Ask the Expert: What are the limitations on payors requesting a refund?

July 24, 2023
Area(s) of Interest: Payor Issues and Reimbursement 

Physicians often contact the California Medical Association (CMA) because a payor has requested a refund of monies allegedly overpaid on a claim. While the reasons can vary from patient eligibility errors to incorrectly paid contractual rates, refund requests are understandably frustrating, administratively burdensome and raise questions as to whether a payor can indeed request the refund.   

It is important for physicians to promptly review and respond to overpayment notices since under California law, providers that disagree with an overpayment request must initiate a dispute within 30 working days of receipt of the notice. If a physician does not voluntarily pay or contest a notice of overpayment within those 30 days, the plan can withhold the funds from future payments that are owed to the physician, so long as the physician’s contract specifically authorizes the payor to do so.

Below is an overview of the overpayment request requirements by plan type.

Commercial Plans/Insurers
California law allows health plans, their delegated groups and health insurers 365 days from the date of payment to request a refund, except in cases of fraud or misrepresentation.

California law also requires commercial health plans and insurers to send a written request for reimbursement clearly identifying the claim, the name of the patient, the date of service and a clear explanation of the basis upon which the payor believes the amount paid on the claim was in excess of the amount due. Practices have 30 working days to dispute an overpayment request; payors are required to process the dispute as an appeal.

If a practice fails to reimburse the plan for an uncontested overpayment within 30 working days, the plan can offset the overpayment against future claims if the physician’s contract permits.

Medi-Cal Managed Care
Knox Keene-licensed Medi-Cal managed care plans are required to comply with the same recoupment laws as commercial health plans/insurers. The exception to the rule is for County Organized Health Systems (COHS) that are not licensed Knox-Keene plans. COHS without a Knox-Keene license are not subject to any specific statutory limitations; rather, these entities are only bound by the terms of their contract with the Department of Health Care Services.

Fee-for-Service Medi-Cal
For fee-for-service Medi-Cal, there is no time limitation for identifying, requesting and processing of overpayments or refunds. When a provider overpayment is identified, providers are sent notices of overpayments by the fiscal intermediary or demand-for-payment letters by the auditing organization. These letters also notify providers of their appeal rights. If the provider does not voluntarily pay, steps may be taken to offset the amount owed against future Medi-Cal claims payments.

Medicare Advantage
Recoupments by Medicare Advantage plans are regulated by federal law. Under federal law, plans can request a refund for any reason within one year of the date of the payment and within four years from the date of the payment, for good cause. For more information what constitutes good cause, click here.

Fee-for-Service Medicare
For Medicare overpayments, the federal government and its carriers and intermediaries have three calendar years from the date of issuance of payment to recoup overpayment. This statute of limitations begins to run from the date the reimbursement payment was made, not the date the service was performed.

Under the Affordable Care Act, self-reported and self-identified overpayments must be returned within six years of the date the overpayment was received. 

With respect to ERISA self-insured commercial plans, the California Code of Civil Procedure establishes a “statute of limitations” for pursuing civil action, which also can be applied to the pursuit of overpayments by these types of payors. The applicable timelines for the pursuit of refund include four years for contracted providers and two years for non-contracted providers. 

If a payor is requesting a refund outside of the timeframes permitted or is recouping without sending the required advance notice with the opportunity to dispute, physicians are encouraged to dispute the request in writing and contact to CMA’s Center for Economic Services at economicservices@cmadocs.org or (800) 786-4262 for assistance.

For more information about your rights and options when it comes to health plan refund requests, see CMA’s health law library document #7512, “Plan Requests for Refunds from Physicians.” This and other health law library documents are free to members. Nonmembers can purchase documents for $2 per page.


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