Successfully Handling Medicare Overpayments

Basics of Medicare Overpayments

A Medicare overpayment exceeds regulation and statute properly payable amounts. When Medicare identifies an overpayment, the amount becomes a debt provider owes the federal government. Federal law requires Medicare to recover all identified overpayments. Common reasons for Medicare overpayments include incorrect coding; insufficient documentation; medical necessity errors; and processing and administrative errors. Proper understanding of Medicare overpayments is essential for successfully handling them.

Handling Medicare Overpayments

If you realized Medicare did overpayment then you simply can’t keep that money. Providers must report and repay Medicare overpayments within 60 days of identifying them. This includes overpayments identified within six years of when the overpayment is received. You can refer to the following guidelines on successfully handling Medicare overpayments:

  • What Makes an Overpayment: When the provider receives an overpayment of $25 or more, MAC initiates overpayment recovery by sending a demand letter requesting repayment. The demand letter includes overpayment reason/s; interest accrual begins if the overpayment isn’t repaid in full within 30 days; immediate recoupment request options; Extended Repayment Schedule (ERS) request options; rebuttal rights; and appeal rights. To reply to Medicare overpayment demand you can either: make immediate payment; or request immediate recoupment; or submit a rebuttal; or appeal the overpayment by requesting a redetermination.
  • Immediate Review of Potential Overpayment: According to CMS, “Receiving overpayments from Medicare is sufficiently important that providers and suppliers should devote appropriate attention to resolving these matters. A total of 8 months (6 months for timely investigation and 2 months for reporting and returning) is a reasonable amount of time, absent extraordinary circumstances affecting the provider, supplier, or their community.” Although providers technically have six months to investigate the potential overpayment, CMS says that providers and suppliers should prioritize these investigations and recognize that completing the investigations may require the devotion of resources and time.
  • Report and Send Overpayments: According to CMS, “Providers and suppliers must report and return overpayments identified as a result of upcoding, whether the inappropriate coding was intentional or unintentional.” Providers can report and return overpayments using one of these methods: an applicable claims adjustment, credit balance, or self-reported refund. Send the overpayment, as well as a written reason why the overpayment occurred, to the Secretary, the state, an intermediary, a carrier, or a contractor. The overpayment amount is the difference between what was paid and what should have been paid if the claim had been submitted correctly.
  • Conduct Billing Audit: Plan medical billing audit either internal or external. If you don’t have qualified billing and coding staff then you can think of external audits. Consider hiring a full-time auditor, coder, or compliance specialist who can conduct ongoing coding audits, review documentation concurrently, spot larger trends of non-compliance, and monitor payments as they occur. The idea is to ensure coding and billing compliance 24/7. This reporting individual can also help mitigate instances of upcoding.


Failure to comply with the Medicare overpayments rule could result in liability under the False Claims Act as well as monetary penalties and exclusion from federal healthcare programs. Be on the lookout for overpayments, and take proactive steps to ensure compliant documentation and coding. In case if you need to conduct an external billing audit, MedicalBillersandCoders (MBC) can assist you. As per your medical specialty, we can provide you with external audit services covering all medical billing processes. To know more about our Medicare billing audit services, contact us at info@ medicalbillersandcoders.com/ 888-357-3226


Published By - Medical Billers and Coders
Published Date - Dec-08-2021 Back

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