Dear ADA: Recoupments

Payers may recover alleged overpayments by offsetting funds from future remittances

Dental insurance issues are often cited as one of dentists’ biggest challenges.

In response to an ADA Health Policy Institute poll in late 2025, more than half of dentists reported that one of their top concerns looking ahead to 2026 was related to insurance, including low insurance reimbursement rates and delayed or denied payments.

This ADA News series aims to address some of those challenges. “Dear ADA” will feature answers to common insurance-related questions the American Dental Association receives from members to help provide clarity and direct members to additional resources.

The answer to this month’s question is provided by Liz Papineau, D.D.S., a member of the ADA Council on Dental Benefit Programs.

Dear ADA: I've received a notice from a payer that they've automatically withheld funds from a remittance because they say they overpaid me on another unrelated patient. How can they do this?

Dr. Papineau: You're not alone. Many dentists and staff members are surprised and frustrated the first time a payment is reduced because of an issue involving an entirely different patient. Most of us think of claims and payments as patient-specific transactions, but payers may not. This practice, commonly known as a recoupment or offset, is a mechanism many payers use when they believe they have overpaid a provider.

An overpayment can arise from a processing error, such as a claim paid twice, or from information that comes to light after payment, such as a coordination of benefits issue, a retroactive eligibility change or an audit finding. Either way, when the payer concludes it paid more than it should have, it will typically seek to recover those funds.

Rather than sending a bill and waiting for a refund, some payers recover the amount by reducing future payments. That's why you may see a deduction on a remittance for a completely unrelated patient.

Whether a payer may do this depends largely on your provider agreement and applicable state law. Many contracts expressly authorize offsets against future claim payments with language such as, “Dentist shall notify [insurance company] of any overpayments or payments made in error, and [insurance company] may offset future claim payments due to the dentist.” I encourage you to review the ADA webpage on dental insurance contract issues for more information on recoupment clauses. Those rights may be limited by law, however, depending on which law governs the patient’s plan.

Start by determining whether the plan is self-funded or fully insured. Self-funded plans may take the position that state protections such as notice requirements, recovery timeframes and dispute rights do not apply to them. Because a large share of employer-sponsored coverage is self-funded, confirm the plan type with the plan administrator, summary plan description or payer before relying on state law.

For fully insured plans, state law may require notice, supporting documentation and an opportunity to dispute before funds are recovered. Many states also set a lookback limit — often 12 to 24 months — beyond which a payer generally may not recover an alleged overpayment, subject to exceptions such as fraud or coordination of benefits issues.

When you receive a recoupment notice, take time to carefully review the information provided by the insurer. A proper notice should identify the original claim, the patient involved, the amount the payer believes was overpaid and the reason for the adjustment. If that information is missing or unclear, request it; you can’t evaluate a recovery without knowing what the payer is recovering and why.

Practices should also track recoupments carefully. A recovery applied against unrelated patients’ payments can complicate reconciliation and confuse patients, so train staff to post these payments correctly and explain the adjustments. Link each recoupment to the original claim and keep a clear paper trail to confirm the adjustment is legitimate and prevent duplicate recoveries.

Of course, the most important question is whether the payer is right.

Payers process enormous volumes of claims, and mistakes can occur on either side. Before accepting the adjustment, review the original claim, clinical documentation, prior remittance advice and related correspondence. The payer may have misapplied a policy, overlooked submitted information or miscalculated the overpayment.

If you believe the payer is wrong, review your contract and the payer's dispute procedures promptly. These rights are often subject to specific deadlines, and missing them can make a reversal harder to pursue. The ADA's Third Party Payer Concierge can also help with dental benefit concerns, including claim adjudication and payer practices. Members can reach the concierge by emailing dentalbenefits@ada.org.

The bottom line is that payers may recover alleged overpayments by offsetting future remittances, even for different patients, but that ability is not unlimited. Know your contract terms and state law protections, review every recovery notice carefully and keep accurate records. When a recovery appears questionable, don't assume the matter is settled simply because the funds have already been withheld. Reviewing the facts and exercising available appeal rights may help ensure the outcome is both accurate and fair.