California Insurance Code 10133.66 Limits Payment “Takebacks” by Health Insurance Companies
In the last decade, health insurance companies have become more aggressive with retrospective reviews of payments they have made to healthcare providers. During these reviews, the insurance companies disqualify payments that were previously made to providers based on any imperfection with the service or bill that is newly discovered during their review. When this happens, health insurance companies “take back” the payment they previously made by offsetting it against current payments on current services. Many providers have seen a dramatic increase in the amount of “takebacks” by health insurance companies, and many times these reviews are done on services and payments that are several years old. As a result, provider revenues decrease and become unpredictable while insurance companies create savings for themselves. Sometimes these takebacks can’t even be appealed or overturned. This is just one example of the types of strong-arm tactics that insurance companies employ in their unfavorable treatment of the payments they are supposed to make to their contracted healthcare providers.
Provider efforts to reduce or limit takebacks see little success, because the insurance companies are much larger and more powerful than most of the providers, and so they simply take the liberty to create their own rules. Here at RPM Billing, one way that we have attempted to limit takebacks is to negotiate terms into the insurance contracts when we do contracting work for our clients. The insurance companies use template-based contracts, with built-in standardized language which favors them and which they are reluctant to change. This language always limits the time in which a provider has to submit a bill for services. For example, many insurance companies write into their contracts that the providers must bill for services within 180 days of providing the service, or the bill will be automatically denied instead of paid. Our RPM Billing clients never run into this issue because we bill timely 100% of the time. However, in the insurance contract templates there are never any limits as to how far back the insurance companies can retrospectively review and take back the payments they previously made. So the insurance companies set it up so that they have an unlimited ability to search for payment issues and perform “takebacks” on those payments, yet they limit how far back a provider can bill for services. This is clearly unfair to providers, and here at RPM Billing we always point this out and use it during contract negotiations.
However, the State of California Insurance Code has a section dealing with this exact type of situation. In California Insurance Code INS 10133.66, part B states: “Reimbursement requests for the overpayment of a claim shall not be made, including requests made pursuant to Section 10123.145, unless a written request for reimbursement is sent to the provider within 365 days of the date of payment on the overpaid claim.” This significantly levels the playing field for providers, as it directly limits the takeback period to 365 days after the payment was made. The full text of INS 10133.66 can be seen here: http://codes.findlaw.com/ca/insurance-code/ins-sect-10133-66.html
Because of this, we are now able to provide our California clients with several approaches to limit insurance company takebacks. We advise them to respond to aged takebacks with a professionally written form letter refusing the takeback, regardless of the language in the insurance contract. After all, these contracts typically have a boilerplate section, out of concern for legal compliance, stating that the law prevails in any discrepancy that may exist between contract language and the law. The form letter should be written in compliance with INS 10133.66, and signed by an authorized official of the provider. While providers should work constructively and in good faith with their contracted insurance companies, they should also ethically take advantage of all opportunities that are presented within that relationship. Otherwise the bigger, stronger insurance companies will constantly bend the rules in their favor as they constantly work to reduce provider payments.
RPM Billing is a medical billing and consulting firm based in Las Vegas and Reno, Nevada, and serving doctors, hospitals, and other healthcare providers nationwide. We have an experienced billing team, and we work with our clients to develop processes that make sure 100% of the encounters get processed, billed, and paid appropriately and timely. We have also helped numerous clients successfully implement insurance contracting and payment strategies such as these. Led by Jonathan Marshall, who holds a Healthcare MBA and two decades of experience as CEO, CFO, and COO of hospitals and physician practices, RPM Billing was created as a commitment to excellent processes, results, and customer service for its clients. To contact us for a free review of your company’s opportunities to improve revenues, please call us at 775-501-9820, email us at email@example.com, or visit us at www.rpmbilling.com.