Underpayments & overpayments in managed care provider agreements
I was reviewing a CIGNA managed care contract for a client recently and came across two typical provisons concerning underpayments and overpayments. Here is the underpayment clause in the provider agreement:
Underpayments. If you believe you have been underpaid for a Covered Service, you must submit a written request for an appeal or adjustment with CIGNA or its designee within 180 days from the date of Payor's payment or explanation of payment. The request must be submitted in accordance with the dispute resolution process set out in the Administrative Guidelines. Requests for appeals or adjustments submitted after this date may be denied for payment, and you will not be permitted to bill CIGNA, the Payor or the Participant for those services.
As you can see, the physician practice only has 180 days to identify and then notify CIGNA of any underpayments in its reimbursement. Keep in mind underpayments are VERY COMMON today so be sure you have procedures in place to identify such underpayments on a daily basis. Then there is a section in the provider agreement dealing with overpayments:
Overpayments. You will refund to CIGNA any excess payment made by a Payor to you if you are for any reason overpaid for health care services or supplies. CIGNA may, at its option, deduct the excess payment from other payments to you, and you will be notified of any such deduction as specified in the Administrative Guidelines.
While the physician practice has a limit of 180 days to identify and notify CIGNA of underpayments, there is no time limit place on CIGNA with respect to overpayments. This is quite typical in most managed care provider agreements. The payors literally can request a refund years after the reimbursement was made.
This is one area you should include in all of your contract negotiations. Try to place on limit on the payor's ability to seek overpayments - I try to include the same 180 day limit but definitely limit it to one year.