Berks County Medical Society Medical Record Winter 2017-18 - 18

M e d i c a l r e c o r d F e at u r e

Offsets, Insurance Companies,
and The Impact on Our
Financial Stability
by Richard J. Greene, M.D.

I

would like to provide some insight, comments, thoughts,
and suggestions relative to the "offset issue." I believe that
insurance companies are abusing physicians by using the offset
process. What follows is an explanation of offset, why I think they
are inappropriately applied, and what can and should be done about
them. Many physicians are either indirectly involved with billing
or are completely removed from the billing process. Nevertheless,
physicians should be aware of issues that may impact their financial
well-being. Obviously, if the billing process is more cumbersome,
more staff hours are needed, and this creates extra cost.
For those of you who have the fortunate status of not having
to deal directly with insurance payments, the word 'offset' may
not ring any bells. Offset in medical insurance jargon refers
to a negative payment that the insurance company collects by
subtracting a sum from a subsequent insurance payment. This is a
way for the insurance company to recoup a payment that was either
excessive for whatever reason, or totally made in error. For example,
an insurance company issued a payment for a patient's office visit
and later discovered that the patient was actually not covered by
that company's insurance at the time of the visit. The physician then
owes the insurance company the amount that was paid. Instead of
the insurance company asking for the payment back, they instead
remove that amount from a subsequent insurance payment, often a
bulk check. The problem with this method of recouping a mistaken
payment is that it is difficult with a computer system to reconcile
the payment. Reconciling the payment entails a significant amount
of expertise, extra time, and labor as well as complicating the
printout of that day's accounting.

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Let's say the bulk check is for $500 and covers three patients,
and let's say the offset is $50. That means that a percentage of
the $50 needs to be taken from each of the patient's payment,
or $50 taken from one patient's payment. Yet on the EOB, each
patient's payment is stated for a specific amount not less than $50
or any percentage of the $50. Where and how can this amount
be subtracted and not screw up the accounting? The answer is
that it must be removed from one patient and applied to another.
Rectifying the situation may require a great deal of staff time and
perhaps even a consultation with technical support. Additionally,
the day's receipts are missing the offset amount. These offsets
are apparently perfectly legal. This is a bad business practice and
may create great animosity. To make matters worse, insurance
companies apparently have the right to go back up to several years
when they magically discover that they made an error in payment.
Paradoxically, physicians have only a six-month to a one-year
window to submit claims to insurance companies. For example -
when an insurance company discovers a payment made in error two
years after the visit, in turn the patient is actually now responsible
for that payment. Imagine sending a bill to a patient two years plus
after their visit. Talk about ill will...that will do it. The other choice
would be for us to write off the debt. Writing off the debt avoids the
inappropriate idea of sending a bill to a patient long after the charge
was rendered, but then we are minus the payment. Both choices are
unacceptable and certainly not fair, considering it was the insurance
company that was inefficient in processing the claim.
Again, I note that while not apparently illegal, the offset
process is offensive, obtrusive, costly and a poor business practice.
Clearly, if an insurance company pays us in error, we owe them the
payment back and should promptly comply. There should be a time
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Berks County Medical Society Medical Record Winter 2017-18

Table of Contents for the Digital Edition of Berks County Medical Society Medical Record Winter 2017-18
