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.
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.
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.
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