Transforming coordination of benefits: Challenges, technology, and the path forward

The health care industry has long grappled with the complexities of Coordination of Benefits (COB), a process that ensures the correct payer covers a patient’s medical expenses when they are insured by multiple health plans. While proper COB can save health plans money and lower out-of-pocket costs for members, errors in this process are estimated to cost patients and health plans significant dollars each year.

Decoding the complexities of COB

The current state of COB is marked by the intricacies of federal and state programs, each with their own eligibility requirements; plus a dependence on various databases, health insurance and prescription plans, pharmacy networks, and special assistance programs. Employee mobility further complicates COB, with Medicare-eligible individuals still working and those under 65 becoming eligible for Medicare due to medical circumstances.

Determining primacy in COB is a significant challenge, requiring the navigation of factors such as employment status, disability, medical history, COBRA, plan group size, and effective dates – in addition to more tricky variables such as dependents and the working spouse rule. Challenging this alphabet soup of factors means that most employer groups or health plans can’t do it alone. If you’re small, the overhead of just keeping up with all the regulations is difficult. If you’re big, you’re dealing with a high volume of fringe cases. As a result, the industry relies heavily on outside vendors who apply a variety of methods to manage COB, leading to high administrative costs and abrasion with individuals and employer groups. By proactively addressing these challenges at the prepay stage, health plans could significantly alleviate such concerns.

The escalating challenge of commercial to Medicare COB

Today, 26% of Medicare recipients also having employer- or union-sponsored health coverage. This presents a challenge when commercial plans cover a service that should rightly have been billed and paid for by Medicare. The proportion of Medicare enrollees under age 65 and their impact on COB findings is significant, and the year-over-year increase in Medicare and Medicare Advantage enrollments only adds to the complexity. Meanwhile, the number of American enrolling in Medicare or Medicare Advantage programs each continues to skyrocket –– with nearly 65 million recipients as of October 2023.

The impact of COB-related errors is far-reaching, affecting payment integrity for health plans, providers, and patients. Plan sponsors face multiple verification requests, while providers must deal with payment reversals, rebilling, and adapting to different care management guidelines. Patients, on the other hand, may experience incorrect billing and delayed care. If a patient pays the bill believing it’s settled, and then 90 days later receives a letter indicating additional costs or reimbursement notifications, it often leads to reduced satisfaction and trust.

Regulatory hurdles and opportunities

Regulatory limitations in Medicare-related COB, such as time constraints for correcting payments and provider contract impact on correction timelines, further complicates the process. However, these limitations are precisely what create an opportunity for COB to be shifted from post-pay to pre-pay timing in payment integrity. This enables a seamless alignment between regulatory requirements and payment accuracy. Enter the power of artificial intelligence (AI) to help drive meaningful transformation in the COB process.

AI-driven predictions of patient transitions (whether due to employment changes or injury projection) and its potential applications in identifying eligibility gaps, verifying correct coverage, and streamlining rebilling and recovery processes can significantly improve COB efficiency. With AI, there are hosted solutions, allowing more to be done faster, without human beings. Humans, kept in the loop with COB, can shift more time and activity to the remaining 1% of cases. For years, the thought of solving for Medicare eligibility in the under-65 population required several weeks. Now, it can be completed in seconds.

Strategies for improvement and the path forward

Increasing transparency and collaboration among health care stakeholders is crucial for improving COB processes. Best practices for health care providers, payers, and patients to minimize errors and improve COB efficiency include regularly reviewing roles and proactively scrubbing membership data. It’s not just the employee you’re looking at; it’s the dependents of the employee as well.

Related: Report: AI driving major changes in benefits experience

The most critical step in driving meaningful change in the COB landscape is for all stakeholders to become more comfortable with data sharing. Eligibility is a simpler problem to solve because you have three sides: the payer, the provider, and the member. It’s well known that payers and members don’t necessarily like to trade or share information. However, the member-to-payer relationship, which is brokered by the employer group, makes this a stronger possibility. It’s in the best interest of large employer groups to share more information with their health plans, as enhanced data exchange facilitates better understanding of employee health needs, leading to more tailored and effective health care solutions.

As the health care industry navigates the challenges of COB, embracing technology and fostering collaboration among stakeholders will be essential in driving meaningful change. By leveraging AI and hosted solutions, health plans can transform their COB processes, moving it from a post-pay to prepay capability—ultimately benefiting the entire health care ecosystem. The path forward is clear: it’s time for all stakeholders to come together, share data, and harness the power of technology to streamline COB and unlock its full potential.

Dan Gallagher, Vice President, Strategy and Partnerships, Lyric