What is difference between offset and refund in medical billing?

In medical billing, an offset refers to the reduction of a payment due to adjustments for previously billed services, often applied to balance accounts between providers and insurers. A refund, on the other hand, occurs when a payment has been overpaid, either by the patient or the insurer, and is returned to the payer. While offsets adjust the amount owed without cash changing hands, refunds involve returning excess funds.