What does COB mean in Medical Billing

The Health care industry allows patients to enroll in multiple health insurance plans as per their requirements. But enrollment in multiple health insurance plans is likely to cause overlapping or duplication of benefits that a patient is eligible to receive. To avoid duplication of benefits in medical billing Centers for Medicare and Medicaid Services (CMS) has a set of provisions referred to as Coordination of Benefits or COB.

Definition of COB

COB or Coordination of Benefits refers to the process of determining a health insurance company’s status as a primary or secondary payer to provide medical claim benefits for a patient having multiple health insurance policies. With COB it is much easier to determine the responsibilities of the primary payer and settle on the contribution of the secondary payer while processing the medical claims.

The Purpose of the COB Process

As per CMS, the COB process is designed to fulfill the following purposes.

• Correct Payment of Claims: COB ensures that there is no discrepancy in the payment of medical claims. This is done by identifying the Medicare beneficiary’s health benefits and coordinating the payment process. To make the payment process hassle-free it is important to ensure that the primary payer (either Medicare or other insurance company) pays first.
• Sharing Medicare Eligibility Data: To maintain transparency it is important to share the Medicare eligibility data with the secondary payer(s) and to ensure payment of secondary payments. However, in case of automatic crossover claims an agreement between Benefits Coordination & Recovery Center (BCRC) and private insurance companies (for the BCRC) is required.
• No Duplication in Payments: The key purpose of COB is to prevent duplication of payments in dual coverage situations. The payment should not exceed 100% of the total claim itself.
• Coordination of the Part D Benefits: COB process is important to identify a Medicare beneficiary’s True Out of Pocket (TrOOP) expense. This is helpful in the correct administration of the Part D benefits.

Medicare as Primary Payer under COB

The following are the situations where Medicare is required to pay as the primary payer.

Working Aged (Medicare beneficiary age 65 or Older) and Employer Group Health Plan (GHP):

• Medicare pays primarily if the individual’s age is 65 or above and is covered by GHP (either through current employment or spouse’s current employment), and the employer has less than 20 employees. In the case of more than 20 employees, Medicare pays secondary.

Coverage through COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)and Medicare:

• Medicare pays primary if the individual’s age is 65 or above.
• Medicare pays primary if the individual is disabled.

Retiree Health Plans:

Medicare pays primary if the individual’s age is 65 or above and has an employer retirement plan.

The Role of COB in Medical Billing

Coordination of Benefits (COB) plays an important role in medical billing by determining the primary and secondary payers. This helps generate the correct bill with EOBs, reimbursement of claims and managing a hospital’s revenue cycle.