|Title: Processing Refunds|
This standard defines the approved process for resolving credit balances and overpayments and to facilitate timely refunds for confirmed overpayments.
Accounts with credit balances or overpayments must be researched and analyzed promptly. Credit balances or potential overpayment discrepancies must not remain unresolved for more than 60 days following the date of the overpayment. If the payment discrepancy is confirmed as an overpayment, refunds must be processed immediately.
- USC Care adopts Federal Standards in compliance with its Healthcare business operations unless a higher standard applies. For purposes of processing overpayments, USC Care adopts the federal standard established in Section 6402 of the Healthcare Reform Law. This law provides that identified overpayments must be reported and returned (repaid) within 60 days to the applicable government contractor, intermediary, or carrier. The retention of any overpayment after the 60-day period may constitute an “obligation” under the False Claims Act. Under the 2009 amendments to the False Claims Act, the definition of “obligation” was expanded to expressly include “retention of overpayments.”
Credit balance/overpayment discrepancy – A credit balance and/or overpayment can result from a payment made by an insurance carrier and/or another responsible party for an amount greater than expected, duplicate payment/contractual entries, misapplied charges/credits, incorrect patient account adjustments, etc. For the purpose of this standard:
- Clinical Departments are responsible for the resolution of credit balances and potential overpayments subject to their respective authority.
- USC Care Medical Finance Department is responsible for confirming that the refund requests are complete, processing USC check requests, and monitoring the regular activity of the refund process.
- USC Care Refund Team: A team of personnel within USC Care Revenue Cycle Operations available to assist the Clinical Department with documentation as it relates to patient payments received via check and verifying that credit card payments posted are an accurate reflection of the source documentation.
- Account: a patient account or invoice.
- Refund Request Form (Attachment 1): Standardized form provided by USC Care for the purpose of documenting the summary of overpayment research and resolution.
- J1 Overpayment Refund Form (Attachment 2): The CMS overpayment form which must accompany every voluntary refund.
- Department Practice Plan Administrator: The top administrative position within the Clinical Department with responsibility for departmental billing.
The following steps must be performed to ensure timely research and analysis of accounts and prompt, accurate refunds of confirmed overpayments. Because, account discrepancies can occur for many reasons, accounts with credit balances or suspected overpayments require review and research to determine the underlying cause for the balance in question. Once confirmed, all bona fide overpayments must be promptly refunded to the appropriate patient, guarantor or third-party payer.
Clinical Department Responsibilities
On a weekly or more frequent basis, the Clinical Department will identify all outstanding credit balances associated with any accounts for which they bear responsibility. The Clinical Department should identify such balances by accessing the Credit Balance Enterprise Task Manager (ETM) view in GECB or by using the Credit Balance report in MARS. Additionally, to the extent that it is reasonable, the Clinical Department should employ whatever tools or methodologies it has available to identify potential overpayments not resulting in a credit balance. Receipt of correspondence indicating that an overpayment has been made will constitute having identified a potential overpayment for the purpose of this standard. Once identified, the Clinical Department will complete the following procedure within 10 business days:
- The Clinical Department is responsible for verifying that all payments and any adjustments were posted correctly. The verification will include reviewing the following information located on a third party explanation of benefits or on a patient payment:
- Patient Name
- Date of Service
- Provider Name
- Procedure Code
- Charge Amount
- Payment Amount
- Adjustment Amount
- If the payment(s) was/were applied to the incorrect invoice(s), the payment(s) will be transferred to the correct invoice, after appropriate review and authorization. The Clinical Department will ensure that both accounts contain notes that link the invoices (e.g., “payment transferred from invoice number xxx” and “payment transferred to invoice number xxx”) to create an appropriate accounting trail.
- When the credit balance is a result of overpayment by a patient, the entire patient account will be reviewed. If it is determined that the patient has outstanding patient responsibility for other invoices within the patient account, the Clinical Department will transfer the overpayment using the first-in first-out (FIFO) methodology, until the credit is exhausted. Under no circumstances shall a transfer result in a credit balance for the invoice to which the credit is being transferred. Any overpayment remaining after application of outstanding invoices will be refunded to the patient or guarantor. The Refund Request Form should be completed and retained in the batch envelope to document the transaction(s) in a manner appropriate for audit.
- Once the Clinical Department has finalized their research and has determined that a refund is appropriate, the Clinical Department shall complete the following process:
- Enter financial comments into the account(s) in GECB detailing the research of the credit balance.
- Complete the Refund Request Form
- In the event that a valid address can’t be identified after exhausting all available means, The Clinical Department should so indicate with appropriate notation.
- Obtain the appropriate signature approvals:
- The Clinical Department Billing Manager must sign all Refund Request Forms verifying the accuracy of the research and validity of the refund requested.
