Did you recently face a denial of claim despite everything being accurate? Maybe it’s your coordination of benefits that is not updated.
When a patient is covered by more than one healthcare plan, COB comes into play to decide which plan is primarily responsible for the rendered services or prescription drugs and who will be secondly responsible for the remaining payment.
Navigating the healthcare system is a bit complicated, especially when you have more than one payer onboard. Below in this guide, we have elaborated on what is COB in medical billing, how it works, and the rules associated with it.
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What is COB in Medical Billing
To be precise, through the coordination of benefits, the healthcare system establishes clear-cut guidelines on how much share each payer will pay when there is more than one insurer in the house.
Mainly, the coordination of benefits helps prevent dual payments for covered services from two different providers. This is the reason why health plans now clearly state which plan is primarily responsible for reimbursement and which plan comes after that for the remaining balance.
At this point, one must wonder what’s the need for a secondary coverage plan when your insurance provider covers the rendered services.
The secondary coverage plan comes as a savior when the primary coverage does not reimburse for the full services. Your secondary plan will pay for that out-of-pocket cost of the treatment. Therefore, COB clarifies which payer is primary and which payer is secondary, ultimately paving the way for billers to bill the patients accordingly to get reimbursement.
3 Reasons Insurance companies coordinate benefits
Insurance companies in the US coordinate benefits for these three major reasons:
- To prevent duplicate payment for the same service as it will result in reimbursing more than the service cost.
- To clarify which insurance plan is primary – means which insurer will pay first as per the benefits stated by the plan. It also determines how much of the remaining balance the second provider will pay as per the benefits stated by the plan.
- To keep the healthcare cost affordable for everyone.
These rules are highlighted in your summary plan description under the heading of ‘Coordination of Benefits.’ the document further details your healthcare benefits and how they are determined.
How does COB work?
The purpose of the coordination of benefits is to avoid dual payment and make the payment procedure easier and more affordable for patients.
When a care receiver uses the coordination of benefits, the primary insurer pays the claim up to their share. Once the primary payer has done their part, the claim is than transmitted to the supplemental insurance to cover the remaining balance.
Note: An agreement must be made between private insurance companies and the Benefits Coordination & Recovery Center (BCRC) to transfer the processed claim data automatically.
This is how the total payment for the rendered services does not exceed 100 percent of the total amount on the claim. Hence no duplication of payments occurs.
4 Common Situations when COB occurs
Coordination of benefits occurs under any of the following situations:
- You are covered by your employer’s insurance plan and as a dependent under your partner’s healthcare insurance plan.
- Your partner is covered as a dependent under your employer’s insurance plan and covered under her own healthcare plan by her employer.
- Your children are covered under your employer’s and your spouse’s healthcare plan.
- You are still employed at age 66 and covered under your employer’s group health insurance plan as well as Medicare Part A
All four of these situations have two payors; primary and secondary. Your healthcare provider first submits the claim to the primary payer, and then your secondary plan will cover the rest.
When is COB Needed?
Even though your insurance can inquire about your other healthcare plans at any time, sever other situations can also prompt your service provider to verify your coverage. For instance:
- When you are covered under more than one healthcare plan
- When a child is covered as a dependent under both of their parent’s healthcare plans by their employers, individually.
- When you have a private insurance plan from work in addition to Medicare. That said, Medicare has its own rules under which scenarios it will act as a primary payer. Also, if Medicare has inaccurate information concerning your plan, they won’t reimburse you for the service until the issue is resolved.
- When a newborn child is added to the policy, insurance providers often inquire about other healthcare plans for both the mother and the baby.
Other times, Insurance providers also request coordination of benefits at the beginning of every year to confirm if you have added another coverage or when an accident occurs to confirm if there is other coverage that might cover the treatment, such as worker’s compensation insurance or liability insurance.
How Should you Handle the Coordination of Benefits?
Typically, insurance companies ask their clients to provide information about other healthcare coverage, if they have any in place, through email or a questionnaire. You are required to either fill out the form or directly contact your provider and provide all the information over a phone call.
Also, keep a record of any documents you have regarding the coordination of benefits for future reference or to answer queries that may arise in the future. Lastly, if you provide the information via a phone call, note down the representative’s name and the number for reference.
Coordination of benefits in medical billing is a systematic way to prevent duplicate reimbursement for provided care services. There are specific guidelines for patients, payers, and billers to follow to ensure care services have been delivered for every reimbursement.
If you don’t update your coordination of benefits status, you may face complications in submitting your claim and getting timely reimbursement.