General Overview

While the cause of an insurance refund or recoupment may vary, you will use the same two steps to track these types of transactions in EZDERM.

Step 1: Create a Draft Insurance Refund using Unapplied insurance money

Step 2: Change the status of the Draft Insurance Refund to "Issued" once insurance recoups the money automatically or your office mails a refund check to the insurance company

When insurance companies are owed a refund, there must be either Unapplied insurance money to account for, which is your first step in tracking an insurance refund. How you arrive at having Unapplied money may vary - it may come in on an ERA automatically or you may create it manually (see scenarios below). Once you have an overpayment or Unapplied amount, Step 1 is to create a Draft insurance refund from the Insurance Refunds screen for tracking.

Once you create a Draft Insurance refund, it will sit in the Refunds History as a Draft until Step 2, the issuing of the refund. Whether your office mails a paper check or a recoupment is done automatically, Step 2 simply entails marking the Draft refund Issued and indicating a reference number for the check the refund was issued on. 

When posting ERAs, it is important to note any positive (+) or negative (-) Unapplied money on the check, as that may indicate a refund is owed (+ Unapplied) or that a recoupment has taken place (- Unapplied). Do not change anything about how the ERA is posted until you understand why you have Unapplied money. It may be correct that your ERA posted with Unapplied money (positive or negative) and you should not alter how it was posted until you investigate further.

 

What does this process look like from start to finish? Let's look at an example...

You post an ERA on 1/1/2020, and immediately upon posting have an Unapplied amount of $30. Upon further investigation, you find it's because Aetna miscalculated the patient responsibility on claim #EZ12345. Aetna previously paid $50 when they should have only paid $20, and the patient now owes your office a $30 copay. The $30 Unapplied is the result of -$50 Paid + $20 Paid.

There are two elements to address: the Unapplied Amount (refund owed) and the claim balance.

The Unapplied Amount: Once you confirm the refund request is valid, you go to the Insurance Refunds screen and generate a Draft refund, which brings your Unapplied check amount to $0. You prefer not to mail a paper check and instead await a recoupment from Aetna.

The Claim Balance: With the previous adjudication being reversed and the new adjudication posted, the claim balance should be $30 because the patient now owes you a $30 copay. You set the claim "Ready for Patient" and leave a Statement Note for the patient. While you still owe Aetna a refund, the claim itself is no longer pending with insurance. You can move the claim to the next step of billing the patient. The refund itself will now be tracked from the Refunds History screen.

 

Now, months later, on 4/1/20, you post ERA #90901 from Aetna and immediately have an Unapplied amount of -$30 and a warning message "Total paid amount is greater than the check amount!" This is an immediate red flag that a recoupment may have occurred because this message means that the sum of all Paid amounts for all claims on this check are less than the total check amount. When you look more closely at the ERA, you see the check is for claim #EZ78678, which has a Paid amount of $100, but you only received a check for $70. Your Paid amount ($100) is greater than the amount of the check Aetna sent to you ($70). This indicates they withheld or recouped $30 from you (they owed you $100 for EZ78678 but only paid you $70). Upon further investigation of the ERA, you see a notation for a WO amount of $30 due to EZ12345. This message on the ERA shows you that, although the check is for EZ78678, the WO amount (the amount being withheld) is due to EZ12345. No changes have to be made to EZ78678 - Aetna processed the claim without issue and adjudicated it with a paid amount of $100. Even though you did not receive payment for $100 due to the recoupment, EZ78678 is completed (or can be moved to the next stage of billing the patient if there is some patient responsibility).

Seeing this negative Unapplied amount of -$30 and, after some investigation, determining the recoupment was done, brings you to Step 2. Aetna has done their recoupment and you no longer owe them $30 for EZ12345. Go into Refunds History, find the Draft insurance refund you created on 1/1/20 and change the status to Issued, noting a reference number of 90901 because that is the check number the recoupment was done from. If in the future, you receive another notice from Aetna regarding the same refund, you can check your Refunds History and confirm that a recoupment was already done from check #90901 on 4/1/20. 

 

Insurance Overpayments

Overpayment - When too much money has been applied to a charge, resulting in a negative balance. The claim will appear on the Refunds > Overpayments screen. 

From the Overpayments screen click on the claim number, then go to the Billing Log and open the insurance payment causing the overpayment. Update the amount, this will place this claim in the insurance refunds section. Select the insurance you will be refunding and update the information. 

Once the refund has been issued - either by the office mailing a check to insurance or via an offset from a future payment - go into Refunds > Refunds History and change the refund status to Issued. The details of how the refund was issued (check, credit card, cash), as well as a Reference Number for the refund payment (check number, ERA number if offset), should be documented here.

