DEALING WITH REFUND DEMANDS
FROM DENTAL PLANS
®
By CDA Dental Benefit Plan Specialist
Reprinted with permission from California Dental Association
If we were to list the top five payment
dispute issues CDA’s Practice Support
hears about, refund demands from
dental plans for previously paid claims
would rank up there at the top.
In responding to a refund demand, it
should be remembered that as with any
other type of payment dispute, the
resolution with the dental plans doesn’t
need to be complicated. When it can be
shown that a disputed claim refund is
contrary to the plan’s schedule of
benefits and allowable fees, or contrary
to its payment policies on a particular
procedure, the issue can usually be
resolved in a timely manner and in the
dentist’s favor.
Refund demands always stem from
perceived overpayments – the plan paid
something it shouldn’t have paid.
Overpayments may come from a billing
error on the part of the dental office –
for example, an office charging a patient
for the unpaid balance of a bill at the
full usual and customary fee schedule of
the practice, instead of at the plan’s
discounted allowance agreed to by the
contracted dentist, or the claiming of
more than one procedure that the plan’s
policy bundles into one procedure code.
A billing error on the part of the
practice, resulting in an overpayment
either by the patient or by the plan, will
result in a refund demand.
WHEN ARE REFUND DEMANDS
LEGITIMATE?
State law recognizes that providers are
required to refund many overpayments,
and defines how providers will be
notified when an alleged overpayment
has been made:
• First, the overpayment has to be real
(it’s always within the dentist’s right
to appeal refund demands where the
dentist does not believe that an
overpayment was made).
• Second, the plan must make a refund
demand within 365 days of the
overpayment if the plan overpaid the
provider.
• Third, the plan must give proper
notice to the provider of the claim
that was overpaid, the patient, the
date of service and the procedure that
was overpaid, if applicable.
• Fourth, the provider must either
refund the overpayment within 30
working days of receipt of the
demand, or must file a formal appeal
challenging the refund demand.
• Finally, the plan must inform the
dentist where to file an appeal if the
dentist believes that the payment did
not constitute an overpayment.
While many refund demands are
legitimate, some are not. Specifically,
payments made to the dentist in error,
where the error was made solely by the
fault of the plan, may be appealed. The
specific circumstances of the
overpayment will indicate whether it is
an overpayment that should be
returned, or an overpayment made in
error by the plan that it has no authority
to demand. Often, an office will receive
a refund demand letter wherein the plan
says that it “paid the amount in error.”
It’s advisable that dental offices call
CDA’s Practice Support to discuss the
nature of the refund demand and the
overpayment that the plan is seeking to
recover to determine whether such an
overpayment constitutes a true
“payment made in error,” and presents
grounds upon which the refund demand
may be appealed.
Legislation sponsored by CDA placed
into law a requirement for dental plans
to provide a standard notice to
providers of possible overpayments and
requests for refunds. Notices requesting
a refund must include:
• Information clearly identifying the
claim that was overpaid.
• Name of the patient.
• Date(s) of service.
• A clear explanation of the basis upon
which the plan believes the amount
paid on the claim was in excess of the
amount due, including interest and
penalties on the claim.
The notice should also include a
statement explaining how the provider
can access the plan’s dispute resolution
mechanism if the dentist chooses to
appeal the refund demand. Whether a
dentist refunds the overpayment or
appeals the demand, state law requires a
response from the dentist within 30 days
of the date of the refund demand letter.
CDA has developed resources,
including a sample letter on cda.org, to
evaluate a refund demand and to
prepare an appeal if the request appears
to be illegitimate. Case law in California
has determined that overpayments made
in error by health plans are not the
responsibility of either the provider or
the patient to refund to the plan. But
the payment must meet certain criteria:
the overpayment was made solely
through the mistake of the plan; no
misrepresentation was made to secure
the payment (there was no fraud
involved in filing the claim); services
were provided in good faith, with the
assumption or knowledge that the
services were covered by the plan; the
dentist was not unjustly enriched by
being paid amounts above what was
legitimately owed (in other words, the
dentist was reimbursed a fair amount
that reflected the cost of the service). An
appeal of a refund demand should be
based on these criteria.
State law sets a statute of limitation on
refund requests for overpayment at 365
days from the “date of payment” for the
Los Angeles Dental Society Explorer