Is it Possible to Settle an Overpayment Demand? Depends on the Payor.

Appealing an overpayment demand can be a challenging task for healthcare providers. Whether the demand stems from claim denials or an audit, the appeals process can involve significant amounts of documentation; complex medical, legal, or coding issues; contract or regulatory review; attorneys; and independent experts. The process may also take months or years to resolve. While some providers with strong cases will likely benefit from pursuing the full appeals process, others may ask if there is a quicker and simpler way. Is it possible to settle the overpayment demand for less than the original demand? The answer often depends on the type of payor.

Commercial insurance plans are often the most likely to entertain the possibility of settlement. Commercial plans perform much the same cost/benefit analysis as any other business and, while it may vary greatly from case to case, may be willing to discuss a final settlement of an overpayment demand. However, it is often helpful for the provider to engage with the early levels of whatever appeal process is available, including submitting documentation and refuting the plan’s assertions and arguments, in order to strengthen the provider’s position.

Where Medicaid is the ultimate payor, a provider may find limited flexibility to discuss settlement. In these cases, the provider is likely dealing directly with a state agency or a state contractor. However, because much of the funding for state Medicaid programs is federal funding, state agencies and contractors are often required to answer to federal authorities regarding the use of Medicaid funds. This dynamic often restricts the state’s ability to resolve overpayments with the provider and requires them to fully litigate the alleged overpayment through the available appeals process.

The Medicare program is the payor least likely to discuss settlement. The various contractors generally have no authority to settle with providers during the first two levels of the Medicare claims appeal process, but in limited circumstances and depending on the merits of the case, the contractor may be willing to stipulate at the third level of the appeals process.

Although providers are not required to retain an attorney to appeal their claims, the appeals process can be extremely confusing and burdensome, regardless of payor. There are also numerous legal and procedural arguments that can be argued by an experienced healthcare attorney.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding and appealing audits and claim denials. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.