Centers for Medicare & Medicaid Services (CMS) defines coordination of benefits (COB), as the process which allows plans that provide health and/or prescription coverage for a person with Medicare to determine their respective payment responsibilities. In simpler words, COB determines which insurance carrier is primary, secondary, and so forth. This coordination between insurance carriers exists to avoid duplicate payment, which could result in a provider receiving payment in excess of the services provided and the total amount billed. Receiving denials due to the coordination of benefits issues is quite common. Whether you are a patient, provider, or billing staff, you surely came across coordination of benefits denial at some point.
Coordination of Benefits and Medicare
Many patients have Medicare, so it stands to reason that this issue is most commonly seen when dealing with Medicare claims. Medicare-eligible patients may also have a Medicare supplemental plan, such as AARP, as their secondary. In most cases, Medicare will have this information on file and will automatically cross the claim over to the supplemental insurance. However, this process is not foolproof. Therefore, it is important that the provider documents all insurances for the patient. In the event that Medicare does not cross over the claim, providers will need to manually submit claims to the patient’s secondary.
Another common COB denial arises when a patient has recently reached Medicare age but continues to use primary insurance provided by an employer. Often commercial insurances will deny claims until the member updates their COB. In other cases, the carrier will require a denial from Medicare showing that the patient has opted out of Medicare as primary. In both cases, these denials slow down reimbursement and cause frustration for the involved parties. Because it is the responsibility of the member to update their COB, amending this problem is often out of the provider’s hands. It is important that patients of Medicare age understand how COB works in order to avoid receiving unnecessary bills from providers.
COB and Other Insurance Carriers
- There are several situations in which it is necessary to understand the coordination of benefits. These include, but are not limited to:
- Unless otherwise specified, the patient’s employer insurance plan should be primary, while their spouse’s health plan would then be secondary. This can be especially complicated when both have their insurance under the same carrier.
- If the services rendered are due to an accident, the patient’s workers’ compensation or motor vehicle insurance would be used as primary, while the commercial insurance would be billed second.
- If patients have both Medicaid and any type of commercial insurance, Medicaid will always be used last.
When Coordination of Benefits is Needed?
There are many different scenarios that require coordination of benefits. For example:
- If both spouses in a married couple are each covered by their own group (through their employer) or individual coverage, each policy where the patient is the primary policyholder would be the primary payer.
- If one spouse elects to add the other spouse to their policy as a dependent, then that coverage would be secondary. (Check your plan for rules on domestic partner coverage.)
- Parents can cover their dependents on their insurance plans until the age of 26, regardless of the dependent’s student or marital status.
- If a married couple has children, the insurance of the parent whose birthday (month/date) falls first in the calendar year would be primary. This is called the ‘birthday rule.’ The other parent’s coverage would be secondary. Should the parents have the same birthday (month/day), then the policy with the longest effective date would be considered primary.
- If one parent’s coverage is provided by Consolidated Omnibus Budget Reconciliation Act (COBRA), then the non-COBRA plan would be primary and COBRA would be the secondary payer, regardless of the birthday rule.
- If the parents are divorced, coordination is dependent on who is the custodial parent or the parent whom the child spends the most time with; their coverage would become primary and the non-custodial parent’s policy secondary. There is an exception to that advice: If the custodial parent has an individual policy or COBRA, and the non-custodial parent has a group policy, then the group policy would be considered primary.
- If the custodial parent remarries, then the stepparent’s policy would be reported secondary and the non-custodial parent’s plan would be the tertiary payer.
Medical Billers and Coders: Quick Payment with Coordination of Benefits
Coordination of benefits can be a complicated process and it is not always clear which insurance is primary. It is always a good idea for patients to verify the order of their policies before scheduling an appointment. This precautionary step will reduce the risk of claims getting denied for a COB issue and save time in the long run. In addition, if the COB needs to be updated, this can often take a week or more to finalize. Staying one step ahead of easily corrected insurance issues means fewer headaches for providers as well as for patients.