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Because spouses and dependents are often provided insurance coverage under multiple plans, Coordination of Benefits (COB) rules were developed to help prevent the overpayment of health and dental benefits that would occur if the two plans both provided coverage independent of the other.
COB rules establish which insurance plan will pay first (the primary plan) and which will consider any remaining amounts not paid by the primary plan (the secondary plan).
Coordination of payments helps reduce the possibility of members profiting from duplicate insurance coverage, as well as preventing healthcare providers from receiving duplicate payments from two insurance plans. In doing so, COB helps control the rising costs of health and dental insurance.
In general, the purpose of Coordination of Benefits (COB) is for the secondary plan to pay benefits not paid by the primary plan. However, there are several different ways, or COB Benefit Methods, to calculate the secondary payment.
The three basic COB Benefit Methods are:
Model COB compares primary liability to secondary liability and selects the most cost-effective payment on a claim-by-claim basis. Primary liability refers to the amount that would have been paid if the contract were primary. Secondary liability is simply the total charge less what the other insurance carrier (OIC) paid.
Many self-funded groups choose the Non-Duplication COB method. This method is more cost effective for the group, often resulting in less paid in secondary benefits than would have been provided under Model COB. The secondary benefit payment under Non-Duplication COB is determined by calculating primary payment, subtracting the OIC payment, and paying the remaining amount, if any.
Secondary Limit COB
The secondary benefit determination under Secondary Limit COB is made by first subtracting the OIC payment from the total charge. Contract benefits are then applied to the remaining amount. All copayments, deductible, pricing (e.g., UCR, PMD, etc.) and benefits would apply unless noted on InfoSolutions (e-Practice Management).
Determining the COB Benefit Method Used
The specific COB method used for your patient can be found under the "Coordination of Benefits" category of the Summary Plan Description on ProviderAccess. This site also indicates whether the patient has primary or secondary coverage under the contract being viewed.
Group Plan: This term normally applies to employer-sponsored health and dental insurance. However, it may apply to any group plan by which dental, medical or other health care benefits are provided by an employer, fraternal organization or franchise insurance coverage.
Group plans also include most Blue Cross and Blue Shield plans, other prepayment coverage, any coverage under labor-management trusted plans, union welfare plans, employer organization plans, employee benefit organization plans, any governmental program or any coverage to which coordination of benefits may be applied by law or regulation.
Group plans generally include COB provisions and should coordinate benefits.
Non-Group Plan: This term normally applies to individually purchased insurance. Generally, non-group plans do not coordinate benefits with other plans. See below for more information regarding Non-COB Plans.
Blue Cross and Blue Shield of Alabama does not coordinate with the following types of insurance plans:
There is no coordination of benefits with these companies because they are either:
United States military personnel and retirees may have coverage through Tricare (formerly Champus). According to their rules, this coverage always pays secondary to any other healthcare coverage. Therefore, Blue Cross coverage is always primary, as if no other coverage exists.
When both carriers include coordination of benefits in their contracts, payment order is determined by a series of rules that were developed by the National Association of Insurance Commissioners and adopted by most state insurance departments including the Alabama Department of Insurance (see Alabama State Regulation 128) and plan administrators. Regulation 128 contains an order of benefits determination referred to as the “Birthday Rule.”
Generally, the Birthday Rule is an accepted guide for most plans in determining the order of benefits. The plan of the parent that has the earliest birthday in the year is primary. If the parents have the same birthday, the plan that has provided coverage for one of the parents the longest is the primary plan.
There are cases when primary coverage is other than a Blue Cross and Blue Shield of Alabama contract or is a non-Preferred Care Blue Cross and Blue Shield of Alabama contract. In these situations, the secondary coverage may be Blue Cross and Blue Shield of Alabama. Where the secondary coverage is a Preferred Medical Doctor (PMD) contract, the PMD agreement is still in effect and patients should not be billed for services over the PMD fee schedule.
When a member is covered by more than one Blue Cross and Blue Shield group contract, benefits are provided under both contracts applying the principles of coordination of benefits.
When a member is covered under a Blue Cross group contract and a Blue Cross non-group contract, benefits are provided under both contracts by applying the principles of coordination of benefits, except the group contract is always the primary payer.
