In the health care reimbursement arena, there are two opposing interests. On the one hand, providers deserve to be paid promptly for services performed. For that reason, laws require payors to pay claims within a certain amount of time. On the other hand, health insurers and other payors should be allowed to protect themselves against paying fraudulent, duplicate or otherwise incorrect claims.
To meet proscribed claims payment deadlines, but still protect themselves from incorrect claims, most insurers and other payors employ antifraud software and other means to detect obvious false claims prior to payment, as well as an audit process to review claims after they are paid. When the audit process turns up a problem claim, the insurer may deny the claim retroactively - and either require the provider to repay the claim or withhold amounts from future payments to the provider.
A. The General Rule
A few states, including Maryland, impose restrictions on an insurer's ability to deny claims retroactively. The Maryland retroactive denial of claims statute covers insurers, nonprofit health service plans, health maintenance organizations, dental plan organizations, and any other person that provides health benefit plans subject to regulation by the State. In general, these carriers may only retroactively deny reimbursement paid to a provider during the six-month period after the date that the carrier paid the provider.
This time period does not apply, however, if the submitted claim was fraudulent, was "improperly coded," was a duplicate claim, or, in the case of an MCO (which is a managed care company that receives capitated payments from the State for Medicaid recipients), was for services provided during a time period the Maryland Medical Assistance Program had permanently retracted capitation payment for the recipient.
A claim is "improperly coded" if the provider used a code that did not conform either to the coding guidelines used by the carrier applicable on the date the service was rendered, or the contractual obligations of the provider applicable on the date the service was rendered. The carrier must give the provider a written copy of its coding guidelines at the time of contracting with the provider, and also send the provider both written and electronic notices of changes in its coding guidelines at least 30 days prior to a change.
If a carrier retroactively denies a claim, it must give the provider a written statement specifying the basis for the retroactive denial, as well as give other notices required by law if the denial is due to an adverse decision or results in noncoverage of services.
The time to deny claims retroactively is extended to 18 months in the case of a denial of payment due to a coordination of benefits with another carrier, provided that the insurer follows certain guidelines. A carrier may only deny claims under a coordination of benefits if another entity acknowledges responsibility for the claim, and the carrier gives the provider a written statement that gives the name and address of the entity that is responsible for payment of the claim.
Finally, an HMO may make an adjustment to reimbursement as part of an annual contracted reconciliation of a risk sharing arrangement as part of an administrative provider contract, provided the contract complies with certain applicable filing requirements.