How to Prevent Being Asked for Refunds From Insurers

The HelpLine has heard from several members about an issue that appears to be particularly unjust—being asked to return payments to insurers for patients who were seen in network.

The psychiatrists were in-network providers for a commercial insurer, and before they agreed to see a new patient, they checked the insurance company’s database to be sure the patient was covered and could be seen under the plan. All appeared to be in order—they saw the patient several times, filed claims, and received payment from the insurer.

The following scenario unfolded in each of these cases: Several months after receiving payment, the psychiatrist received a letter from the insurer stating that, in fact, the patient had not been covered by the insurer during the time he was seen, and the psychiatrist had to reimburse the company for the payment. The psychiatrist was told that he could either remit the money immediately or the insurer would subtract the amount from future reimbursements for the care of in-network patients.

Clearly, the psychiatrist had no way of knowing the patient was not covered, and the insurer understood that the patient was covered; otherwise, it would not have paid for the care. So the question is: Does the insurance company have the right to request a refund?

The answer is in the fine print. Most contracts that physicians sign when they join an insurance network stipulate that if something like this occurs, the insurer has a right to recover the money, and it falls to the provider to try to recover payment from the patient. This may not seem fair, but it is legal. Because of the contract clause, it is irrelevant whose fault it is, although most probably the culprit is the patient’s employer who failed to inform the insurer that the patient had been dropped from the plan.

To avoid having this happen to you, we suggest that when you begin treatment with a new patient, have the patient sign a contract acknowledging that the patient must notify you if his/her insurance changes and that if the insurer fails to reimburse for the care provided for any reason, the patient is responsible for the payment. A sample contract can be accessed here.

This provision is already standard in the paperwork that patients are required to sign by most primary care practices. Also, each time you see a patient, be sure to ask whether the patient’s insurance has changed. ■