Making the Case for Not Refunding Money for Care Provided

Here’s a quick quiz. Imagine that a National Coverage Determination (NCD) lists six conditions for which a treatment is covered. During a review you find dozens of patients who received the treatment for a seventh, unlisted condition. Which of the following is true?

1. You must refund every patient immediately.
2. You must refund every Medicare patient. 
3. You must refund every Medicare patient within 60 days.
4. A refund is not required, but you must not bill for any new patients. 
5. A refund is not required, and you may bill for new patients. 

In a recent poll of Monitor Mondays listeners, only 22 percent of respondents chose e), which is the best answer. Let’s look at why, and why so few people chose it. 

The first answer, a) is the most clearly incorrect. An NCD only applies to Medicare patients. Therefore, the assertion that you must refund every patient is completely inaccurate.

Private insurers can adopt Medicare rules, but they do not automatically apply. If you have a contract with a private insurer, and that contract incorporates Medicare policy, then you must likely follow Medicare policy. But absent a contract, or if the contract does not incorporate Medicare rules, Medicare policy is irrelevant. Even Medicaid doesn’t automatically follow Medicare rules. While Medicaid is a combination of a state and federal program, the coverage rules are generally determined at the state level. 

The second answer is closer to being correct, but there’s a trap, and this is where a deep understanding of Medicare rules is important. The forward to the Medicare NCD Manual includes the following statement:

“Where coverage of an item/service is provided for specified indications or circumstances but is not explicitly excluded for others, or where the item/service is not mentioned at all in the Centers for Medicare & Medicaid Services (CMS) NCD Manual, the Medicare Administrative Contractor (MAC) has the discretion to make the coverage decision, in consultation with its medical staff, and with CMS when appropriate, based on the law, regulations, rulings, and general program instructions.”

Under this text, unless the NCD explicitly excludes coverage, the coverage is determined by the contractor. In other words, it has to be proper to bill the service, because absent a bill, the contractor can’t make a determination. (Some might argue “wait, you could ask the contractor without submitting a claim,” but that would not result in a “determination” under Medicare law. There would be no ability to appeal from the contractor’s review unless that review was a determination under the Medicare program.)

In the question above, the NCD lists six situations in which the treatment is covered, but it does not specify that other situations are uncovered. While there is a widespread belief among contractors, compliance professionals, and even healthcare attorneys that only the specified conditions are covered, that conclusion is explicitly contradicted by the Manual language quoted above. 

If b) were correct, c) would also be true (or at least, close to true). You would have 60 days from the date that you quantify the overpayment to make a refund. The preamble to the 60-day rule makes it clear that you are permitted time to review the situation and quantify the overpayment before the clock starts. The preamble suggests that six months will generally be a reasonable amount of time. Once the overpayment is quantified, you then would have 60 days to make a payment.

The fourth answer, d) suggests that a refund isn’t required, but you may not bill for new patients. The first half of the answer is correct, but the second is wrong. When a Medicare rule is ambiguous, I often conclude that there is not an overpayment because the law is unclear. In an ambiguous situation, I may recommend that the client refrain from billing, but that is an option, not a requirement. It is a risk management decision, not a legal requirement. If you conclude that it is improper to bill going forward, barring a change in the law, you should also be refunding for past services. Only when the decision not to bill is optional can you refrain from giving a refund. That is why the final answer, e), is the best. A refund is not required, and you may (but need not) opt to bill going forward. 

This is another example of the importance of carefully reviewing all Medicare policy, and of leveraging healthcare counsel that is not too quick to require a refund. When an organization provides medically necessary services to a patient, it is reasonable for the organization to receive payment for that care. The good news is that the rules, regulations, and policies of the Medicare program recognize this point. 

As long as you fully understand them, you can avoid needlessly refunding money for the medical care you appropriately provided.