Coordination of Benefits
Coordination of Benefits (COB) applies when expenses for covered services are eligible under more than one insurance program. Usually, one health insurance company has primary responsibility and there is at least one other health insurance company with responsibility for any remaining patient liability. On occasion, an automobile insurance or workers' compensation insurance carrier will be involved.
Regardless of which insurance carriers are responsible, the combined payments are never greater than the actual charges of services and generally are not more than the primary carrier's contract rate. This portion of the manual offers some guidelines to help in COB situations.
Please remember to ask your patient if they have other health insurance coverage.
Obligations of Ancillary Provider to Obtain COB Information and to Bill Primary First
Claims should be submitted to the primary carrier first. You must help with processing forms required to pursue COB with other health care plans and coverages (including and without limitation, workers' compensation, duplicate coverage and personal injury liability). You are required to make diligent efforts to identify and collect information concerning other health care plans and coverages at the time of service. Where Horizon is, or appears to be, secondary to another plan or coverage, you must first seek payment from such other plan or coverage according to the applicable rules for COB.
HCAPPA Revised COB Rules
The New Jersey state law known as the Health Claims Authorization, Processing and Payment Act (HCAPPA) states that no health insurer can deny a claim while seeking COB information unless good cause exists for the health insurer's belief that other coverage is available.
For example, if the health insurer's records indicate that other insurance coverage exists, Horizon will continue to gather information from members regarding other benefits in an effort to maintain accurate records and have the appropriate health insurer be financially responsible.
Patient Who has Two or More Insurance Plans (other than Medicare, Motor Vehicle Accidents or Workers' Compensation)
If you are providing care to the covered spouse of a Horizon subscriber who also has his/her own health plan, the spouse's health plan is always primary UNLESS all of the following are true:
- The spouse is retired.
- The spouse is also eligible for Medicare.
- Our subscriber is covered as an active employee and Medicare is not primary under the Medicare Secondary Payer rules described beginning on page 31.
In this event, the Horizon coverage is primary, Medicare is secondary and the spouse's health plan is tertiary.
If you are providing care to a Horizon subscriber who also has coverage as a subscriber with another health plan and the subscriber is:
- An active employee of one group and a retired employee of another. The plan from the group where the employee is active is primary.
- A retired employee of two groups. The plan in effect the longest is primary.
- An active employee of two groups. The plan in effect the longest is primary.
When providing care to a dependent child, whose parents are not separated or divorced and:
- The parents both have health insurance, determine from their benefit plans whether the Birthday Rule or the Gender Rule will apply. In most cases, the Birthday Rule will apply.
When providing care to a dependent child, whose parents are separated or divorced:
- The plan of the parent who has financial responsibility for health care expenses (as determined by the court) is the primary plan, regardless of who has custody of the child.
- For claims for a dependent child whose parents are separated or divorced, but a court has not stipulated financial responsibility, the unmarried parent who has custody is primary. The other parent is secondary.
- Any coverage through a stepparent married to the custodial parent would be next, and the noncustodial parent's coverage last.
Under the Birthday Rule, to determine the primary carrier, you need the month and day of the parents' birth dates; the year is never considered. The parent whose birthday falls earlier in the year has the primary plan for the dependent child. If both parents have the exact same birthday (month and day), the plan in effect the longest is primary. The Birthday Rule will only apply if both carriers use the Birthday Rule.
Under the Gender Rule, the father's plan is primary for the dependent child. If one parent's contract uses the Birthday Rule and the other contract uses the Gender Rule, then Gender Rule determines the father's plan as primary.
MOTOR VEHICLE ACCIDENTS
If the primary carrier is:
- The auto insurance, you must submit your claim to them. After you receive the Explanation of Payment (EOP) from the auto insurance carrier, send it to us with a completed claim form, an itemized bill and a copy of the member's Explanation of Benefit (EOB). Electronic claims cannot be accepted because of the additional information required to process the claim.
- If the primary carrier is Horizon, we will need a copy of the automobile declaration sheet with the date of accident between the policy effective date and cancellation date. Be sure to attach an itemized bill and completed claim form.
