Repayment Demands, Recoupment & Offsets

Providers need to fight back when unmet repayment demands lead to recoupments and offsets

The Issue: Healthcare insurers often initially pay claims and then decide not only that they want the money back as to a specific claim but that they want all the money they paid out in the past for the same procedure or supply. They conduct an “audit,” demanding billing records from providers, and they extrapolate to make a repayment demand often representing the entirety of the provider’s claims payment history.

When repayment of demanded amounts is not immediately forthcoming, healthcare insurers offset the full amount they claim from all other amounts they owe, even when these claims and services have nothing to do with the claims originally at issue.

A provider can face ruin when confronted with “recoupment” (also called a “clawback”) or offsets in a market where the healthcare insurer is in a dominant position and represents a large percentage of the provider’s revenue. Repayment demands, recoupments and offsets can and should be challenged.

Our solution: We won a game changer. Formerly, healthcare insurers relied on the fact that ERISA, the federal law that governs the majority of employee benefit plans, was somewhat ambiguous about the rights of providers facing recoupments. Healthcare insurers took the position that providers had no administrative appeal rights under ERISA where recoupments were involved.

But no longer. Axelrod, with other counsel, challenged this interpretation and won at trial the rights of providers to appeal all recoupments and offsets as “adverse benefit determinations” under ERISA. Now, healthcare insurers must provide full and fair review – complete appellate rights – each time they attempt to recoup and each time they attempt to offset, or they cannot do so. In addition, the underlying reasons for the recoupment can also be challenged.