could provide a more definitive and exact answer. Like going back to 1955 in your Delorean, the slightest change could cause a completely different outcome and method to resolve the problem. We will continue this article in future BC Advantage e-newsletters, where we will discuss ERISA, and par and non-par provider payments, as mentioned in the post. Stay tuned for the rest of the answer.

Never Give Up and Never Surrender.

Steven M. Verno, CMBS, CEMCS, CMSCS, is a Professor of Medical Coding and Billing Instruction at Florida Metropolitan University.