Proactive vs. Reactive Coordination of Benefits: Data and Technology Make the Difference

Whether you are a commercial or Medicare health plan, or a Medicaid managed care plan, you know that paying claims with third-party primary responsibility is a significant source of unnecessary cost.

Coordination of benefits (COB) is the best way to address this issue, but it’s not always easy. It’s often tough to identify other coverage, determine the order of payer responsibility and manage members’ constantly changing eligibility and life circumstances. Once you’ve paid a claim where other coverage exists, it can also be costly to recover those payments.

What is Proactive Coordination of Benefits?

True coordination of benefits goes beyond opportunistic identification of other coverage. An effective COB program requires a proactive solution that focuses on the entire lifecycle of a claim. The goal is accurate, real-time primary payer detection and verification to avoid or recover costs.

It’s essential to begin COB work before payments are made. Accurately determining eligibility before a claim is processed helps prevent improper payments. Corrections can be entered in the payer’s system or returned to the client to correct before payments are made. This can minimize costly “pay and chase” activity.

The unfortunate reality, however, is that not all COB efforts can be completed during the pre-payment phase. When overpayments inevitably occur, plans must also have a system to identify them and then recover the funds by billing claims to the correct, liable payer.

Proactive COB Relies on Data and Technology

Without a foundation of robust data and technology, health plans struggle to deploy proactive coordination of benefits. Here are six characteristics that differentiate proactive COB systems from other solutions:

  1. Accurate, real-time detection and verification of other primary payers. Advanced data mining, data matching, and analytics are the keys to identifying other healthcare coverage for members. These technologies and algorithms address coverage complexities like common name matches. Comparative and predictive analytics help manage plan benefits and other types of denials to optimize recoveries.
  2. Identification of claims with the highest likelihood of recovery. Machine learning technologies can analyze and target claims that have the greatest probability of recovery based on factors like claim type, employer group and procedure code.
  3. Collection and longitudinal analysis of member data. When it comes to COB, big data infrastructure is a game changer. Large database repositories like data lakes can house carrier response files. With that information, plans can leverage analytics to create longitudinal case histories for members. These should identify when beneficiary coverage begins and ends. Coverage date ranges support post-payment recovery of claims from liable third parties.
  4. Automatic dispatch of rejected or inappropriately paid claims. Revenue cycle management technologies can identify the root cause of denials and facilitate corrective action. Through automation, proactive COB systems analyze, correct, and resubmit rejected or inappropriately paid claims until third-parties have correctly paid.
  5. Electronic reclamation claims billing. Using technology for claims billing results in fewer errors and higher yields than traditional paper claims.
  6. Friction-free online communication with providers. Online portals allow two-way communication between plans and providers. When designed with end users in mind, these portals make it easy to review and submit claims information and additional information electronically. This minimizes the impact on providers, while accelerating recovery cycles.

Proactive COB Maximizes Cost Savings for Health Plans

Timely and accurate information about members’ other coverage enables plans to better coordinate care, maximize cost savings, ensure accurate reimbursements, and reduce administrative rework.

After transitioning to proactive COB solutions, health plans report lower costs which improve their bottom lines. Technology-based COB systems accelerate the return of recovered funds. Increased claim accuracy rates translate into fewer subsequent claims adjustments. Real-time review and reporting also enable employees to securely access the status of claims.

These benefits are important to health plans of all kinds, but particularly for Medicaid managed care plans. The U.S. Government Accountability Office has reported that more than 13 percent of Medicaid members have Medicare or other sources of private insurance that are dynamic in nature.

Looking ahead, the complexity and cost of healthcare will most likely continue to increase. Given this environment, proactive COB represents a critical tool for plans to use to maintain their sustainability, competitive advantage and success in the market.



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