Practice Management Alert

Practices can maximize reimbursement and reduce the costs of administering claims for patients covered by more than one insurer -- such as those whose employers and spouse's employers both provide health benefits -- if they understand coordination of benefits (COB) and how both insurers are supposed to pay, says Felecia Bernstein, CPC, EMT, a coding and reimbursement consultant in Deal, N.J.
 
COB is a common clause in most health insurance policies. It specifies how the insurer will reimburse for services when more than one insurance plan is applied to a claim. Although COB rules can be governed by state law, and most insurers have COB rules in their contracts, many payers follow model rules developed by the National Association of Insurance Commissioners (NAIC), says Steve Verno, CMBSI, NREMPT, practice manager with Emergency Medicine Specialists, a 23-physician practice in North Miami Beach, Fla. Under the rules, the plan that pays first is known as the primary plan; the one that pays second is known as the secondary plan. The primary plan must pay benefits as if the secondary insurer did not exist. The secondary plan can only take into account what another plan paid when it is secondary to that plan.
 
Commercial insurance is generally primary to any public insurance program, such as Medicare and Medicaid, but there are exceptions. For example, federal law states Medicare is the secondary payer when no-fault or liability insurance is available as the primary payer, as in auto accidents. This rule applies even when state law or the insurance policy states that its benefits are secondary to Medicare or otherwise limits payments if the injured person is also entitled to Medicare benefits. Medicare is secondary to employer group health plans under federal law. Medicare beneficiaries age 65 and older who have group health-plan coverage because their spouses are working have Medicare as their secondary payer.
 

When a provider has a contract with an insurer" the provider must adhere to the terms of the contract and those terms can vary Verno says. A contract may contain COB rules that are different from NAIC rules. Read your contracts on COB and contact the insurer if you have questions.
 
To ensure your practice collects all the reimbursement it deserves when a patient has primary and secondary insurers it is essential that you obtain the correct health insurance information from the patients Bernstein says. Your front-office staff should ask for insurance information at every patient visit. You could also ask the patient for a copy of each policy Verno says. If a patient reports two insurers verify the coverage and which is primary and which is secondary with both. Getting the correct insurance information can help you submit claims to the payers correctly and promptly the first time you file them Bernstein says and eliminate the time and expense of appealing.

 
Submit the claim to the primary insurer and receive payment accompanied by an explanation of benefits (EOB) before submitting the claim to the secondary insurer. Attach a copy of the primary insurer's EOB to the secondary payer's claim form. When the secondary insurer acts on the claim review its EOB to verify it was paid correctly. A common mistake practices make is simply assuming the secondary payer adjudicated the claim correctly even when the secondary payer made no reimbursement. Coordinating benefits can be complex and insurers can and do make mistakes Verno says. "I have had several cases where the primary paid its portion and the secondary approved the allowable amount but stated it would not pay any more than what the primary already paid. And that wasn't right " he says. Some plans will pay as a secondary plan up to the provider's charges. Others will pay as a secondary plan up to the amount they would have paid had they been the primary insurer. When an insurance plan is secondary on a claim Verno says it can reduce the benefits it pays under two circumstances:
 

When the practice has a contract with either the primary or secondary insurer that pays discounted fees. If the practice has contracted for discounted fees it must write off the insurer's adjustment according to its contract. The secondary plan in such cases may limit its payment to any copayments or deductibles owed by the insured after payment by the primary plan.
 
For example a practice charges $130 for services and submits the claim to the primary insurer it contracts with. The contract calls for the practice to write off adjustments. The primary plan allows $100 and pays $80. The patient has a 20 percent copayment and owes $20. The practice submits the $20 to the secondary insurer which pays the $20 copayment owed by the patient.
 

When a practice has no contract for discounted fees with either the primary or secondary insurer. In this situation the secondary plan may reduce its benefits so the total amount paid by both plans is no more than the highest allowable expense of any of the plans for that service.
 
For example a practice has no contract for discounted fees with either the primary or secondary plan. It charges $100 for services. The primary insurer pays 80 percent of the charges which is $80 leaving a balance of $20. The secondary insurer pays 60 percent of the charges. Because the $20 is within the secondary's allowable amount which would have been $60 if it were the primary plan the practice should expect the $20 balance to be paid by the secondary.
 
Secondary-Payer Responsibilities

 
The secondary plan must determine the amount of benefits it would normally pay if no coordination existed and apply that amount to unpaid covered charges owed by the insured after any benefits have been paid by the primary payer Verno explains. The payable amount must include deductibles coinsurance and copays owed by the insured. The secondary plan can use its own deductibles coinsurance and copays to determine the amount it would have paid had it been primary. It can apply only its own deductibles coinsurance and copays to the total allowable expenses not to the amount owed after payment by any primary plan.
 
The secondary plan has no obligation to pay for any services that it does not cover as a benefit. A practice should never expect reimbursement from the primary and secondary insurer to total more than the service charges. COB's purpose is to make sure insurance payments for patients with duplicate health insurance coverage do not exceed the cost of the services.
 
When a secondary insurer acts on your claim check the payer's COB clause to see if it followed its own rules Verno advises. Ask the insurer's customer-service representative to explain its COB rules and request a copy in writing. A company's Internet site may also offer COB handling explanations. Or ask patients for copies of their insurance policies.

 
A common error by secondary insurers involves applying allowables. For example a secondary insurer's COB rules state it will pay the primary plan's balance up to but not exceeding 100 percent of the covered-service expense and up to but not exceeding the amount it would pay had it been the primary insurer. A practice submits a claim with a charge of $100. The primary insurer allows and pays $60. The secondary insurer if it had been primary would allow $80. But the secondary insurer makes no payment stating on the EOB that the payment represents the normal liability after coordination of benefits and the patient is not responsible for the balance.
 
Verno says the secondary insurer under its own rules actually should have paid $40 because the balance after the primary insurer paid was within the secondary's maximum allowable of $80. Such a case should be appealed. Verno suggests this appeal letter for such circumstances:

 
When appealing claims involving coordination of benefits keep a record of what has happened with the claim Bernstein suggests. Record the date time and name of any customer-service representative you discuss the claim with. Keep copies of all correspondence concerning the claim. "When you have all your information available you can see how much stronger your case will be to get your claim paid " she says. Having the history of the claim at your fingertips also prevents you from omitting important details from your appeal letters.
 
If adjudication of a claim is delayed while insurers try to determine which company is primary and which is secondary a letter to the claims administrator of the primary insurer is a "good offense " Bernstein says and may help speed up the payment process. The following is an example of such a letter: