The 411 on Patient Refunds

Health
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By Martine G. Brousse

Learn more about Martine on NerdWallet’s Ask an Advisor

As a billing manager for many years, and a patient advocate more recently, I’ve seen the subject of accounts overpaid by patients come up all too often. If patients were truly aware of how much sits on the books of medical providers instead of being refunded, they might gather pitchforks and demand their money.  

This is a widespread practice in the industry, one that has worked well for many doctors, hospitals and other medical providers, as it improves their accounting and provides additional income. But it is time to let the public in on the deal, and come clean with patients who are, after all, customers. Does the clerk at the supermarket, or at any other business, require your formal request to hand over your change? Why are medical providers different?

1. Why is it happening? 

The system for insurance reimbursements is a confusing mess. Reimbursements require waiting a couple of weeks at best, months at worst. Paid charges may be appealed or disputed, payments may be recouped or claims denied or left pending. Account balances remain fluid until they are fully settled, yet patients are usually billed after the first insurance notice. Even if the error or fault for a denial lies with the provider, the patient will receive a statement of insurance non-payment, and threats of collection action after a few weeks.

Another side to this sad story is a common office policy. Though rarely advertised, many practices have a “refund on demand” rule. Don’t ask? Don’t get!

The administrative burden of processing refunds, as soon as a positive balance is noted, is often cited as the main excuse. While that is a valid reason, a good compromise might be refunds on demand for sums less than, say, $50 or $100, and automatic reimbursements for larger overpayments. A good business practice, it also would generate appreciation and positive publicity.

2. Common reasons for credit balances:

Do any of these sound familiar?

  • Premature payment: Your claim has not reached final processing before you receive a doctor’s bill.
  • Pre-payments: The office demands your payment up front, to cover a deductible for example, or if out of network.
  • Double coverage: You have two policies, especially primary, so overpayments are more likely. This is a rare case when an insurance overpayment may (and should) be turned over to the patient.
  • Double payments: An assistance program may have made payment on a charge, or you may have paid the same bill twice.
  • Billing error: An erroneous adjustment may have been posted or an inaccuracy in the billing process may have occurred. If you have a common name, expect such errors.

3. What can you do? 

Keep track of your bills, your insurance plan’s explanations of benefits and your payments. Any statement not matching an EOB should be questioned, and a call placed for confirmation or clarification.  

Request a copy of your ledger, or itemized bill, at the end of each year, or after your last expected visit to a medical facility. Useful for tax purposes, it also will allow you to scan for errors and check balances.

Get receipts for any payments, especially if paying cash. At the time of payment, indicate whether this is an advance on a future liability, partial payment or payment in full.

Decline to make a payment in advance other than the set office co-pay, even if you have not met your deductible or yearly liability. A contractual adjustment will reduce your bill, but may be difficult to calculate before a claim is processed. An in-network facility may not ask for any upfront payment at all per its contract with insurers.

At any suspicion or proof, contact the billing department and ask for a refund. Expect to wait a while, though, before a check is cut. Many offices are on top of billing patients but are reluctant, if not outright combative, about refunding them.

Do not hesitate to contact the office manager or physician if you are given the runaround or a further delay is unacceptable. A complaint to your insurer might be helpful too.

In conclusion 

There’s a French saying that “good accounting makes for great friends.” This goes for your medical practice, too. If you cannot trust the staff or the practices they follow, can you really trust the practitioner?