Audio

If you’ve been in private practice long enough, you’ve likely encountered the frustrating reality of recoupments, clawbacks, or offsets from insurance companies. Just when you think everything is running smoothly, you receive a notice that an insurance company is taking back money for claims that were previously paid. It’s frustrating, confusing, and can disrupt your income if you’re not prepared.

What Are Recoupments, Clawbacks, and Offsets?

While these terms are often used interchangeably, they each have slightly different meanings:

Recoupments occur when an insurance company determines that they overpaid on a claim and request the provider return the excess funds.
Clawbacks happen when an insurance payer retroactively denies a previously paid claim and demands repayment. This can happen months, or even years after the initial reimbursement.
Offsets are when an insurance company takes back money by deducting it from future payments instead of asking you to send back a check. This can cause unexpected reductions in your reimbursement for other claims.

Why Do Recoupments and Clawbacks Happen?

Insurance companies conduct audits and payment reviews to ensure claims were processed correctly. If they find discrepancies, they’ll attempt to recover funds. Some common reasons include:

Billing Errors – Incorrect CPT codes, mismatched diagnosis codes, or billing for a service that isn’t covered under the client’s plan.
Documentation Issues – Missing or incomplete session notes that fail to justify the billed service.
Coordination of Benefits (COB) Conflicts – If a client has multiple insurances and primary/secondary coverage isn’t verified correctly, the payer may recoup funds after determining another insurer was responsible for the payment.
Retroactive Eligibility Changes – If a client’s insurance coverage was terminated or changed after the service date, the insurer may take back payment.

How to Minimize Risk and Protect Your Income

While recoupments can’t always be avoided, there are proactive steps you can take to reduce the risk:

Maintain Thorough Documentation – Always document sessions clearly and in alignment with insurance requirements. Additionally, be certain to accurately document medical necessity.
Listen with your third ear – If your client has a life changing event happen for them or their family members i.e. job change, divorce, retirement, graduation from college, client aging out of their parent’s insurance plan. If your client mentions these things it may be good to ask directly if this will impact their insurance coverage.
Keep a Stash – Since recoupments can happen months (or years) later, it’s wise to have a financial cushion to absorb the impact, insurance companies can be unpredictable at times.

Wrapping things up!

Insurance recoupments, clawbacks, and offsets are an unfortunate reality in the world of private practice, but they don’t have to be a financial disaster. By maintaining accurate records and staying informed, you can reduce the chances of money being taken back.

At CCS our wonderful Billing Team will keep you informed about anything going on with your client’s account and they will take care of the leg work communicating with the insurance companies to verify whether any recoupments or clawbacks are valid.