Note: The state of Alabama group requires us to pay primary on both contracts.
When a member is covered by more than one non-group Blue Cross contract, benefits are provided only under the one such contract providing the greatest coverage.
The majority of our contracts contain a subrogation and reimbursement provision. Subrogation is the substitution of one party for another when the injured party has a legal claim against another party. It allows Blue Cross and Blue Shield of Alabama to recover from any other payer the cost of our health care benefits. In general, we have the right to recover the cost of a member’s medical care, to the extent of what we have paid, from anyone the member has the right to recover from, or to substitute for the member and seek to recover our payment. For example, if automobile or liability insurance is involved, Blue Cross will pay for the services rendered as the primary payer according to the contract. If payment is made to the physician’s office by both Blue Cross and Blue Shield of Alabama and insurance other than another health plan, Blue Cross should be notified of the overpayment. We will then request the overpayment from the physician’s office, if needed.
However, if the payment is made to the physician’s office from our member’s personal automobile insurance company, we may choose not to subrogate. In all instances, providers should contact Provider Customer Service so that they may check the contract and advise to whom the refund should be sent.
When treating a member that has been involved in an accident of any nature, claims should be immediately filed with Blue Cross and Blue Shield of Alabama. In accordance with our Preferred Medical Doctor (PMD) and Participating Hospital Contracts, it is Blue Cross’ policy to consider each claim under normal contract benefits and make payment accordingly to the provider.
Should a provider receive payment from the patient’s other insurance, or that of another party involved, it would then be necessary to contact Blue Cross on each individual case to determine any subrogation activity. When Blue Cross is involved in subrogation activity, the full amount of the Blue Cross payment should be refunded to Blue Cross not to exceed the amount received. Any remaining amount over the Blue Cross allowable should be refunded to the subscriber or returned to the issuing carrier. Payment made under the terms of the provider’s contract agreement is to be considered as payment in full. Liens should not be filed against a patient with valid Blue Cross and Blue Shield of Alabama coverage, except to cover any deductibles, copayments or other out-of-pocket expenses related to treatment. Any such liens should be filed only after reasonable efforts to collect such patient-pay amounts have been made.
The Work-Related Injury (WRI) Plan covers work-related injuries and illnesses. This benefit is not subject to deductibles, copayments or maximums. WRI coverage for work-related injuries must be a benefit of the patient’s group coverage and does not apply to all contracts.
Worker’s Compensation is an exclusion in most contracts and payment by Blue Cross and Blue Shield of Alabama will be excluded. If a claim is submitted, paid in error, and the physician finds out that it is related to an on-the-job injury, he or she should reimburse Blue Cross, in most cases. For any questions concerning whether we are due the refund, call Provider Customer Service.
Worker's Compensation is an exclusion in our group health care contracts, with the exception of a few groups that are covered under the Work-Related Injury Plan. The member’s contract number will begin with prefix WRI if he or she is covered under the Work-Related Injury Plan.
Any charges submitted to Blue Cross and Blue Shield of Alabama for payment of a work-related injury should be non-covered. They will process with an adjudication code of 910 (Treatment of work-related injuries are not covered by this contract. These charges should be submitted to the patient’s Worker’s Compensation carrier).
If payment has been made, Blue Cross and Blue Shield of Alabama will review the group healthcare contract and take action to seek recovery on any work-related claims paid.
If an employer has less than five employees, they are not required by law to carry Worker's Compensation insurance for their employees.
Telephone calls or inquiries related to Worker's Compensation issues will be directed to the Worker's Compensation Recovery Area.
Physicians’ Current Procedural Terminology (CPT) code 99080 should be used to file special reports such as insurance forms or in cases where there is more information than conveyed in the usual medical communications or standard reporting form.
CPT code 99080 is payable once per case (per individual patient injury) when billed related to Worker’s Compensation claims. This code is only covered by contracts with the 24-Hour Coverage plan and the WRI prefix. CPT code 99080 is not listed on the Preferred Medical Doctor (PMD) fee schedule and will therefore be paid based on the Worker’s Compensation State-mandated Fee Schedule.
Last Updated January 2010