- Any refund exceeding $1,000 requires the signature approval of the Practice Plan Administrator in addition to that of the Billing Manager.
- Submit the completed Refund Request Form with supporting documentation to the USC Care Medical Finance Department.
- The supporting documentation must include the following:
- If refund is due to Medicare the “J1 Overpayment Refund” form must be completed and included.
- Copies of all Explanation of Benefits (EOB’s) as they pertain to the refund.
- Copies of all patient payments as they pertain to the refund.
- Once the check is available, the Clinical Department will post the refunds to the appropriate accounts in GECB within 4 business days. The staff member posting the refund must not be the staff member who requested the refund initially.
- All supporting documentation described in 5(d) above will be kept in the batch envelope for auditing purposes.
- Retain a copy of the Refund Request Form and supporting documentation for the refund posting process.
USC Care’s Responsibilities
- The USC Care Medical Finance Department will review the refund request to verify that the appropriate supporting documentation is received with each refund request within 3 business days.
- If all documentation is not received, the Refund Request Form and all supporting documentation will be returned to the Clinical Department for additional research and/or information.
- If a valid address has not been identified by the Clinical Department, the USC Care Medical Finance Department will refer the refund request and supporting documentation to internal operations staff for address tracing and resolution with the support of USC Care contracted vendors.
- The USC Care Medical Finance Department will process all refund check(s) in WEBBA within 5 business days. WEBBA check requests will be processed with appropriate routing information allowing for direct distribution from USC Disbursement Control to the requesting Clinical Department.
- If the refund checks are not distributed by USC Disbursement Control within 5 business days, the USC Care Medical Finance Department must follow-up with USC Disbursement Control for resolution.
- The USC Care Medical Finance Department will retain a copy of the Refund Request Form and all supporting documentation for audit purposes.
Clinical Department Responsibilities
- Once the checks are made available to the Clinical Department by USC Disbursement Control, the Clinical Department will post the refund to the appropriate invoice(s) in the GECB system within 4 business days using the appropriate refund pay codes (e.g., Government Insurance Refund – 5090, Insurance Company Refund – 5088, or Patient Refund -5087). The refund posting process and the mailing of the refund payment must be performed by a different staff member than the refund requestor. At no time shall the individual posting the refund to the patient account be the same individual as the refund requestor.
- The comment field of the posted refund transaction must include the USC Check number and adhere to the following formats:
- For patient refunds (Payment code 5087): USERNAME USC CK#V000000; Example: STTI USC CK#V025039
- For government payer refunds (Payment codes 5090 & 5091): USERNAME USC CK#V000000 TO PAYER; Example: STTI USC CK#V023093 TO MCARE
- For non-government payer refunds (Payment code 5088): USERNAME USC CK#V000000 TO PAYER; Example: STTI USC CK#V025043 TO HCP
Failure to do so will result in reconciliation discrepancies which will require additional research and effort on behalf of both the Clinical Department and the USC Care Medical Finance Department.
- A copy of the refund check and all other pertinent documentation will be maintained in a batch envelope for reference.
- The refund payment is mailed with the supporting documentation and cover letter the same business day of posting the transaction. The supporting documentation will include:
- Medicare – the “J1 Overpayment Refund” form must be included.
- All other Third Party Payors – a cover letter, Explanation of Benefits, and any additional documentation that supports the refund.
- Patient Refund – a cover letter and copies of patient payments.
- All refunds must be mailed using an approved envelope with the following return address:
USC Care Medical Group
P.O. Box 31309
Los Angeles, CA 90031
Finance Department Refund Unit
Note: The Clinical Department will attempt to process all refund checks within the same month received. In the event a check is not processed, for balancing purposes it will appear in Finance as a rollover from the previous month.
- Refund checks returned to USC Care will be recorded and forwarded to the original requesting Clinical Department for additional follow-up and resolution.
- In the event that a refund check remains outstanding, as requested, the Clinical Department shall provide the USC Bank Reconciliations Department and/or the USC Care Medical Finance Department with whatever support and assistance is available. The Clinical Department is expected to facilitate compliance with the California Unclaimed Property law wherever possible.
USC Care Responsibilities
- As part of the GECB reconciliation process, the USC Care Medical Finance Department will reconcile refunds posted to refund checks issued. All discrepancies involving checks issued for which posted refunds can’t be identified or where posted refunds don’t balance to check disbursement amounts will be communicated to the Clinical Department responsible for immediate resolution.
