Insurer is ordered to stop asking physicians to pay back old claims

Some states limit the look-back period for overpayments, but few have taken actions against insurers.

By Emily Berry — Posted July 26, 2012

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A California insurance regulator has barred a WellPoint-owned health plan from trying to collect alleged overpayments from physicians based on claims that are more than a year old. Though other states have rules giving insurers a time limit on demanding physician repayment of back claims, actions against them are rare.

In a July 16 order, California’s Dept. of Managed Health Care ordered Anthem to stop trying to collect overpayments without identifying the name of the patient and date of the visit in question, and to stop recoupments for claims more than a year old where there was no evidence of fraud or misrepresentation (link).

The order was welcomed by the California Medical Assn., which had brought the issue to the attention of the state’s managed care department.

“Anthem’s practices interfere with physicians trying to run their practices and also increase the overall cost of care,” CMA President James T. Hay, MD, said in a statement responding to the state’s action. “Fighting unjust violations by insurers like Anthem takes time away from patient care. The order from DMHC will help pave the way so that we can get back to treating our patients.”

Many other states bar insurers from collecting alleged overpayments for claims after a certain time. Indiana, Ohio, Rhode Island and Washington limit the look-back period to two years except in cases of fraud. South Carolina sets the limit at 18 months. Vermont’s limit is 12 months.

Even among states where insurers are limited in their ability to recoup overpayments, it is difficult to find cases in which regulators have gone so far as to order a plan to stop its overpayment collection efforts.

“I don’t think anyone has shown an interest in addressing this,” said David Mullens, an attorney in Palo Alto, Calif., who specializes in physician compensation and insurance company abuses. He said insurers have been successful in lobbying for laws that give them a generous time period in which to identify and collect overpayments, and physicians haven’t pushed back against health plans’ recoupments. Even if they are aware that an insurer’s claim of overpayment is too late, doctors fear losing their contracts if they fight back, he said.

The DMHC order came more than a year after the California Medical Assn. alerted the DMHC to the recoupment efforts that physicians believed were illegal.

The DMHC’s announcement said it concluded its investigation in 2012 and found that in violation of state law, “between 2008 and 2011, Anthem sought reimbursement from at least 535 providers for claims that were more than a year old and, according to the plan, were overpaid.” The collection efforts would have been allowed if Anthem had shown physicians evidence of “fraud or misrepresentation,” the DMHC said.

Anthem spokesman Darrel Ng said the collection efforts were in many, if not most, cases based on the plan’s findings that physicians had essentially been paid twice for the same patient encounter and had billed, for example, for both a well woman exam and a Pap smear when the latter should be included in the former. He said the plan does not identify the individual patients or dates of service in its notices to physicians out of concern for privacy.

Anthem had not formally challenged the DMHC’s findings at this article’s deadline.

“We’re reviewing our options,” Ng said.

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