Overpayment Requests: Overview and Tips for Clinical Social Workers in Private Practice
Marla Galvan, LICSW, LCSW-C, Senior Practice Associate, Clinical Social Work
October 2026
NASW receives large volumes of emails from clinical social workers (CSWs) in private practice who have received overpayment requests from insurance companies. These overpayment requests are commonly referred to as “clawbacks.” They occur when an insurance company overpays for a therapy session, or multiple sessions, and subsequently requests recoupment of the funds.
Overpayment requests have the potential to negatively affect a CSWs income months after services were provided and paid for and require significant uncompensated time to respond. They are not inevitable, and not all insurance companies engage in such practices. Still, understanding why overpayment requests occur, knowing how to respond, and implementing preventative strategies may help protect CSWs from financial risk.
To help CSWs navigate this complex issue, NASW has compiled a list of questions from NASW members. This Tips & Tools for Social Workers answers those questions and provides additional resources for support.
Overpayment Requests
Q: Why do overpayment requests occur?
A: Overpayment requests can occur at any time, but they are commonly seen in response to specific scenarios, including random or targeted audits, retroactive claim reviews, or following an overpayment identification.
Q: How do audits, retroactive claim reviews, and overpayment identification differ?
A: The following bullet points explain these scenarios:
- Audits and Retroactive Claim Reviews – In both an audit and a retroactive claim review, the insurance company reviews past billing claims and clinical records to verify client eligibility and medical necessity. They are looking for coding or documentation errors, such as the use of an incorrect billing code or insufficient documentation needed to justify the insurance company paying for a service.
- Overpayment identification - Overpayment identification is a scenario in which an insurance company finds that they’ve overpaid a clinician for their services. This could be through duplicate payments, billing errors, or because they’ve discovered they are reimbursing a clinician the incorrect amount based on the physician fee schedule.
Q: How can I tell if I’m being overpaid?
A: Overpayments can be difficult to identify since insurance companies do not post universal rates. If you are in-network with an insurance company, view your original provider agreement to confirm that the payment amounts align with your original contracted rate. Otherwise, take time to conduct internal audits to check for discrepancies, or consider hiring a professional billing service to help. If you notice you are receiving a higher rate than you are contracted to receive, self-report the overpayment to protect yourself from unexpected future recoupment.
Q: What if an insurance company identifies that they are overpaying me, requests the recoupment of funds, but then continues to overpay me?
A: Look up the insurance company’s policy on how to self-report overpayments. Verify with the insurance company what the return process is and return the payment, explaining the reason for return. Ask the insurance company to investigate and correct the cause of the overpayments so that future claims are paid correctly, and continue to report and document any overpayments received until the issue is resolved.
How to Respond
Q: What does it look like to receive an overpayment request?
A: An overpayment request is initiated when an insurance company sends you a written notice. This notice may include recognition that an overpayment was made, the total amount owed, an explanation for how the amount was calculated, and details such as the client’s name, service dates, and types of services that were overpaid. It may also include the request for recoupment of funds, repayment instructions, and explain the interest rate that will accrue if the amount is not paid.
Q: What should I do after receiving an overpayment request?
A: First, verify that the information is correct. Clawback scams exist, and insurance companies sometimes contract with third-party companies to do this work, so it’s important to verify that the patient information and the dates of service are accurate and match your records. Once verified, promptly respond to the letter. Make sure that you understand the specific reason for the overpayment request, review your contracted rate and the documentation for the services in question, and verify that the correct coding was applied. Then, decide whether to pay the requested funds or to file an appeal.
Q: What if I believe the request was made in error?
A: You have the right to appeal a request, but there are strict time restraints for doing so. Potential grounds for an appeal include if therapy services were provided in good faith and if you relied upon the pay rates confirmed by the insurance company at that time. Other valid reasons include if the overpayment was caused by an error from the insurance company itself and you had no notice or knowledge of the company’s mistake, or if the request causes undue and unreasonable financial burden.
Q: How do I file an appeal?
A: Appeals are time limited and must be filed as soon as possible. To initiate an appeal, draft an appeal letter that directly addresses the facts related to the reason for overpayment. Include concrete information such as the patient’s name, phone number, and dates of service. Use the body of the letter to articulate the reason for the appeal. State the facts clearly and succinctly and attach supportive documentation, such as a copy of the initial overpayment request, a copy of the contractual agreement stating the agreed-upon payment rate, or a detailed list of the alleged overpayments.
Q: What happens if I don’t respond?
