Some individuals are fortunate enough to have coverage from two health insurance plans. But what happens when two insurers both provide the same cover to a patient? This is when a process known as coordination of benefits comes into effect.

What Is Coordination of Benefits and Why Is it Important?

Coordination of benefits rules ensure the orderly processing and payment of claims when a client is covered by more than one health insurance plan. The coordination of benefits (COB) process determines the order in which multiple insurance providers are billed, effectively preventing duplicate payments and reducing the overall cost of healthcare for patients. For Applied Behavior Analysis (ABA) providers, understanding and navigating COB is paramount to optimizing billing procedures, maximizing reimbursement rates, and minimizing administrative costs. By effectively coordinating benefits, ABA businesses can enhance their financial stability while ensuring clients receive the coverage they are entitled to without unnecessary delays or complications.

What is coordination of benefits in medical billing?

When patients are eligible for benefits under two or more health insurance plans, the insurers will “coordinate” benefits to establish proper claims processing. The COB process begins with insurance companies determining a patient’s primary and secondary (or tertiary in rare situations) plans. Once this has been determined, the primary plan will pay for services according to their provided benefits, while the secondary or tertiary plan will pay for any remaining costs for services according to their provided benefits.   

When is coordination of benefits needed?

Coordination of benefits should be completed by each member with more than one policy annually. Common reasons for the coordination of benefits to be requested by insurance are:

• When an individual is covered by their employer’s policy and is also covered under their spouse’s plan.
• When an individual has a private or marketplace plan and has an additional plan through a spouse or parent. 
• When a child is covered by more than one parent, stepparent, or guardian.
• When a patient has Medicare or Medicaid, in addition to being covered by a commercial insurance plan.

How are benefits coordinated?

We’ve already briefly touched on how insurers will engage with each other to decide which health insurance plan is primary and which is secondary. However, other elements could affect how benefits are coordinated. These factors are as follows.

• If an individual is covered by their employer’s policy, this policy will pay before a policy where the individual is considered a dependent. 
• If a child or dependent is covered by more than one person, several factors are considered:
  • If the child/dependent is covered by multiple parents/guardians, the parent/guardian’s plan with the earlier birth date in the calendar year pays first. In some instances, a custody or court order might supersede the date-of-birth rule.
  • If the child/dependent has coverage through an employer or post-secondary institution, these plans will always pay before a plan where the child is the dependent. 

• Policyholders need to complete updated coordination of benefits forms with each insurance company and are obligated to disclose all policies. Claims may be held if coordination of benefits forms are not completed by policyholders. Policyholders must also communicate changes in coverage to their insurance company. 
• Many autistic or disabled children are covered by Medicaid and additional funding sources. Typically, Medicaid is considered the payer of last resort. The patient’s parent/guardian is still obligated to disclose coverage to all insurers, and they will coordinate benefits.

Why is coordination important?

The necessity of COB for insurance providers and patients can’t be overlooked. Coordination helps both insurers and patients deal with many challenges, including:

• Preventing both insurance companies from paying for the same claim.
• Helping to reduce the cost of insurance premiums.
• Assisting the provider in understanding which policy to bill as primary, secondary, or tertiary. 
• Helping to keep the cost of prescription medication as affordable as possible.
• Avoiding any situations where a patient or insurer has to pay for expenses due to a lack of coordination.

Furthermore, it is essential to note that insurance rate increases can significantly impact the cost of providing ABA services, potentially leading to higher out-of-pocket expenses for clients. Effective COB can mitigate these challenges by ensuring that all available insurance resources are utilized efficiently before a patient incurs additional costs. This not only aids in covering the increased rates without directly passing costs on to the client but also optimizes the financial operations of ABA businesses. By strategically managing COB, ABA providers can absorb or offset some of the financial strain caused by rising insurance rates, maintaining the viability of their services and continuing to offer high-quality care to those in need.

Get assistance with revenue cycle management from Missing Piece

Coordination of benefits is just one piece of the puzzle of revenue cycle management for ABA providers. Missing Piece Billing and Consulting are leading experts on ABA and behavioral health billing and revenue cycle management. Thanks to our excellent ABA therapy billing services, which manage the complicated billing process, ABA consultation and service providers can focus on delivering excellent therapy to their clients.

To learn more about how our comprehensive revenue cycle management process helps ABA services, including in situations requiring coordination of benefits, contact us online or by phone at 765-628-7400.