When Insurance Takes it Back: Navigating Dental Overpayment Recoupment
Dental insurance plays a big role in helping patients access dental care, but it also introduces complexities for dental practices. One issue many of us have seen—and dread receiving in an explanation of benefits—is insurance overpayment followed by recoupment.
Increasingly, insurers not only overpay claims but then immediately take steps to recover those funds. Understanding how and why this happens is essential to maintaining a healthy revenue cycle and avoiding unexpected financial disruptions.
Let’s take a closer look at what this means for the practice and how it impacts daily operations.
What is an Insurance Overpayment?
Insurance overpayments typically occur for a few common reasons:
- Coordination of benefits (COB) errors – two insurers both pay as if they are primary
- Incorrect fee schedules – a procedure is reimbursed at a higher level than appropriate
- Duplicate claim processing – the same claim is paid twice
- System or manual processing errors
While it may initially seem like a benefit, an overpayment is not additional income or a patient credit for the practice. It is money that will ultimately be taken back.
When I receive a letter of overpayment and recoupment, I call the patient directly to let them know. I prefer not to surprise patients with an unexpected balance. Most patients are not even aware of these issues because, frankly, many do not regularly review their explanations of benefits (EOBs).
Across healthcare (including dentistry):
- Roughly 20%–30% of patients consistently review their EOBs carefully
- About 50%–60% glance at or review them occasionally
- Around 20%–30% rarely or never look at them
EOBs can be confusing, and patients often place full trust in the provider and front office to catch discrepancies and communicate any changes.
What is Immediate Recoupment?
Immediate recoupment refers to the process where an insurance company takes back an overpayment by withholding funds from future claim payments, often across other policyholders under the same plan.
This is where things become more complicated. It can create confusion when explaining adjustments that affect multiple patients under the same insurance plan. Clear and transparent communication is key in these situations.
How This Affects Patient Ledgers
Staff must spend additional time reviewing EOBs and identifying recoupments. Patient ledgers must then be adjusted accurately to reflect these changes.
When communicating with patients, I explain that their insurance carrier has experienced overpayment issues that are affecting how claims are processed for all patients under that policy. I also let them know that, since we are not contracted with that plan, we will collect payment upfront for treatment and assign benefits directly to the policyholder.
I’ve found that collecting upfront helps eliminate surprise billing for patients and reduces recoupment-related disruptions for the practice.
Can Practices Dispute Recoupments?
Yes—recoupments can often be disputed if they are believed to be incorrect. Practices can:
- Request a detailed explanation from the insurer
- Submit an appeal with supporting documentation
- Review contract terms related to overpayment recovery timelines
It’s also important to note that regulations vary by state. Some states—and some payer contracts—limit how far back insurers can go to recover overpayments. Understanding those agreements is essential for proper financial management.
Insurance overpayment and recoupment processes are an unavoidable, and often frustrating, part of dental practice management. However, being proactive, organized, and transparent can help protect revenue while maintaining a positive patient experience.
About the Author
Linda Martinez, FAADOM
Linda has been in the dental field for 25 years. Her passion for dentistry started when her aunt started her dental career as a dental assistant. Following in her footsteps, she graduated as a dental assistant in 2000.
She started her dental career as an assistant and was cross-trained for the front office. Working in the front office, she knew she had found her passion for working in dental customer service. Linda loves diving into the business part of the dental office and enjoys managing and leading her team.
Linda has been an AADOM member since 2021 and received her FAADOM fellowship in 2023.
Linda has been married to her husband John for the past 24 years, and they have two sons, Anthony and Adrian. In her spare time, she enjoys spending time with family and being a dog mom to her Frenchie named Lucy!!
