What does "recoupment" refer to in the context of billing?

In the context of billing, "recoupment" primarily refers to the process of taking back a payment that has already been disbursed to a provider or organization. This situation usually arises when an insurance company or payer determines that a payment was made in error or is otherwise not justified according to the terms of the agreement.

Recoupment is significant in billing practices because it ensures that funds are returned to the payer when there has been an overpayment or when a claim is found to be invalid. This is typically initiated by the payer, who will notify the provider of the intention to recoup funds, often detailing the reason and the amount involved.

It is important to distinguish this from the other choices. A refund of overpayment to a patient addresses a different scenario where a patient has been overcharged. Charging for a procedure not performed is an unethical practice and does not represent the concept of recoupment. Finally, adjusting a patient's account balance can occur for various reasons, but it does not specifically involve the act of taking back a payment previously made, which is the essence of recoupment. Thus, the definition of recoupment distinctly aligns with the action of taking back a payment.