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Automated COB check said to be on the horizon
Determining the proper coordination of benefits (COB) — which insurance company should pay when an individual has multiple coverage — long has been a thorn in the side of access departments. With tougher screening by insurance companies and the move toward capitation, the issue fast could become a matter of financial life and death for a health care organization.
Failure to ask patients such questions as, "Are you employed?" and "Do you have group health insurance?" when they offer the spouse’s insurance card costs a health care organization time and money. Typically, insurers delay paying claims, saying they’re not sure if theirs is the primary coverage. Insurers wait for responses from patients, who may have tossed out a letter asking which insurance is primary. Three months later, the hospital still hasn’t been paid.
When the hospital begins assuming risks under a capitated system, the stakes get much higher as profit margins get slimmer. (See related story, p. 62.) A health care organization may find itself getting paid nothing for providing care to a member’s spouse, when the patient’s own insurance would have paid the entire tab.
A solution to the problem is on the way, according to COB Clearinghouse Corp., an Independence, OH-based company that claims to have the first automated method of performing COB on health insurance and drug card plans. Founded in 1993, the company has been laying the groundwork for a system that will revolutionize the way patients are registered, says Patrick Lawlor, president.
The key to bringing the system to fruition is convincing large health plan sponsors, both governmental and corporate, that they will benefit by signing on to a universal database, he explains. When that happens, the service will become available, Lawlor adds. "Until we’ve gotten most of the third-party administrators [TPAs] and carriers involved, it’s not ready for release."
With that in mind, the company offers a retrospective audit service that shows health plan sponsors how much money they’re losing because a plan member’s primary insurance is not identified, he says. One audit uncovered an employee who had four fully active health insurance policies in force at the same time, notes Todd Swanson, COB vice president.
"Rather than relying solely on enrollment forms, our system searches patient social security numbers through the top 300 third-party administrators/insurance carriers’ eligibility gateways and immediately determines if other coverage exists," says Susan Muha, a spokeswoman for COB Clearinghouse. "Once other coverage is found, an algorithm is run consisting of six COB rules established by the National Association of Insurance Commissioners. Primacy is instantaneously determined."
The idea, Lawlor says, is to persuade the company that its TPA cannot do the coordination of benefits by hand. "We get clean identification information on everybody, not just spouses but children, and put it in a centralized database. We show, for example, a major carrier’s biggest customers that they’ve missed a lot of COB events — that 10% of the claims they’ve paid, someone else should have paid."
With the average employee using $3,800 in health benefits a year, that’s important information for the plan sponsor to have, he points out.
Working with the Department of Defense on its CHAMPUS coverage, COB Clearinghouse already has found that a significant number of military dependents thought to have no other coverage are, in fact, covered by other insurance plans, he says.
"We are also accurately performing COB on drug claims," Muha adds. "There are 350 million drug cards floating around in the United States and only 260 million Americans. Only about 200 million of those have insurance."
People tend to use the drug card or the insurance card with the lowest co-payment, and until now, those cards have not been coordinated, Muha points out. In the case of at least one carrier she is aware of, insured persons are not covered if they fail to provide current COB information. "The next time they go to the emergency department, the provider won’t get paid."
Meanwhile, Lawlor advises access managers to prepare themselves for the most efficient way of registering patients. The service could be on line as early as Jan. 1, 2000, he says.
A fee scale has not yet been established, but the company likely will charge a minimal sum for participation plus a per-transaction charge, Swanson notes. COB may pilot its service as early as next month in a regional area, he adds.
Using a modem or a point-of-service credit card machine, an access employee will be able to enter pertinent information, such as a patient’s social security number, policy number, or name and address, and find out on a national basis if that individual has other insurance.
Registrars won’t have to copy insurance cards or get the patient to fill out forms, although they may choose to do so, Lawlor notes. "What a patient tells you on a form is no longer interesting because the machine can tell you faster. With a dedicated telephone line, the [user] can get the answer back in one second."
He likens the improvement in efficiency to the speed of an automatic teller machine vs. that of a bank employee, he says. "Not only will you verify eligibility on a plan, you will find out if that plan is primary and receive a gross schedule of benefits. You’ll be told that there is a $250 deductible, or 80-20 co-pay insurance. You may still have to do precertification, but you will get the [toll-free] numbers to do that expeditiously."
The COB service also will be of interest to the billing and receivables department, Swanson points out, particularly in cases where the primary coverage may change. "The patient may be admitted for one thing and treated for something else.
"There may be coverage that’s primary for an appendectomy but doesn’t include vision care," he says. "If in the hospital, the patient gets a sliver in his eye, the hospital will have to determine which coverage is primary in that case. So [hospitals] will inquire not only at the point of admission, but also at the time of billing to ensure the procedure done is billed to the proper carrier."
COB Clearinghouse recently arranged for several leading companies providing reinsurance for health plans to offer a 10% discount to plans that sign on to the COB interface, Lawlor says. That would give those plans a significant budget reduction for health care, he adds. The COB service will use the same electronic gateway as the 270 standardized transaction set, one of the data sets under the Health Insurance Plan Portability Act of 1996 required for electronic data interchange beginning in February 2000, he notes.
Electronic billing inquiries to Blue Cross or Aetna, for example, will go from the health care provider to the TPA or insurance company, as the system now stands. The TPA or insurance company may not have correct COB information, Swanson points out.
What COB Clearinghouse will do instead, Lawlor explains, is answer that inquiry directly and determine the primacy of coverage. "It will be a simpler journey and a more complete answer."