A: If an overpayment request is not addressed promptly, the insurance company can withhold future payments until the full amount owed is recouped or refer you to a collection agency. They may also charge interest on any outstanding amounts.
Q: What else should I know about this process?
A: When filing an appeal, it is essential that you document all communication with the insurance company. Create a record of your emails, payments, phone calls, and other forms of contact. You should also familiarize yourself with the insurance company’s overpayment process, as well as your appeal rights, which may vary.
Preventing Recoupment
Q: How can I prevent claims from being identified for recoupment?
A: To prevent claims from being identified during an audit or retroactive claims review, implement the following protective strategies:
- Accurately document all services and interventions. The NASW publication Documenting for Medicare: Tips for Clinical Social Workers offers general guidelines for documentation requirements and best practices to ensure Medicare and other insurance companies properly validate claims.
- Always use the correct Current Procedural Terminology (CPT), International Classification of Disease (ICD), and Place of Service Codes (POS). The NASW publication Most Frequently Used CPT Codes by Clinical Social Workers provides a list of the most frequently used assessment and treatment codes by CSWs and when to use them.
- Conduct periodic internal reviews. Knowing the insurance company’s requirements for showing medical necessity and implementing a system to track your own documentation can help you identify potential coding or documentation patterns that could trigger an overpayment request.
Rights and Protections
Q: Are clawbacks legal?
A: Yes, overpayment requests from insurance companies are legal. As the paying entity, insurance companies have the right to audit services at any time, request proof of medical necessity, and recover funds for unjustified services.
Q: Are there any limitations to this practice?
A: Overpayment requests from an insurance company must take place within a legal timeframe known as a “look-back period.” Look-back periods differ between Medicare, Medicaid, and commercial plans, with the legal limit being as generous as six years.
Q: What laws exist to protect CSWs from overpayment recovery?
A: There are no universal federal protections shielding CSWs from clawbacks. However, some states have laws in place that set time limits and enact other restrictions on insurance companies. Thoroughly reviewing the laws in your state that govern insurance clawbacks is one-way CSWs can protect themselves from unnecessary recoupment.
Q: Where can I find information about these specific state laws and protections?
A: Information on specific state laws may be found on the Crossroads Health website. NASW cannot attest as to the accuracy of the database, however, and encourages CSWs to look up the relevant statutes for their state to find the most up-to-date information or consult an attorney to understand their rights. Some state insurance commissioners may be helpful in informing CSWs about the laws in your state.
Conclusion
Overpayment requests are a complex issue. Although they are legal, the practice can feel exploitative and unjust, and responding to them can be burdensome. They are a reason why many CSWs choose not to panel with insurance. And when there are fewer in-network providers available, there are implications for individuals being able to access affordable mental health care.
To protect themselves, CSWs should understand why overpayment requests occur and become educated on their payer-provider agreement and state laws to determine if the overpayment request in a given scenario is allowed.
NASW advocates on the federal and state level for a fairer and more predictable overpayment process for CSWs. For an example of NASW’s advocacy work on this issue, view the resources below:
The information contained in this publication is provided as a service to members and the social work community for educational and information purposes only and does not constitute legal advice. We provide timely information, but we make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this website and its associated sites.
References
Coleman, M. (2024, February 16). Responding to requests for clawback/overpayment requests. National Association of Social Workers. https://www.socialworkers.org/Practice/Clinical-Social-Work/An-Hour-With-Private-Practice/u32924q/726573706F6E64696E6720746F2072657175657374
Coleman, M. (2024, April 19). Follow-up of Optum’s overpayments and an overview of other overpayments. National Association of Social Workers. https://www.socialworkers.org/Practice/Clinical-Social-Work/An-Hour-With-Private-Practice/u32924q/466F6C6C6F772D5570
Cravens-Knoxson, K. (2025, October 16). Behind the claims curtain: Demystifying insurance denials, recoupments, & credentialing. National Association of Social Workers. https://naswinstitute.inreachce.com/Details/Information/a4038181-f7ff-43d7-96e8-c879251278d8
Felton, E. M. & Polowy, C. I. (2015, February). Legal Issues in Health Insurance Audits. National Association of Social Workers. https://www.socialworkers.org/About/Legal/Legal-Issue-of-the-Month/Legal-Issues-in-Health-Insurance-Audits
National Association of Social Workers (2024). Optum/United Healthcare issuing overpayment notices to providers: Important information and steps to take. https://www.socialworkers.org/About/Legal-Defense-Fund/Optum-United-Healthcare-Issuing-Overpayment-Notices-to-Providers-Important-Information-and-Steps-to-Take.