Ask Caryl: Understanding Coordination of Benefits

Q: What is COB?

Caryl Serbin: COB stands for “coordination of benefits.” One legal definition of COB is as follows: “… the practice of ensuring that insurance claims are not paid multiple times, when an enrollee is covered by two health plans at the same time. The idea behind coordination of benefits is to ensure that the payments of both plans do not exceed 100% of the covered charges.”

Simply put, sometimes two insurance plans (or other types of coverage) work together to pay claims for the same person. That process is called COB. Payors often coordinate benefits to:

  • avoid duplicate payments by ensuring the two responsible coverages do not pay more than the total amount of the claim; and

  • establish which plan is primary (the plan that pays first) and which plan is secondary (the plan that pays any remaining balance after the patient’s share of the costs is deducted).

Here's an example: A married couple has separate family health insurance coverage through each of their employers. When the husband becomes ill, his policy at work will become the primary plan and the wife’s health insurance plan becomes the secondary plan. The covered medical expenses incurred will be paid by the primary plan and all other medical expenses not covered by the primary plan will be paid by the secondary plan (depending on whether the plans stipulate a non-covered patient financial responsibility (e.g., deductible, co-pay).

Be sure your ASC carefully determines COB for the following:

  • Medicare patients — Determine whether Medicare is primary or secondary.

  • Workers’ compensation (W/C) — This depends on state regulations, but ordinarily W/C is responsible for expenses and private insurance has no responsibility.

  • Automobile accidents — In most cases, automobile insurance is primary and private insurance has no responsibility.

  • Liability cases — In most cases, the liable entity’s insurance covers the total amount of expenses.

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