This week saw significant healthcare news out of Washington D.C. as the CAQH (Council for Affordable Quality Healthcare) and several major health plans released a new coordination of benefits (COB) registry called COB Smart, aimed at enabling providers and health plans to identify individuals with multiple forms of coverage before care is delivered.
What is COB you ask? Well, have you ever received those annoying forms in the mail from your insurance carrier asking if you have other insurance, requiring you to check the “no” box, and then mail it in? On top of that annoyance, you have to waste a stamp! Or, have you ever called your carrier, gotten lost in an IVR system for 10 minutes and when you finally got a real person the first thing they asked you is whether you have any other insurance? Well, that’s COB in a nutshell…
To further explain, COB applies to group or individual members who are covered by more than one health care plan. COB helps ensure that members with multiple plans receive all the benefits they are entitled to while avoiding overpayment by either plan. It is one way health plans work to control premium costs. The bottom line is COB determines which plan is primary. Once determined, that plan’s benefits are applied to the claim first and then the unpaid balance is usually paid by the secondary plan. Benefits are thus “coordinated” among all of the health plans involved, and payments do not exceed 100% of charges for the covered services.
COB can cause significant claims processing delays and inefficiencies that cost providers and health plans more than $800 million annually. In my previous experience working in the industry, I would constantly hear how COB was one of the top drivers for aging claims, rising operational costs, and provider dissatisfaction. Providers continued to indicate that inaccurate and untimely claim payments due to the investigation for COB were a major pain point. The fact that health plans are now working together to combat this issue shows the severity and the impact it has on our health system. It will be interesting to see the outcome of this as more payers start to implement this solution in the face of stricter regulations.
It will also require health plans to get smarter and streamline their processes to gather other liability information on their groups and members. One example of this would be looking at what percent of your membership currently has other primary insurance. If the percentage is low, let’s say 3% or below, this may help their marketing areas sell various COB approaches, such as “pay and pursue” to accounts when comparing savings to operational cost associated. Note: It is recommended that Medicare not be considered in this percentage. Although Medicare is a primary payer, there are few claim denials to determine whether the member has Medicare and it’s generally known by the provider and the health plan.
Although the press release states the registry is already identifying COB for more than 100 million patients, I believe the one major challenge is going to be clean and reliable (up-to-date) data. Remember that COB letter you received in the mail? Yep, neither do I. It is probably already in a landfill somewhere. That is one barrier to the success of this solution. But, for now, this solution provides the opportunity and a start to analyze and reduce the volume of claims being rejected as a result of COB.