Coordination of benefits, (COB) is a clause in most group policies, which is in place to minimize the over-payment or duplicate payment of claims. COB applies to patients covered by more than one insurance plan and limits the amount paid by each plan.
With the COB clause the payments made by all of the insurance plans, when combined should equal 100% of the charge. For example, when both spouses work and each are covered by an insurance plan offered by their employers, their own individual plan would be the primary carrier and their spouse's plan would be the secondary carrier. If the primary carrier pays 80% of the charge, the secondary carrier should pay the remaining 20%, provided that all program provisions and limitations are considered. Once the primary carrier makes payment, a claim may be submitted to the secondary carrier accompanied by the primary carrier's explanation of benefits, or EOB.
When the patient is a dependent of two working spouses the "Birthday Rule" typically determines which insurance plan is primary. The "Birthday Rule" identifies the primary insurer as the parent whose birthday falls first in the calendar year. For example, if the patient's mother's birthday is April 5, 1967, and the patient's father's birthday is October 20, 1963, the mother's insurance would be primary. When neither insurance plan follows the "Birthday Rule", the "Gender Rule" may apply, which declares the father's insurance carrier as the primary plan. However, if the parents are divorced, a court order about children's health coverage after a divorce supersedes the birthday rule. In such cases, the parents may be asked for a copy of this section of the divorce decree in order to determine the proper order of benefits. Because COB policies may vary from state to state, plan to plan, and even patient to patient, it is best to check with the carrier(s) when verifying your patient's coverage or perhaps your State's Department of Insurance. The National Association of Insurance Commissioners (NAIC) also publishes Model Coordination of Benefits Regulations that many plans see as a standard for setting such policies. This model regulation is contains many of the issues above and is available on its website at www.naic.org.
Because the specialty of oral and maxillofacial surgery is so unique, OMSs may experience more confusion in coordinating benefits, since some of the procedures they render may be covered by both medical and dental. Therefore, it is important to determine each plan's policy and definition of COB prior to submitting the claims. This may be done by telephoning the carrier or reviewing the provider contract. While state insurance codes do not address coordinating medical and dental benefits, some state insurance laws do state that a plan that does not contain order of benefit determination provisions is always the primary plan. Although when both the medical and dental plans in question do not have a coordination of benefits clause, there is no official "rule of thumb" to follow when determining which to bill first. If neither plan says they coordinate or agree to be secondary, many will consider the patient's condition. If it presents complications, or may be considered medical in nature, it may be best to submit the claim to the medical insurance first. Many believe if they submitted to both insurance carriers, the insurance carriers will determine who is primary and pay accordingly. This is not always true, unless both insurance plans are the same carrier, such as Aetna medical and Aetna dental. Many also believe coordinating benefits is the patient's responsibility. Though, patients should know which of their plans are primary that may not always be the case. Therefore, to assure prompt payment, the billing staff should verify which plan is primary, with each insurance carrier before submitting the patient's claims. Without COB many providers may be tempted to "double dip" or "double bill", which may result in a double recovery of payments. "Double billing", or billing two or more insurance plans at the same time for full payment, may be considered fraud and abuse and may be punishable by monetary means.
Determining Whether Medicare is Secondary
Many Medicare beneficiaries may also be covered by another type of health insurance plan, making it difficult to determine which plan is primary. Because Medicare will not release a beneficiary's eligibility without the beneficiary's verbal consent at the time of the call, physicians and their staff are responsible for obtaining their patients' insurance information and verifying this information at each visit for any changes in coverage. Below are some tips in determining whether Medicare is the primary payer. Additional Medicare benefit information, including an "Other Insurer Intake Tool" may be found on the Centers for Medicare and Medicaid Services (CMS) website at www.cms.gov.
If a beneficiary or spouse is actively employed and covered by another insurance plan or have other liability consideration, the law requires that plan to pay first. Medicare is always secondary to:
Employers Group Health Plans - When the beneficiary is actively employed and is eligible for Medicare because he or she is 65 years old or older, disabled, or enrolled in Medicare Part B due to end stage renal disease.
No-Fault Insurance - when the beneficiary is injured as a result of an auto accident, e.g. auto liability insurance, uninsured and underinsured motorist insurance, homeowner's liability insurance, and general casualty insurance. Medicare may be billed after the claim process under No-Fault Insurance has been exhausted.
Workers Compensation Insurance - when the beneficiary has been injured during course of employment.
Federal Black Lung Program - when the beneficiary suffers from work-related illness related to "Black Lung."
Veterans' Administration Program - if the beneficiary is entitled to receive benefits under the VA, the beneficiary may elect to have either the VA or Medicare be the primary carrier for services in a VA facility. If the VA is elected as primary, Medicare Part B may be billed as the secondary payer.
Common concern regarding coordinating benefits
Q: I am contracted with both of my patient's insurance plans. I wrote off the contractual discount indicated by the primary insurance; however the payment from the secondary insurance exceeds the remaining balance? Can I keep the money?
A: Assuming that the proper order of benefits was followed, every attempt should be made to refund the secondary insurance the overpayment and ask that they reprocess the claim taking the primary payer's contractual obligation and payment into consideration. In actuality, the physician is not entitled to more than what was contractually allowed by the primary. To accept more would be considered a contract violation. However, some provider contracts are written so that physicians may accept reimbursement exceeding the contractual allowed amount if the overpayment is received by insurance. If that is the case, one may possibly readjust the charge and post the entire payment from the secondary payer. Though remember, regardless of what the total amount collected by all insurances involved, a physician may only collect up to 100% of his or her allowed amount. The issue of how to handle overpayments and refunds is best handled between the provider and the insurance companies involved. In some cases, a provider may wish to consult with a practice consultant or an attorney for advice on handling overpayments when an insurer refuses to accept a refund