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Coordination of Benefits, Explained | CAQH

Written by Admin | Mar 24, 2021 4:00:00 AM

Coordination of Benefits, Explained

March 24, 2021

The term “coordination of benefits” pops up everywhere these days. But hearing it and knowing what it is are two different things. Read on for a little primer, so you can get up to speed on this essential topic of healthcare administration. 

What is coordination of benefits? 

There are instances where a person will have more than one insurance plan. For example, a person could have healthcare coverage through their employer but also through their spouse and their spouse’s employer. Those health plans will have to work together to pay claims correctly. That process is called coordination of benefits (COB). 

Why is coordination of benefits important?  

There are several reasons why coordination of benefits is important, including: 

  • Ensure payment integrity: Health plans want to make sure they pay only the amount they are responsible for and do not make duplicate payments.  
  • Establish who is the primary and secondary health plan: The primary health plan pays first, and the secondary health plan pays any remaining balance after the beneficiary share of the cost is deducted. 
  • Prevent payment inaccuracies: Health plans want to know their financial responsibilities ahead of time which alleviates administrative headache resulting from overpayment or other payment problems and leads to cost avoidance. 

How to do coordination of benefits better 

COB Smart enables health plans to identify which of their members have other coverage more easily, so that benefits can be coordinated, and claims can be processed and paid by the appropriate health plan. COB Smart also matches each member to make sure the member in Plan A is the same member in Plan B. Learn more.