Revenue Cycle

From the field: Recoupment before receipt of demand letters

Recovery Auditor Report, December 2, 2010

The Revenue Cycle Institute recently had a brief conversation with Karen Sagen, managed care leader at Bellin Health Systems in Green Bay, WI, on a recent problem that has been confounding a number of providers nationwide.

Question: There has been talk out there about a confusion issue involving RACs. Apparently some providers have been seeing recoupment before the receipt of demand letters. Can you comment on this?

Answer: We have seen a lot of this and it’s definitely causing some confusion. What is actually happening is that the Medicare Explanation of Benefits (EOMB) shows the N432 code (a RAC denial code that appears on the remittance advice, which is a notice of payments and adjustments sent to providers, billers and suppliers.) and if you look at that entry, it looks as though money has been recouped. However, what is actually happening is that the N432 is attached to the claim at the time the demand letter is produced, which in turn activates the N432 on the EOMB.

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