An Example

Aetna processes a claim as primary, allowing $25 as the patient's copay amount. The claim is sent to Cigna secondary, but due to a Coordination of Benefits issue, Cigna also processes the claim as primary and pays $75 based on their allowed amounts. The claim now has a negative balance of -$50.00 and the claim will appear on the Refunds > Overpayments screen.

From the Overpayments section, click on the claim number, then go to the Billing Log and open the insurance payment causing the overpayment. Unapply the overpaid amount ex. if they paid $50 but only $25 is overpaid, then only un-apply $25

 

You will then go to the refunds tab, and select the insurance you will be refunding 

Ensure that the refund is directed to the correct insurance company and add a note explaining the reason for the refund. The refund status should remain as "Draft" until it is processed. Once completed, click "Done." Also, if the overpayment needs to be refunded to the patient, you can change the recipient type from "insurance" to "patient."

Once the refund is issued, either by the office mailing a check to insurance or via an automatic offset, go into Refunds > Refunds History and change the refund status to Issued, being sure to leave details of the refund payment. Click Done.

 

Insurance Refunds 

Insurance Refund - When there is positive Unapplied money on an insurance payment, that payer and Unapplied amount will appear on the Refunds > Insurance Refunds screen.

Having Unapplied insurance money means that the check amount was greater than the sum of the amount(s) Paid (you have money left over).

From the Insurance Refunds screen, you can post a Draft insurance refund to track the status of the refund, eventually marking it Issued once the refund is complete (either by the office sending a check or by an automatic offset from a future insurance payment).

When a Refund Request/Reversal Comes in via ERA

When an ERA is posted, it is possible you will have a positive Unapplied amount on the check, which indicates a refund may be owed to insurance. Do not be alarmed if there is Unapplied money after posting an ERA, and do not start modifying how the payment was posted. The first step is to look over the ERA to determine why there is Unapplied money. Also, the claim's payment history should be reviewed to verify whether a refund is truly owed. This may require calling the payer and speaking to a representative if you are not clear why a refund is being requested. However, the ERA itself may contain a message from the payer regarding why they made a new determination on the claim.

When a Refund Request/Reversal Comes in via EOB/Letter

If you receive a letter from a payer requesting a refund or receive a paper EOB (in lieu of an ERA) detailing a reversal of their previous determination resulting in a refund request, you can manually create Unapplied money so that the claim appears in the Insurance Refunds screen for tracking.

1. Go to Payments > Add Insurance Payment

2. Add a payment where the check amount is $0.00 (even though the EOB may say Paid: -$100, the payment amount itself is $0)

3. Insert the claim(s) the letter/EOB pertains to

4. Open the claim and enter negative Allowed, Copay, Coinsurance, Deductible, Paid, and Adjustment amounts to reflect insurance's reversal or refund request. For example, if insurance is asking $100 be refunded, put -$100 in the Paid column to create an Unapplied check amount of $100. With the new Paid amount of -$100, the original check amount of $0 will then be greater than the Paid amount, thus creating an Unapplied amount of $100.

5. Since there is now an Unapplied amount (which should match the amount to be refunded), that payment will be found on the Insurance Refunds screen. Create a Draft insurance refund to be able to track when the refund is eventually Issued.

This change in payment (+$100 Paid, -$100 Paid) will be saved in the claim's Billing Log, however, leaving a Claim Note explaining why the refund was requested may also be useful should you need to look back at the claim history.

An Example - Reversal with no New Determination

A claim was billed for $250 and Aetna originally paid the claim in full (no patient responsibility) in the amount of $100. A letter comes in from Aetna saying that the patient's policy terminated due to missed premium payments so their coverage was actually terminated prior to the date of service. Aetna is, therefore, reversing its decision and is requesting a refund of $100. This puts the claim back to square one, so once the reversal is posted, the claim balance should be back up to my original Billed amount of $250.

1. Go to Payments > Add Insurance Payment and create a payment with a check amount of $0, making sure to link it to the appropriate claim.

 2. Open the claim and begin posting negative values that mirror the positive values in Aetna's original payment. For example, if on line one they originally Allowed $75, Paid $75, and Adjusted $75, then in this $0 check, the values for line one should be entered as Allowed: -$75, Paid: -$75, and Adjusted: -$75 so that the previous determination for that line item is reversed and the balance is back up to the original Billed amount (see screenshots below).

Original Payment

Reversed Payment (Balance is back up to original Billed amount)

3. Having a Paid amount of -$100 on a $0 check creates an Unapplied Amount of $100 on the check, thus putting the payment into the Insurance Refunds screen.

4. From the Insurance Refunds screen, click the Insurance Refund and save it as a Draft so that the progress of that $100 refund can be tracked.

