Patients may be covered by multiple insurance policies at a single point in time. In this case, insurers must communicate with each other to decide which one, if any, will cover certain services.
When patients have multiple health insurance plans, insurers must coordinate with each other to avoid overpaying or duplicating reimbursement.
Health insurance companies may not have all the information they need to successfully coordinate. In this case, they may reach out to the insured, who should respond promptly in order to avoid delays or denials.
When does COB occur?
Individuals can obtain health insurance coverage in many ways- through their employer, a spouse, parent or individual marketplace plan. For example, Spouse A may enroll with both Insurance Company A (through their own employer) and Insurance Company B (through Spouse B’s employer).
In this case, Company A would be the primary insurer, and Company B would be the secondary insurer. COB is the procedure that designates the primary and secondary health insurers so that both understand the order in which they should process claims.
Primary vs. Secondary Insurance
Individuals may opt for secondary coverage to minimize out-of-pocket expenditures their primary plan may not cover. However, benefits need to be coordinated so that payments are not duplicated. For example, both plans cannot each contribute $100 for a medical consultation that costs $100 total, as that would overpay for the service. However, it may be possible that Company A contributes $70 and Company B pays the remaining $30.
As outlined here, the primary insurer reviews the claim first, while the secondary insurer reviews leftover costs and pays if approved. There are rules that insurers can follow when coordinating benefits. However, health insurance companies may not have all the information they need to properly identify the primary and secondary insurers. This is what makes COB complicated and potentially time and cost-intensive.
Why is COB important for insured individuals?
Many health insurance companies rely on databases to identify patients who are simultaneously covered by another insurer. While some databases can only identify if there is another existing policy, others may be able to decipher which plan is the primary one before the claim is finished processing. In the case of the former, the insurer may contact the individual to sort out the matter to coordinate benefits.
Health insurance policies can be placed on hold in the event that insurers cannot coordinate benefits on their own or reach the insured to designate. Without the information they need to move forward, insurers may pause claims in progress, resulting in potential delays, denials and out-of-pocket expenditures.
COB is part of an effort to improve the accuracy of claims processing and payment, which could save the nation $362 billion. For this reason, insured individuals should alert their insurance carriers with changes that may impact coverage, such as switching jobs, adding a new member to the plan or enrolling in a spouse’s plan. This way, the insurance company can provide proactive guidance and minimize COB issues in the future.
Outside the Huddle
Coordination of benefits | United Healthcare
Coordination of Benefits | Centers for Medicare & Medicaid Services
COB Smart | Council for Affordable Quality Healthcare
What’s coordination of benefits? | BlueCross BlueShield Blue Care Network
Coordination of Benefits: A Road Map to Payment Integrity for Medicaid and Managed Care Plans | Council for Affordable Quality Healthcare