- On a monthly basis, the USC Care Medical Finance Department will generate a departmental refund report in order to verify that each department is requesting refunds regularly. If no refunds are requested within a given month for which there are outstanding credit balances, the department Practice Plan Administrator will be notified in writing. If two consecutive months transpire without refunds for a given department in which there are outstanding credit balances, the Department Chairman will be notified in writing with a copy to USC Care’s CEO, the KSOM Medical Finance Office and the Office of Culture, Ethics and Compliance.
- On a quarterly basis the USC Care Medical Finance Department will review refunds to identify any unusual patterns (e.g., frequent refunds to same patient, frequent address used). The USC Care Medical Finance Department will report any unusual activity to the Office of Culture, Ethics and Compliance immediately. In an effort to identify outliers, the patterns reviewed shall include but are not limited to the following:
- Frequency of patient name
- Payment address
- Overpayment reasons
- Volume trending
Additional Clinical Department Responsibilities
- The Clinical Department will work with the Office of Culture, Ethics and Compliance to implement an immediate action plan, should the results of the Office of Culture, Ethics and Compliance’s monitoring program identify a lack of adherence to the standards and processes of this standard.
- To make certain that this issue receives the appropriate attention, the Department Chairman shall designate a senior level individual with appropriate expertise and knowledge to manage this issue on behalf of each clinical unit. This individual will be accountable to KSOM Finance and the Office of Culture, Ethics and Compliance with regard to this standard.
- On a monthly basis, the Clinical Department will be provided with an edit report identifying invoices for which both refunds and offsets/take backs have been posted. The Clinical Department will be responsible for verifying that the posted transactions are appropriate and/or coordinating resolution with the involved payer. Should a stop payment for an outstanding refund check be warranted, the Clinical Department will follow the published process and guidelines established by USC Disbursement Control.
All employees having roles or responsibilities covered under this standard are expected to be thoroughly familiar with the standard and its procedures and obligations as they pertain to the employee’s role. Failure to comply with this standard may result in disciplinary action pursuant to all applicable university policies and procedures, including termination.
The Office of Culture, Ethics and Compliance will report non compliance with this standard to the Department Chairman; to KSOM Finance and the USC Care Board.
- Credit Balances Established for Future Services: Credit balances established for the purpose of funding future services (e.g. pre-negotiated self pay, package pricing, global service contracts, etc…) are exempted from the specific requirements of this standard. However, such balances must reside in one of the Specialty Billing FSCs (e.g. Pre-Negotiated Self Pay (706), Case Rates (709). The Clinical Department must routinely monitor credit balances within these FSCs verifying that each credit balance represents a legitimate deposit against future services. Should that not be the case, the credit balance will no longer be exempt from this standard. The Clinical Department must be prepared to provide the USC Care Medical Finance Department and/or the Office of Culture, Ethics and Compliance with a confirmation of the current legitimacy of any or all such credit balances upon request.
- Unresolved Credit Balances: Credit balances that can otherwise not be resolved by the Clinical Department (e.g. payer refuses refund) will be adjudicated on an ad hoc basis in cooperation with the USC Care Medical Finance Department and the Office of Culture, Ethics and Compliance. The Clinical Department will be responsible for performing the research and documentation outlined within this standard under the stated timelines, at which point the Clinical Department should alert the Office of Culture, Ethics and Compliance and the USC Care Medical Finance Department of the special circumstances involved in order to coordinate resolution.
- Small Balances: Credit balances that fall under the province of the Small Balance Write Off Policy are exempted from the processing timelines outlined in this standard. It should be noted that Government Payers are expressly excluded from the Small Balance Write Off Policy. The automated write offs outlined in the Small Balance Write Off Policy are intended to maintain the 60 day standard set forth in the Standards section of this standard. Clinical Departments are expected to monitor all outstanding small balance credit balances during their routine identification process as set forth in the Procedure section of this standard. Small Balances, not automatically written off, may be manually written off by the Clinical Department in compliance with the Small Balance Write Off policy. While small balances are exempted from many of the timelines in this standard, resolution under the 60 day standard is still required.
- Held Charges: Credit balances that are a result of charges being held in TES (e.g. provider under a Compliance Suspension/Review) are exempted from the processing timelines in this standard. Upon request, the Clinical Department must be able to demonstrate that the credit balance is a result of charges that have been entered in TES but have not been extracted to BAR due to an edit for which resolution is outside of the Clinical Department’s direct control. This exemption is intended to specifically address edits for Compliance Suspension/Review, determination regarding the use of this exemption as it pertains to other system edits will be at the discretion of the Office of Culture, Ethics and Compliance on a case-by-case basis.
- Pending Non-Government Payer Correspondence: Credit balances may be exempt from the processing timelines in this standard if resolution is dependent upon pending response(s) to correspondence with the payer. Use of this exemption is subject to review and approval by the Office of Culture, Ethics and Compliance.