An Example - Reversal with a New Determination

A claim was billed for $250 and Aetna originally paid the claim in full (no patient responsibility) in the amount of $100. A new EOB comes in from Aetna showing that they incorrectly processed the claim without any patient responsibility. The patient actually owed a $20 copay so Aetna should have only paid $80. They are, therefore, requesting a refund of $20. Once the reversal and new determination are posted, the claim balance should be $20 (as the patient's copay) and the Unapplied Amount (amount to be refunded) should be $20.

1. Go to Payments > Add Insurance Payment and create a payment with a check amount of $0.

2. Insert the appropriate claim twice - once to post the reversal of the previous determination and a second time to post the new determination

3. Open the first claim and begin posting negative values that mirror the positive values in Aetna's original payment. For example, if on line one they originally Allowed $75, Paid $75, and Adjusted $75, then in this $0 check, the values for line one should be entered as Allowed: -$75, Paid: -$75, and Adjusted: -$75 so that the previous determination for that line item is reversed and the balance is back up to the original Billed amount. When done, the Balance on each line item should be back up to the original Billed Amount, thus effectively putting the claim back to square one.

4. Open the second claim inserted into the check and post the new determination (where Aetna only paid $80 and the patient owes $20). The new determination entered will create a Balance of $20 (reflecting what is now the patient's responsibility). Because the check amount is $0, the -$100 Paid in the first claim and the $80 Paid in the second claim combine to create an Unapplied check amount of $20. This reflects the refund owed to Aetna and puts the payment into the Insurance Refunds screen for $20.

4. From the Insurance Refunds screen, click the Insurance Refund and save it as a Draft so that the progress of that $20 refund can be tracked.

 

 

 

Insurance Recoupments

Insurance Recoupment - A refund was previously requested by insurance and, in lieu of the office sending a refund check, insurance has withheld the refund owed from a future payment.

When posting an ERA, a warning message may pop up that reads "Total paid amount is greater than the check amount!" This alert means that the sum of the Paid columns in all claims on the check is more than the total Check Amount. This results in an Applied Amount that is greater than the Check Amount, reflected as a negative Unapplied Amount (more money has been applied than the check is for).

When more money has been applied than insurance has sent a check for, this usually indicates insurance has withheld or recouped money from that check. Step one is to open the ERA to see if there are any sort of adjustment notes on the ERA, such as a "WO" amount. A positive WO amount indicates money withheld from the check. Step two is to either insert the claim the money is being taken back from or to insert a claim for a generic patient named "Insurance Recoupment."

An Example

Aetna pays $80.00 for claim EZ10648, but sends check 123402349349 for only $50.00.

There is a Check Amount of $50.00 (what the check was for, what hit the bank).

There is an Applied Amount of $80.00 (what Aetna Paid toward the claim(s)).

There is an Unapplied Amount of -$30.00 ($30.00 too much has been applied in the Paid column of the claim(s)).

1. Determine why $30.00 is being withheld. Upon opening the ERA, there is an adjustment that reads "Message from Insurance Company: WO $30.00 (EZ10536, 819042000200188)." Because the WO value is positive, this means $30.00 has been withheld from this check (check 123402349349) for claim EZ10536 that was previously paid on check 819042000200188.

2. To address the -$30.00 Unapplied amount on the check, there are two approaches depending on whether a reversal has previously been posted on claim EZ10536 (meaning, whether -$30.00 Paid was previously posted).

• If -$30.00 Paid was not previously posted, I insert claim EZ10536, putting -$30.00 in the Paid column to bring the check Unapplied amount to $0 and to reflect the $30.00 recoupment within the claim's Payment History.
• If -$30.00 Paid was previously posted, I do not want to post -$30.00 Paid again on the claim because I already have -$30.00 in the claim's Payment History. Instead, I create a patient called Insurance Recoupment as well as a test claim for him (Encounters > New Encounter). I insert Insurance Recoupment's test claim into the check and put -$30.00 in the Paid column so that the check Unapplied amount becomes $0. I also put $30.00 in the adjustment column so that Insurance Recoupment's claim balance is $0.

3. I should have been notified about this refund previously, whether via a letter or a reversal in a previous ERA. Therefore, I should have previously created a Draft insurance refund that we now need to mark Issued because the recoupment is complete. I open Refunds History and change the refund from Draft to Issued, making sure to put 123402349349 in the Reference field, as this is the check the refund was recouped on. I also leave a refund note, if I have not previously done so, detailing which claim the refund was for and why it was refunded. This way, when I look in Refunds History, I can see $30.00 was refunded to Aetna on check 123402349349 and I have a note regarding which claim the refund was for and why the refund was requested.