What is a recoupment in medical billing?

It's when a payer recovers money it says it overpaid by withholding it from a later payment. It usually shows up as a provider-level adjustment (PLB) on the 835 remittance; some payers show it as negative claim lines instead.

Recoupments.

A recoupment is money a payer takes back for what it says was an overpayment, by withholding it from a later payment instead of asking for a refund.

Why it happens

Offsets usually appear as provider-level adjustments at the bottom of a remittance; some payers show them as negative claim lines instead, so they're easy to miss. Tennessee generally limits recoupment to 15 months after payment, or 18 months for state employee health plans (Tenn. Code Ann. § 56-7-110). Where the payer or its eligibility agent verified coverage and you provided services in reliance on that verification, the limit for recouping because the patient wasn't covered is six months from payment (§ 56-7-110(d)). Fraud, suspected fraud, agreed tolling and plan-specific exclusions can affect the rule.

How Owed checks

01
Owed flags provider-level adjustments WO, FB, WU, 72, J1 with positive amounts (reductions in the payment) for review. Of these, only WO denotes overpayment recovery; FB is a balance forward, WU is a federal levy, 72 acknowledges a refund you sent, and J1 is a non-reimbursable amount.
02
Where the payer references the original claim, it finds that claim's payment and works out how long ago it was paid.
03
For Tennessee claims where commercial state law may apply, it flags offsets beyond the longer 18-month limit for review. The remittance doesn't identify state employee plans, so it doesn't label an offset between 15 and 18 months as barred.
04
The 30-day period to appeal and stop withholding starts on the notice date, which must generally precede the offset by 30 days. An 835 doesn't establish the notice date, so Owed leaves this statutory deadline unset and asks you to check the notice immediately.
05
You tell Owed how each payer's plans are funded. It still flags recoupments from payers you've marked self-funded, Medicare or Medicaid, without the Tennessee statute and with a 60-day default deadline from the payment date on the remittance. For eligible Tennessee claims, it marks the rule as confirmed when you've confirmed a payer is fully insured, or unconfirmed when funding is unknown.

What you'll see

The amount taken and the reason code
The original claim's payment date and how many months ago it was, when the payer says which claim
The statute, when it applies
A notice-date review warning when the statutory deadline can't be determined

Rules check your remittances against the rates, settings and history available. Each finding shows its evidence; AI does not decide the result.

What to do

Get the payer's overpayment notice immediately and check its date, basis, amount and appeal instructions. A payer can't base a recoupment on extrapolation from an audit (§ 56-7-110(m)). Confirm the plan and any fraud or tolling exception before relying on a statutory limit.

Questions

What is a recoupment in medical billing?: It's when a payer recovers money it says it overpaid by withholding it from a later payment. It usually shows up as a provider-level adjustment (PLB) on the 835 remittance; some payers show it as negative claim lines instead.
How far back can an insurer recoup payments in Tennessee?: Tennessee generally limits recoupment to 15 months after payment, or 18 months for state employee health plans (Tenn. Code Ann. § 56-7-110). Where the payer or its eligibility agent verified coverage and you provided services in reliance on that verification, the limit for recouping because the patient wasn't covered is six months from payment (§ 56-7-110(d)). Fraud, suspected fraud, separate agreed tolling and exclusions such as TennCare products require review. The 30-day period to appeal and stop withholding runs from the notice date, not the later offset.