Insurance Overpayment Demands
New York Insurance Overpayment Demands Attorneys
At Norman Spencer and Associates, PC, we represent healthcare providers facing audits, overpayment demands, and overpayment recovery efforts by commercial insurance companies.
Commercial insurance companies have been following in the steps of state and federal governments in aggressive auditing of healthcare providers and overpayment recovery of alleged overpayments. Commercial carriers conduct such audits and recovery both on their own and through third parties.
How Insurance Companies Pick Their Audit Targets
Private carriers’ approach is very similar to that the government agencies employ in Medicaid and Medicare audits. Besides random audits, insurance companies identify and target providers who stand apart from other similarly situated providers in terms of their billing or the type of treatment they provide. The most common billing irregularity issues they focus on include overuse of certain procedures or modifiers as well as upcoding and unbundling.
How Private Insurance Companies Recover Overpayments
Again, the way private insurance attempt to recover allegedly overpaid founds is similar to that of the state and federal government agencies. They can issue overpayment demands, withhold the payment of already earned fees or offset future payments, sue providers in state courts, or refer cases for criminal prosecution.
Most cases of alleged overpayments by private insurance carriers begin with insurance audits. The process is very similar to audits conducted by state and federal agencies. Normally, the carrier requests a set of patient files and records, anywhere between 10 to 50 in total, in order to examine the practitioner’s billing and treatment practices. Insurance carriers employ medical reviewers that study the notes, often concluding (not surprisingly) that certain irregularities took place. Then, the carrier’s analysts may extrapolate the data mined from the submitted sample to the entire practice, resulting in substantial overpayment demands.
In some cases, audits may even escalate to allegations of fraud and criminal prosecution referrals to other agencies.
We advise our clients served with insurance audit requests to seek legal advise before submitting anything to the insurance companies. We utilize various strategies to avoid the audit or terminate it, limit the audit’s scope, and ultimately protecting our client’s interests.
The Notice of Overpayment
Private commercial payers may issue demands for overpayments. This may happen after an audit or, at times, even without an official audit. Overpayment demands from insurance companies may be based on many allegations, including:
• The services provided were not medically necessary, experimental, or investigatory
• Using wrong codes
• Billing for services that were not provided or, not properly documented, or were inadequate
• Billing for services for which another payer is responsible
• Breach of contract
• Fraudulent practice
Insurance overpayment demands tend to be high, reaching tens and hundreds of thousands of dollars. In our experience dealing with numerous overpayment demands, many of them are significantly incorrect and may even be illegal. Whatever the basis for the alleged overpayment may be, it is important for the provider to seek legal advice from an experienced attorney who will be able to review the documentation and determine the best defense strategy.
The overpayment demand process by commercial carriers is generally regulated by state law. For instance, under New York law, insurance companies must provide thirty days written notice to health care providers before engaging in additional overpayment recovery efforts seeking recovery of the overpayment of claims. The law requires that such notice must state the patient name, service date, payment amount, proposed adjustment, and a reasonably specific explanation of the proposed adjustment.
Additionally, insurance companies must provide health care providers with the opportunity to challenge an overpayment recovery, including the sharing of claims information, and must establish written policies and procedures for health care providers to follow to challenge an overpayment recovery.
In New York, a health plan is not allowed to initiate overpayment recovery efforts more than twenty-four months after the original payment was received by a health care provider (look-back provision). However, there is no time limit to overpayment recovery efforts that are:
(i) based on a reasonable belief of fraud or other intentional misconduct, or abusive billing,
(ii) required by, or initiated at the request of, a self-insured plan, or
(iii) required or authorized by a state or federal government program or coverage that is provided by this state or a municipality thereof to its respective employees, retirees or members.
In New Jersey, the law requires that insurance companies provide written documentation that identifies the error made by the payer in the processing or payment of the claim that justifies the reimbursement request. Also, in New Jersey insurance companies are not allowed to request overpayments, which are based on extrapolation of errors on other claims. However, they are allowed to use extrapolations in litigation, arbitration, and administrative proceedings or if there is clear evidence of fraud.
If the notice of overpayment is vague or not specific enough, the carrier may not be in compliance with the law and the practitioner may be able to file a complain with the state regulatory agency.
Responding To Overpayment Demands
Providers facing allegations leading to overpayment should respond and dispute the allegations. Most overpayment demands cases involve complex issues related to using the appropriate coding and billing systems, treatment decisions, medical necessity, and applicability of contractual agreements between the physician and insurance carrier. These issues need to be examined and potential errors made by the auditors should be exposed and addressed. Insurance companies’ conclusions are not always correct – and correcting the potential errors may save providers significant amounts of money. Our attorneys have a track record of success challenging insurance companies’ overpayment demands at all stages from the responding to the Notice of Overpayment to appeals.
Allegations of Fraud
In some cases commercial insurance carriers view overpayment situations as fraud and refer such investigations to special investigative units and law enforcement agencies. The time limitation periods that apply to overpayment demands under state law do not apply in fraud cases.
Allegations of fraud require immediate attention and we recommend that providers engage the services of an experienced health insurance fraud defense attorney as soon as possible. At Norman Spencer and Associates we successfully represent healthcare providers who face allegations of fraud by commercial insurance companies in New York and New Jersey.
In New York, in order for an insurance company to demand repayment of services under an allegation of fraud, it should have justifiable reliance that the provider intentionally misrepresented or materially omitted facts. Many insurers will base their repayment demands based on allegations of fraud by default in order to avoid the statutory time limitation on recoupment, whether they can substantiate fraud or not. Aggressive legal representation is therefore required to counter these allegations and protect provider’s rights.
When Do Insurance Companies Must Repost Alleged Fraud to Law Enforcement
In New York, if an insurance company determines that fraud may have been committed against it, it must report the alleged fraud to the Insurance Frauds Bureau. Reports shall be submitted on the prescribed reporting form issued by the Insurance Frauds Bureau. Every major insurance company operating in New York is obligated to create and maintain fraud investigation units known as Special Investigation Units (SIU). SIUs are stuffed by professional investigators trained to detect insurance fraud and cooperate with the Insurance Frauds Bureau and other law enforcement agencies.
Providers contacted by a Special Investigations Unit staff should seek legal advice right away before submitting any information to the investigators.
Attorneys with Norman Spencer Law Group healthcare group have successfully defended numerous healthcare providers against allegations of fraud and overpayment demands. Call us today to discuss your matter with us.