Understanding Coordination of Benefits (COB)

What Is Coordination of Benefits?

Coordination of Benefits is the process insurance companies use to determine which health plan should pay first when a patient has, or potentially has, more than one source of coverage.

 

When multiple plans are involved, they are generally processed in this order:

 

Primary insurance: Processes the claim first.

 

Secondary insurance: Processes the claim after the primary payer and may pay some or all of the remaining eligible amount.

 

Tertiary insurance: When a patient has three plans, the third payer processes after the first two.

 

The basic purpose of COB is to answer one question: Which payer is responsible for paying first?

 

 

Why Does an Insurance Company Request a COB Update?

Sometimes an insurer’s records indicate that the patient may have other coverage. Before processing claims, the insurer may require the patient to confirm whether another insurance plan exists.

 

This does not necessarily mean the patient actually has another insurance plan.

 

For example, a patient may have previously been covered through a spouse, parent, former employer, or another plan that is no longer active. The insurer may simply need the patient to confirm that information and update its records.

 

When COB information is outstanding, claims may deny or remain unprocessed until the patient completes the requested update.

 

How Can COB Lead to Duplicate Payments?

Accurate COB information also helps prevent two insurance plans from paying the same portion of a claim.

 

For example, if a patient has two insurance plans and both insurers process the claim as though they are primary, both may issue payment without accounting for what the other plan paid. A similar problem can occur when a secondary insurer does not receive or correctly process the primary payer’s payment information.

 

This can result in overpayments to the provider. When the COB issue is later identified, one of the insurers may request a refund or recoup the overpayment from future payments.

 

Correct COB information allows each insurer to determine its responsibility based on the other coverage and helps prevent duplicate or excess payments.

 

Why Can’t the Provider or Biller Fix the COB?

This is one of the most important concepts to explain to patients.

 

When the insurance company requires a COB update from the member, the patient needs to contact the insurance company directly. The provider and billing company cannot tell the insurer whether the patient or family has other coverage.

 

The patient may be asked questions such as:

• Do you currently have any other health insurance?

• Are you covered under a spouse’s or parent’s plan?

• Does your child have coverage through both parents?

• When did previous coverage terminate?

• Did you recently start or end coverage with another insurance plan?

• Have you recently changed employers or insurance plans?

Even when the answer to every question is “no,” the patient must still contact the insurer and confirm that.

 

How Is Primary Insurance Determined?

The insurance card a patient gives the provider first is not necessarily the primary insurance. It’s also not possible for a family to decide for themselves what is the primary health insurance plan and what is the secondary plan. The applicable COB rules, established through federal or state requirements and the terms of the health plans, determine which plan is primary and which is secondary. Insurers use these rules to coordinate payment. Here are some common dual coverage scenarios.

 

1. A mother has coverage through their own employer and is also a dependent on her spouse’s plan that he has through his employee benefits. In this scenario, the mother’s primary insurance is usually the one she has through her own employer.

2. A baby who is covered under both parents’ plans are frequently subject to the “birthday rule,” under which the plan of the parent whose birthday occurs earlier in the calendar year is generally primary. There can be exceptions to this rule, particularly with divorced or separated parents, court orders, and specific plan provisions.

3. A baby has Medicaid and is on his father’s employer plan. Generally, the employer plan will be the primary plan and Medicaid secondary.

For providers, the important concept is: have your patient verify the payer sequence rather than assuming it.

 

EOBs and What Happens After the Primary Insurance Pays

Once the payer of the primary coverage processes the claim, it issues an Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA).

 

That adjudication tells the biller what happened to the claim, including the:

• allowed amount

• insurance payment

• contractual adjustments

• deductible, copayment, or coinsurance

• denial or remark codes

• amount assigned as patient responsibility

If the patient has secondary insurance, the secondary payer may then process the remaining eligible balance. In most lactation claims situations, the secondary claim must be submitted separately along with the EOB from the primary.

 

A provider should not automatically bill a balance on the primary EOB to the patient when secondary coverage exists. She should wait until the EOB from the secondary policy posts and see what is listed as patient responsibility.

 

What Does a COB Problem Look Like on a Claim?

COB issues can appear in several ways. A payer may indicate:

 

“Other insurance is primary.”
The payer believes another insurance company should process the claim first.

 

“Coordination of benefits required.”
The insurer needs the member to provide or update information about other insurance.

 

“Submit to other payer.”
The payer’s records indicate that another insurer has primary responsibility.

 

Sometimes the underlying problem is simply outdated information. The patient may no longer have the insurance that the payer has listed.

 

What Should You Tell Your Patient?

When our team notifies you that a patient needs to update their COB, sharing a simple explanation with your patient is usually best:

 

“Your insurance company is requesting a Coordination of Benefits (COB) update, and your claim for your lactation visit is on hold until this is completed. COB is the process insurers use to confirm whether you have any other health insurance and, if you do, which plan should pay first. A COB request does not necessarily mean that you have another plan. Even if you have only one plan, you still must call your insurer to answer their questions before they will process your claim. Please call the Member Services number on your insurance card and tell them specifically that you need to ‘update your Coordination of Benefits.’ Once the update is complete, please let us know so we can continue working on your claim.”

 

When a COB Update Is Completed

When a patient tells you that they have completed the requested COB update, it is important to notify your billing support team promptly. Insurance companies generally do not notify the provider when a member completes a COB update, so you will need to confirm completion with your patient.

 

Once notified, the billing team can contact the insurance company and request that the denied or pending claims be reprocessed or resubmitted.