Denial Codes - Healthcare

Offset in Medical Billing with Example

What is offset in medical billing?

When an insurance company makes a wrong or excess payment to its provider, it would adjust the amount in its subsequent claims and this is called as offset in medical billing.

Offset example in medical billing:

Let us assume Doctor-A rendered the health care services for patient Alex on 12/01/2019 and they have billed the claim to the insurance company with billed amount $200.00 and received a payment of $100.00 to the provider on 12/18/2019.

After auditing, insurance company got to know that they have processed the claim (Patient – Alex, DOS 12/01/2019) incorrectly and paid $100.00 instead of $80.00(Excess payment of $20.00 to provider).

Now insurance company has to ask the provider to either refund that excess payment or else insurance company has to offset the excess payment against the payment of future claims of the same provider.

Let us see how the insurance does offset of the excess payment and payment posting team post the payment in the application?

Assume same Doctor-A rendered the health care services to the patient name John on 12/28/2019 and billed the claim to insurance company with billed amount of $150.00. Insurance company processed the claim and sets $80.00 to be paid for the provider on this claim for the health care services. But here insurance company instead of making payment of $80.00 to the provider (Doctor-A), they will pay only $60.00 and $20.00 they will say as an offset and provide the complete details(Offset EOB and Overpaid EOB).

Once the provider or billing team receives this information (Offset EOB and Overpaid EOB) and found insurance processed the claim correctly. Payment posting team will go to the account of Alex (DOS 12/01/2019) and repost the paid amount from $100.00 to $80.00 and adjust the $20.00.

When it comes to posting the payment for patient John (DOS 12/28/2019), they will post the paid amount as $80.00. This we call it as offset in medical billing.

What actions need to be taken when claim processed as offset in medical billing?
  • Review notes to find the actual date of service in which the insurance has paid more.
  • Check if valid EOB/ERA is available for the date of service. If yes, adjust the balance as per Client’s instructions.
  • If there is no valid EOB/ERA, check website to download the EOB/ERA.
  • If there is no website, call insurance and follow the protocol of overpayment denial as below.
Call the claims department and ask the following question when the claim processed as offset in medical billing:
  • First obtain the processed date of the claim from rep?
  • Next, get the allowed amount and the amount that was offset?
  • Get the payment information if there was any?
  • Request for the claim to be reprocessed if the offset denial was incorrect?
  • Obtain the payment information for the overpaid claims?
  • Get the account details of the claim that was overpaid?
  • Request the copy of offset EOB and overpaid EOB
  • Finally get the claim number and Cal reference number?