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Medica Administrative Manual Home > Special Contracting Requirements > Coordination of Benefits

Coordination of Benefits

Coordination of Benefits (COB) provisions allow health plans to coordinate their reimbursements for services provided to a patient. Medica will coordinate reimbursement with another Medica benefit plan or a non-Medica benefit plan or health insurance policy.

When reimbursements are coordinated, combined reimbursements from the various carriers will be limited to 100% of allowable charges. This is designed to eliminate overinsurance or duplication of benefits.

Please notify Medica when a member has multiple insurance coverage by:

  • Indicating a primary carrier on the CMS-1500 (formerly HCFA-1500) claim form (box #9a-d).
  • Indicating a primary carrier on the UB-04 claim form (boxes 52, 53, 54 and 55) and value codes.
  • Having the member notify Member Service if there is a primary carrier and Medica is secondary.

COB is designed to protect members and their employers from higher premiums that result when duplicate reimbursements are made by two insurance companies. COB allows for reimbursement of up to 100% of allowable charges, which means that out-of-pocket expenses (copayments, coinsurance and deductibles) are minimized or eliminated.


What Happens When Medica Receives a Claim?

If Medica has not investigated for COB in the past or if Medica has information that is more than 365 days old, then the claim will be denied “member liability” and a fresh COB questionnaire will be sent to the member. After the member responds to the questionnaire, the COB edit will be set up in the system. When the member responds to the questionnaire, the provider will be notified that the member COB verification was received. . If Medica is determined to be primary, the claim will reprocess overnight. The provider will not be required to take any further action on this claim. If Medica is deemed to be secondary payer, the claim will be denied as provider liability, (“Send primary carrier’s EOB. “). Medica follows the National Association of Insurance Commissioners (NAIC) COB guidelines in determining primary and secondary payers.


Coordination of Claims

When Medica is Primary Carrier
Submit claims first to Medica. Reimbursement will be made according to the Medica Participation Agreement without regard to reimbursements that might be made by another payer. A claim for the remaining copayments, coinsurance or deductibles, and noncovered services may then be submitted to the secondary carrier.

When Medica is Secondary Carrier
Under the new policy effective July 1, 2010, when Medica is the secondary plan, Medica will reimburse for the balance of expenses up to the primary plan’s fee maximum or the primary plan’s contracted rate for the service. The same policy applies when Medica is the tertiary plan. If Medica reimburses as the primary payer and later determines that another payer had primary responsibility, Medica will withdraw reimbursement from the participating provider as an adjustment to future claims.

The exception would be Medica’s MinnesotaCare and Choice Care members. Per our contract with the Department of Human Services (DHS), effective with a service date of April 1, 2001, coordination of benefits includes picking up any applicable copayments, or deductibles on behalf of the member up to the Medica's Medicaid Fee Schedule allowed amount.

Determination of Primary Carrier
The National Association of Insurance Commissioners (NAIC) offers guidelines that include a few simple rules to determine which carrier reimburses first when two or more carriers provide the same benefits. These rules, referred to as the Order of Benefit Determination, are followed by most insurance companies and HMOs in the United States.

If only one plan has a COB provision, the plan without the COB provision reimburses first (Unlike Medica, some individual plans do not include a COB provision). The plan with a COB provision would then coordinate its benefits with the benefits reimbursed by the other plan.

When both plans have a COB provision, the order of benefits is generally determined as follows:

  1. The plan that covers the person as an employee, member or subscriber is the plan that reimburses first. The plan that covers the person as a dependent reimburses next.
  2. When dependent children are covered under both parents’ plans, the plan covering the parent whose birthday falls earlier in the year reimburses first.
  3. For children whose parents are divorced or separated, the order of reimbursement may be stated in the divorce decree. If there is no decree, or the decree doesn’t specify the order, follow this order:
    1. First, the plan of the natural parent with custody of the child.
    2. Second, the plan of the step-spouse of the parent with custody of the child.
    3. Third, the plan of the natural parent not having custody of the child.

COB Calculations

There are two methods for calculating COB benefits. Alternative One is the central focus of the NAIC guidelines. Alternative Three is used by some self-insured groups. (Note: Alternative Two was a combination of Alternatives One and Three, but is no longer used.)

Alternative One

  • Allowable expenses include any usual and customary expense that is covered, at least in part, by one or more of the plans under which an individual is insured.
  • Requires a Credit Reserve "Bank."
  • Includes Benefit Determination Period.

The basic premise of Alternative One is that the benefit savings generated by the secondary carrier are credited toward the member in order to be applied to future claims for benefits that otherwise would not have been paid, including non-authorized claims.

Alternative Three

  • Requires a contractual disclaimer that less than 100 percent of allowable expenses will be covered.
  • Is used by self-insured groups and in states that have not adopted the NAIC guidelines. Minnesota has adopted NAIC guidelines; however, Medica does have self-insured groups that have opted to use Alternative Three for their COB calculations.

The basic premise of Alternative Three is that the secondary carrier will be liable for its plan benefits available on the claim minus the benefits paid by the primary carrier.


Coordinating Benefits with Medicare

A participating provider who "accepts Medicare's assignment" agrees to the amount that Medicare allows for a particular procedure. Although the member may have a Medicare copayment, coinsurance or deductible to meet for the service(s), the difference between the billed charge and the allowed amount will not be billed to the patient.

If the Provider does not accept assignment:

  • Medicare will still reimburse only 80 percent of allowable charges (once the deductible has been met). The provider can collect from the member the 20 percent coinsurance and the difference between the billed amount and the allowable amount determined by Medicare.
  • Medicare reimburses the member. The member is then responsible for reimbursing the provider. The Explanation of Medicare Benefit (EOMB), addressed to the member, indicates that the member is responsible for the difference between the billed and approved amounts and that this could have been avoided if the claims had been assigned.

Medica coordination with Medicare for assigned claims:

  • When services are provided by a Medica contracting provider, Medica coordinates up to Medicare’s approved amount.
  • The exception would be Medica’s MinnesotaCare and Choice Care members who are eligible for Medicare benefits. Per our contract with the Department of Human Services (DHS), effective with a service date of April 1, 2001, coordination of benefits includes picking up any applicable copayments, coinsurance or deductibles on behalf of the member up to the Medica's Medicaid Fee Schedule allowed amount.
  • Typically, this means that Medica will be responsible for the member’s Medicare copayment, coinsurance and deductible amounts stated on the EOMB.
  • Sometimes, due to state statutes, Medica reimburses charges that Medicare denies; as an example, some preventive services are covered. If Medicare denies the charge and Medica would normally reimburse the charge as a covered service, then Medica would reimburse those charges in addition to the copayments, coinsurance and deductibles due. If Medica would normally deny the charge as an ineligible service (Medicare also denied), then Medica would not reimburse those charges.

Medica coordination with Medicare for unassigned claims:

  • For all levels of claims, Medica coordinates up to fee maximum schedules. Generally, this means that Medica will be responsible for the member’s Medicare copayment, coinsurance or deductible.
  • The exception would be Medica’s MinnesotaCare and Choice Care members who are eligible for Medicare benefits. Per our contract with the Department of Human Services (DHS), effective with a service date of April 1, 2001, coordination of benefits includes picking up any applicable copayments, coinsurance or deductibles on behalf of the member up to the Medica's Medicaid Fee Schedule allowed amount.
  • Medica only reimburses copayments, coinsurance and deductibles. Medica does not reimburse contract adjustments on Medicare bills.
Date: 8/18/2019 2:39:37 PM Version: 4.0.30319.42000 Machine Name: PWIM4-CMSWEB01