Medicare’s Error, But You Pay?

The Latest Wave of Medicare / OPTUM Overpayment Requests (Clawbacks), and What We All Can Learn

By Barbara Griswold, LMFT (January 16, 2024; updates 5/3/24 and 7/12/24, in red)

My email is blowing up.  I’m hearing from clinicians all over about a new wave of post-payment claim reviews related to Medicare clients. One therapist forwarded a copy of the letter she received from United Healthcare Medicare Solutions/OPTUM, which asked for the return of a huge chunk of money for sessions going back two years.

The letter said that after reviewing a large number of claims “we found we overpaid you for some claims.” The reason given for the “clawback?” The letter stated that “correct allowable for licensed clinical social worker is 75% of the CMS rate…” What happened is that UHC paid the clinician at a higher rate than they should have – paying at 100% of the Medicare physician rate, when Social workers (and now MFTs and counselors) are only supposed to be paid at 75% of the physician’s rate.  (Psychologists are paid at 100% of the physician rate).

So now, even though the clinicians made no error, UHC Medicare Solutions — the Medicare Advantage plan — says these clinicians should pay the money back.  And it seems like they are targeting out-of-network providers who bill on behalf of their clients, but network providers have also been targeted.

Many providers didn’t notice the higher payment. Others may have assumed rates had increased with the pandemic, or just figured it was due to an overall rate increase.  And out-of-network therapists have no clear contracted rate with that health plan that would have allowed them to identify that a claim was overpaid.

Perhaps UHC/OPTUM thinks that their apology in the letter should provide some comfort: “we sincerely apologize for any inconvenience this may cause, and we are taking steps to prevent these types of errors in the future.”  This not reassuring to anyone, but it also isn’t too credible, since the same thing has happened multiple times in the past, and we understand that it will be happening again soon for other dates of service (see article click here).

I don’t say this is fair or OK or acceptable.  It’s downright obnoxious.  Shouldn’t the health plan should be held accountable for processing claims correctly? And if they do make mistakes, why should therapists be punished?  I agree. But I am not sure if there are strong grounds for appeal, since an argument can be made that the therapists in this case received undue financial benefit from the plan’s mistake, and the payment went beyond the contracted rate.

Also, most health plans look at this situation in this way: That the provider has inappropriately retained a prior overpayment, which they should have identified and returned.  This alone is grounds for asking for their money back, in their eyes. That is, it might be hard for therapists to argue that they did not have some responsibility to identify and return the overpayment when it was received.

You can find out more about Medicare Overpayments and your response options in this Medicare Overpayment Brochure — click here.

UPDATE MAY 3, 2024:  This article gives an update to what has been happening with this situation as of May 2024:  click here

While Optum is saying that out-of-network providers can’t appeal (and so far I’m not hearing that they have been successful), here are some comments about appeals:

• Since you are an out-of-network provider, how could you have identified an overpayment in the first place?  You do not have a contract with the health plan that spells out a contracted rate.  Therefore, you had no reason to believe the rate paid was incorrect.
• You may wonder if you can argue that the statutory regulations in your state limits how far back an insurance company can recoup overpayments.  However, some state laws regulating recoupment clearly state that these limits do not apply to federal plans.  And in two sources I was able to find online, Medicare states that it can go back as 6 years in a “lookback period” for errors and ask for recoupment (citation 1, citation 2).   And according to Sara Jasper, J.D., attorney for the California Association of Marriage and Family Therapists, your state Insurance Commissioner can’t help. “State law wouldn’t apply, and therefore the state insurance commissioners would not have the power to address the issue,”  she said.  
• One possible appeal approach would be to use the legal doctrine of “reasonable reliance,” “promissory estoppel,” or “detrimental reliance.”  The general idea is that you argue that 1) a specific promise was made (here, a certain fee paid), 2) you reasonably relied on the promise, 3) you now are suffering a detriment as a result of your reliance, and 4) out of fundamental fairness, the original promise should be enforced.   That is, each time you were paid at a certain rate, you believed this to be correct.  You and your client relied on this reasonably to make further healthcare decisions, such as whether the client could afford more treatment, the frequency of the sessions that could be afforded, and whether you, the clinician, could afford to provide the treatment at the rate paid.  Very different decisions might have been made had you known that the rate was 25% less. 
• You might also challenge the amount requested back.  United may be stating that they overpaid different amounts for each session.  How is this possible when you billed at a consistent rate?  That is, if the overpayment came about because United paid at 100% of the Medicare Physicians rate instead of 75% of this rate, (as social workers should be paid), shouldn’t the overpayment request be the same for each session?
• Another approach would be to say that these type of collections that go back so many years are abusive, in that they can have the effect of putting a huge number of Medicare providers into bankruptcy and out of business — clinicians who provided medically necessary services to their members, and who had no intent to defraud Medicare or UHC. 
• One clinician suggested you might be able to get an interest-free repayment plan over many months.  “I said repayment would present a hardship for us, we were able to get a six-month repayment plan with no fees or interest for about $3,000 from TriWest.”  Of course TriWest is not Medicare, but is similar in that it is a federal plan.

I’d be happy to help anyone who wants to weigh whether it worth it to try to fight this, or how wants help in trying to fight this (schedule a consultation here).  However, I will admit that I haven’t heard from anyone who has appealed and won.

The NASW states they are aware of the issue and are speaking to Medicare about it (see article here).  And of course, you can always hire an attorney familiar with mental health issues.  Jasper suggests you can always turn to your local Bar Association and they can help assign an attorney familiar with healthcare issues.

An important note: Be aware, as with all health plan overpayment requests, if you don’t appeal or pay the money back, the health plan may stop paying claims for your current and future clients from that plan, and instead deduct any payments from the balance you owe them.

When something crummy like this happens, I try to figure out what I can learn from it. My takeaways from this:

• If you are billing insurance on behalf of clients (that is, not collecting in full from clients at the time of the session), I don’t recommend this. This has become a very risky practice.  See my article on this topic — click here.
• Sometimes when a payment comes in, we don’t always check the amount to see that it is correct. Make this a habit.
• Know your contracted rates with every insurance plan you work with, and for every CPT code you use. Keep a cheat sheet, if needed. If you aren’t sure, ask the health plan to send a copy of your contracted rates by CPT code.
• Don’t assume.  Always contact the plan to question when you are paid more or less than expected.

Update: Jeanne Pinder, CEO of journalism company ClearHealthCosts, interviewed me and some of my readers about their Medicare clawbacks — by UHC and by others. She covers topics like access to healthcare and how insurance works.  Her latest article included addressed this issue:  click here.  Reach her at jeanne@clearhealthcosts.com.

Here’s are some resource for more information about these Medicare overpayments:

• NASW Article About These Overpayment Requests, Jan 2024
• NASW Article About What to Say in Your Appeal
• Medicare Overpayments: MLN Fact Sheet Oct 2023
• Federal Register Medicare Program Reporting and Returning of Overpayments (2016)

Need help with an audit or records request? Want feedback on your documentation to prevent a clawback? Schedule a consultation — click here