Overpayment Appeals: What to Do When Medicare Asks for Money Back
Receiving a notice from Medicare stating that you have been overpaid and now owe money can be a stressful and confusing experience. An overpayment occurs when Medicare pays for a service or item that it later determines should not have been covered, or for which it paid more than it should have.
These overpayments are often not a result of any wrongdoing on your part. Instead, they are often caused by a mistake in billing, a procedural error, or an incorrect application of a Medicare policy. The good news is that you have a path to challenge Medicare’s finding of an overpayment and, in some cases, to ask that the overpayment be waived.
This article will help you understand what an overpayment is, what to do if you receive a notice from Medicare, and how to file an appeal to either challenge the finding of an overpayment or request that the overpayment be waived.
What is an Overpayment?
An overpayment notice typically means that Medicare has paid a provider or a beneficiary for a service that it later determined was not covered, or for which the payment amount was incorrect. When this happens, Medicare has a legal right to recover that money. Overpayment notices can be a result of various situations, including:
Billing Errors: A simple coding or billing mistake made by a provider, such as billing for a service that was not provided or using an incorrect code.
Incorrect Coverage: Medicare paid for a service that is not considered medically necessary or is explicitly excluded from coverage.
Lack of Documentation: Medicare reviewed the medical record and found that it did not contain sufficient documentation to support the medical necessity of a service or item.
Regardless of the cause, if an overpayment is found, Medicare will send a demand letter requesting repayment. This letter is your first notice and a critical document, as it will include important information about your rights and deadlines.
The Two Paths for Overpayment Appeals
When you receive a demand letter, you have two primary options for responding. You can pursue one or both of these options simultaneously.
Path 1: Challenge the Finding of an Overpayment
This path is used when you believe that Medicare is wrong and that no overpayment occurred. To succeed with this appeal, you must prove that the service or item in question was, in fact, covered and that the payment was correct.
To challenge the finding of an overpayment, you will follow the standard Medicare appeals process, starting at Level 1 with a redetermination. The key to a successful appeal on this path is to provide strong evidence, such as a doctor’s letter and medical records, that directly addresses the reason Medicare gave for the overpayment.
Path 2: Request a Waiver of Overpayment
This path is for situations in which you agree that an overpayment occurred, but you believe you should not have to pay it back. Requesting a waiver is a formal way to ask Medicare to forgive the debt. Medicare may grant a waiver if you meet two specific conditions.
You were "Without Fault": You must show that you were not at fault in causing the overpayment. This means you did not know, and could not have reasonably been expected to know, that the payment was incorrect or for a non-covered service.
Repayment is "Against Equity and Good Conscience": You must demonstrate that paying back the overpayment would be unfair or would cause you significant financial hardship.
A waiver of overpayment is not automatically granted. It is a discretionary action, which means Medicare has the authority to approve or deny the request. Your request must include specific evidence to show that you were without fault and that repayment would be against equity and good conscience.
Taking Action: A Step-by-Step Guide
If you receive a demand letter, here are the steps you should take immediately:
1. Understand the Demand Letter: The demand letter is your most important document. It will tell you the amount of the overpayment, the reason for it, and the deadlines for both appealing the finding of an overpayment and requesting a waiver. Do not ignore this letter.
2. Gather Your Evidence: Regardless of which path you choose, you will need to collect evidence. If you are challenging the overpayment, get a letter from your doctor and your medical records. If you are requesting a waiver, gather documents to show that repayment would cause you hardship.
3. Choose Your Approach and File: You can file a redetermination appeal to challenge the overpayment, and you can simultaneously request a waiver. These requests must be in writing and submitted within the deadlines provided in the demand letter.
For the Redetermination: Use the CMS-20027 Redetermination Request Form or a letter and include your medical evidence.
For the Waiver: Write a separate letter requesting a waiver and include your financial documents. You should explain why you were without fault and why repayment would be a financial hardship.
The appeals process for an overpayment is the same five-level administrative appeals process as any other denial. The key difference is the nature of your argument: you are either arguing that the overpayment was not a mistake, or you are arguing that even though it was, you should not be held responsible for it. You may raise both arguments simultaneously.