The State Of Cross-Plan Offsetting Litigation

In general, cross‑plan offsetting occurs when (a) one health plan (“Plan A”) overpays a provider for services, (b) the provider declines to reimburse the overpayment, and (c) an insurer or third‑party administrator (“TPA”) recoups the overpayment by paying that provider less when a different participant from a different plan (“Plan B”) receives services from the same provider. The provider is paid less for the subsequent service to offset the previously overpaid amount, and each plan's account is debited/credited accordingly. This article examines recent court cases and developments that involve cross‑plan offsetting. Fiduciaries need to be aware of cross‑plan offsetting and how it impacts plan participants because the practice may violate ERISA.