PAGE:1 of 4 / REPLACES POLICY DATED: April 16, 1999; April 1, 2001; Jan. 1, 2002
EFFECTIVE DATE: May 1, 2002 / REFERENCE NUMBER: GOS.BILL.005
SCOPE: All Company-affiliated facilities including, but not limited to hospitals, ambulatory surgery centers, home health agencies, service centers, physician offices and all Corporate Departments, Groups and Divisions. Specifically:
Business Office Medicare Service Centers
Finance Patient Account Service Centers (PAS)Administration
PURPOSE: To define a process for resolving credit balances and overpayments and to facilitate timely refunding of any confirmed overpayments.POLICY: Patient accounts with credit balances or overpayments must be researched and analyzed promptly. Accounts with credit balances or potential overpayment discrepanciesshould not remain unworked for more than 60 days following the date of the overpayment. If the payment discrepancy is confirmed as an overpayment, refunds must be made timely. In the case of confirmed overpayments due to federally-funded payers such as Medicare, Medicaid or CHAMPUS/Tricare, refunds or adjusted claims must be processed in 30 days. In addition, in the case of federally-funded payers where credit balance reports must be filed with the payer and account adjustments or take-backs must be processed by the payer to resolve the overpayment, the specific payer rules and timeframes for processing must be followed. Based on payer specific guidelines, a refund may result in the form of an adjusted claim submission. For further detail, please refer to the Correction of Errors Related to Government Reimbursement Policy, EC.012.
DEFINITION:
Credit balance/overpayment discrepancy – Credit balances and/or overpayments can result from a payment made by an insurance carrier and/or another responsible party for an amount greater than expected, duplicate payment/contractual entries, misapplied charges/credits, incorrect patient account adjustments, etc., posted as a financial transaction to the patient's account.
PROCEDURE: The following steps must be performed to ensure timely research and analysis of patient accounts and prompt, accurate refunds of confirmed overpayments. Account discrepancies can occur for many reasons, patient accounts with credit balances are to be researched to determine the reason for the account balance. These reasons may include an overpayment by an insurance carrier and/or another responsible party, duplicate payment/contractual entries, misapplied charges/credits, and incorrect patient account adjustments, etc. Once confirmed, all bona fide overpayments must be promptly refunded to the appropriate patient, guarantor or third-party payer. In the case of federal payers, refunds must be made within 30 days of the confirmation, and based on payer specific guidelines, may result in the form of an adjusted claim submission.
IMPLEMENTATION
Master Files:Business office personnel must review and revise masterfiles to ensure the credit balance amount to be automatically written off is set at $0.00. Credit balances must not be automatically written off in any case. For example, in the HCA Patient Accounting System, the Auto Write-Off (AW) masterfile must reflect $0.00 in the credit balance field. Additionally, to ensure synchronization with the Collections System, the Facility Profile (FHPRO) masterfile must also reflect $0.00 in the MCAM field. Within the Mainframe Logging System, the LOGID masterfile discrepancy threshold amount may be set to $1.00 for Medicare logs to support rounding issues, etc. Also, specific to managed care payers where a business to business arrangement exists, this threshold amount may be set to the dollar amount specified within the arrangement and agreed upon by both parties. If the managed care contract does not specify a dollar amount, the threshold may be set to $25.00.
Operational Processes:
The Credit Balance Report, Unapplied Cash, and potential overpayments on the Log Discrepancy Report must be worked promptly. Any accounts in Bad Debt status should also be identified by either running Clear Access queries or using the WEB Refund Application (i.e., as available to the PAS Refund Departments). Accounts with credit balances or potential overpayments converted from a system other than Patient Accounting should also be identified and worked in accordance with the guidelines listed below. The process of working these accounts should not exceed 60 days.
Determine the reasons for the overpayment and credit balance. Reasons may include overpayments by an insurance carrier and/or another responsible party, duplicate payment/contractual entries, misapplied charges/credits, or incorrect patient account adjustments.
- Once the reason for the credit balance or overpayment discrepancyhas been ascertained, proceed as follows:
b)If a credit balance remains following correction of the posting errors, ascertain the party (e.g., patient, guarantor, third-party payer) entitled to the refund.
c)Refund the balance promptly to the appropriate patient, guarantor or third-party payer. In the case of federal payers, refunds shall be made within 30 days of the confirmation, and based on payer specific guidelines, may result in the form of an adjusted claim submission. In the case of credit balances which have not been taken back prior to the end of each quarter, for payers such as Medicare, Medicaid or CHAMPUS/Tricare where credit balance reports must be filed with the payer and take-backs must be processed, the specific federal payer rules and timeframes must be followed. Medicare requires credit balance reports to be submitted quarterly (i.e., the HCFA-838 report).
- If a refund is due to a Medicare beneficiary and the refund check has been returned by the postal service for an invalid address, review the fiscal intermediary online system (e.g., DDE, MEDA) as part of the attempts to determine the patient’s address.
- If a refund is due to the other insurers they should be contacted in a manner consistent with their policies/contracts.
- If a refund is due to a federally-funded payer, they should be contacted in a manner consistent with their policies/contracts.
- In order to comply with state unclaimed property laws, a reasonable effort must be made to locate the party who is due the refund. If a refund check remains un-cashed for eleven months, a written notice should be sent to the last known address of any party with a credit balance of $50 or more. The notice must inform the party that the facility is in possession of property belonging to him or her and instruct the party on how to collect the property. This notice must be sent first class mail. If this attempt is unsuccessful, a second notice must be sent not more than 120 days and not less than 60 days before the unclaimed property is reported to the state. Copies of all notices must be retained for 15 years.
- If efforts are not successful to refund the entire amount owed because of inability to locate the patient, guarantor or third-party payer to whom the refund is owed, the credit amount should be recorded to liability account (General Ledger A/C 263210) and a detailed log is to be maintained which supports the balance of the liability account. The log should include, at a minimum, the account number, the patient name, the party making overpayment, the address of party making overpayment, date of service and the date of the overpayment.
- Where there is a continued inability to locate the patient, guarantor or the third party to whom the refund is owed, final disposition of the payment must be processed according to the applicable State Unclaimed Property Law.
REFERENCES:
42 U.S.C. Section 1395cc(a)(1)(C)
42 C.F.R. Sections 489.20(b), 489.40, 489.41
Medicare Intermediary Manual (Sections 3401, 3401.1, 3401.2, 3401.3)
The OIG’s Compliance Program Guidance for Hospitals, February 1998.
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