How to Handle Coordination of Benefits (COB) in Pediatric Billing?

Did you know? As per the survey, more than 43 million individuals in the United States had multiple health insurance plans in 2021. This is particularly common in pediatric cases, where children are often covered under both parents’ plans or employees with personal and employer-sponsored insurance.

As a result, it becomes essential to determine the payment order when more than one insurance policies are involved. This is where Coordination of Benefits comes into action. COB is the formal process used by insurance companies to decide which plan is primary (responsible for the initial payment) and which is secondary (covering any remaining costs, if applicable). This structured approach not only helps to ensure accurate pediatric billing but also prevents double payments and reduces delays or denials of claims.

In this blog, we will explain how COB will be handled in pediatric billing, the key rules that govern it, and why effective coordination is crucial for providers.

Importance of COB in Pediatric Billing

COB is critical in pediatric billing, especially when multiple policies are involved. The key benefits of COB include:

● Controls insurance costs

Efficient coordination reduces administrative burdens and potential billing errors. It contributes to more sustainable and cost-effective insurance premiums. Fewer claim corrections and appeals indicate less time and fewer resources spent on resolving payment issues. This benefits both insurers and healthcare practices.

● Establishes clear billing responsibility

COB simplifies the claims process and prevents delays and rejections in payment. It does this by determining which insurer pays first. This clarity reduces confusion for billing staff and patients. As a result, it leads to faster turnaround and fewer out-of-pocket surprises.

● Protects against billing errors

Any missing or inaccurate COB information can result in denied claims or delayed payments. This places an unnecessary burden on patients and providers. Regular COB verification ensures billing accuracy. It reduces the probability of costly delays in healthcare reimbursement.

● Maximizing patient benefits

Accurate and effective coordination of more than one insurance plan allows patients to receive maximum coverage for treatments and medications. This leads to less out-of-pocket expense. It is especially important in pediatrics, where ongoing and specialized care may be required.

● Prevents duplicate payments

COB prevents double payment of the same claim by multiple insurers. It eliminates the risk of overpayments & post-payment adjustments and refunds. This not only protects insurers from unnecessary financial losses but also ensures providers receive the correct and maximum healthcare reimbursement the first time.

Steps to Handle COB in Pediatric Billing

The following are the key steps to understand when handling COB in pediatric billing:

• Identifying Primary and Secondary Payers

It is important to figure out which one pays first when a child has more than one health insurance plan. In such scenarios, the primary insurer is responsible for settling the initial portion of a medical claim. Any remaining cost is then directed to the secondary insurer, which may pay part or all of it, depending on its policy terms and COB rules.

• COB Rules and Their Role

To avoid confusion or duplicate payments, insurance companies follow specific COB rules. These rules define how payment responsibilities are assigned:

Birthday Rule

When a child is covered under both parents’ plans, the plan of the parent whose birthday (month and day) comes earlier in the calendar year is considered primary. This is the most common method used in pediatric COB.

Active vs. Inactive Employee Rule

If an individual is covered under multiple group health plans, the plan provided by the active employee is the primary payer. If coverage is through a retiree or COBRA, it is generally considered a secondary payer.

Custodial Parent Rule

If parents are divorced or separated, the health plan of the custodial parent is primary. If both parents have joint custody, the birthday rule applies.

Employer Policy Rule

When an individual has one policy through their employer and the other is covered under a spouse’s plan, the employer-sponsored policy generally takes priority.

Military Coverage (TRICARE)

TRICARE is primary for active-duty members as far as military families are concerned. If the individual has additional coverage, TRICARE becomes secondary.

Medicare and Medicaid Rule

If a person has Medicare or Medicaid along with another health plan, the payer order depends on factors such as age, employment status, and employer size.

• Claim Processing

Once the hierarchy of insurers is determined, healthcare providers submit claims to the primary insurance payers first. The primary payer reviews the claim and makes payment based on covered benefits. Thereafter, any balance is sent to the secondary plan for further consideration. This process ensures that families receive the maximum benefit coverage without unnecessary out-of-pocket expenses.

Conclusion

Undoubtedly, families and patients can benefit from the multiple insurance coverage. But such plans often make billing complicated and difficult, particularly when it comes to paediatric care. Coordination of Benefits is necessary to ensure the correct processing of claims, eliminate overpayments, and prevent misunderstandings amongst insurers. However, healthcare staff may find it time-consuming and tedious to manage COB in addition to clinical duties.

Even small mistakes in COB can result in delays in healthcare reimbursements, denial of claims, or an increase in administrative effort. As a result, many practices are opting to outsource pediatric billing and coding services to experts. Working with a knowledgeable medical billing and coding company, such as 24/7 Medical Billing Services, can streamline the COB procedure, ensure on-time payments, minimize paperwork, and enhance overall cash flow. Your team may concentrate more on patient care with the help of professionals, who will handle the challenges of COB.

FAQs

Q1. Who should update the details of COB?

The insured party (usually a patient, parent, or guardian) must provide accurate COB details to the insurance company.

Q2. How can I check if there is a claim denial due to COB?

You can either review the Explanation of Benefits or contact the insurance provider directly.

Q3. Is there a need for COB in case of only one insurance plan?

Yes, insurers may still require COB verification even with just one active plan.

Q4. Can claims be delayed due to COB issues?

Incorrect or missing COB data can cause significant delays in claims processing.

Q5. What happens if COB is not completed?

If COB is not updated, insurance may deny the claim and mark the balance as patient responsibility.

Q6. Does Medicaid require COB verification?

Medicaid acts as a payer of last resort, so other coverage must be verified first.