Automobile insurance is not primary for motorcycle accidents for owner/operators of a motorcycle. However, passengers of motorcycle accidents need to submit any accident-related claims to their auto insurance carrier for consideration.
Workers' compensation covers any injury which is the result of a work-related accident. Employers purchase insurance which covers work-related illnesses or injuries.
Horizon does not provide reimbursement for services rendered to treat work-related illnesses or injuries or for services or supplies which could have been covered by workers' compensation.
Always bill the workers' compensation carrier directly for work-related illnesses or injuries. If Horizon Casualty Services, Inc. is the workers' compensation carrier, please mail medical bills to:
Horizon Casualty Services, Inc.
PO Box 10175
Newark, NJ 07101-3175
REGULATIONS ON NEW JERSEY INSURED GROUP POLICY
Special rules apply for Coordination of Benefits (COB) where the Horizon policy is an insured group policy issued by Horizon.
N.J.A.C. 11:4-28.7, as amended effective January 1, 2003, provides for different COB rules (as to insured group policies issued in New Jersey) depending on what basis the primary and secondary plans pay and whether the ancillary provider is or is not in the network of either or both plans.
If Horizon is the primary payer, these rules do not apply.
If the Horizon insured group policy is secondary, and the ancillary provider is in Horizon's network, these rules apply:
- Where both the primary and secondary plans pay on the basis of a contractual fee schedule and the physician is in the network of both plans, Horizon pays the cost sharing of the covered person under the primary plan up to the amount Horizon would have paid if primary, provided that the total amount paid to the ancillary provider from the primary plan, Horizon, and the covered person does not exceed the contractual fee of the primary plan and provided that the covered person is not responsible for more than the cost sharing under our plan. (N.J.A.C. 11:4-28.7(e)1.)
- Where the primary plan pays on the basis of Usual, Customary and Reasonable (UCR) and Horizon pays on the basis of a contractual fee schedule, the primary plan pays its benefits without regard to the other coverage and Horizon pays the difference between billed charges and the benefits paid by the primary plan up to the amount we would have paid if primary.
Our payment is first applied to the covered person's cost sharing under the primary plan. The covered person is only liable for cost sharing under our plan if he/she has no liability for cost sharing under the primary plan and the total payments of the primary and our plan are less than billed charges. The covered person is not responsible for billed charges in excess of the amounts paid by the primary and secondary plans and cost sharing under either plan. The covered person can never be responsible for more than the cost sharing under the secondary plan. (N.J.A.C. 11:4- 28.7(e)2.)
- Where the primary plan pays on the basis of a contractual fee schedule but the secondary pays on the basis of UCR, and the ancillary provider is in the network of the primary plan, the secondary plan pays any cost sharing of the covered person under the primary plan up to the amount the secondary would have paid if primary. (N.J.A.C. 11:4-28.7(e)3.)
- Where the primary plan is an HMO plan but the ancillary provider is out of network and services are not covered by the primary plan, Horizon pays as if it were primary. (N.J.A.C. 11:4-28.7(e)4.)
- Where the primary and Horizon's plan are both HMO plans and the ancillary provider is not in the primary plan's network, and the primary has no liability, Horizon pays as if primary. (N.J.A.C. 11:4-28.7(e)7.)
There may be instances when an individual who has coverage with us may also be entitled to Medicare coverage. This section will help you to determine which plan will pay as primary.
COB when Medicare is involved is usually called Medicare Secondary Payer (MSP). MSP does not apply to members who have individual contracts. Medicare is always primary for individual contract holders.
There are three ways a person can become eligible for Medicare:
- Attaining age 65.
- Becoming disabled.
- Having end-stage renal disease (ESRD).
Attaining Age 65
When individuals reach age 65 and have contributed enough working quarters into the Social Security system, they are entitled to Medicare Part A benefits at no cost. To receive Medicare Part B benefits, they must pay premiums through monthly deductions from their Social Security checks.
For individuals who have not contributed enough quarters in the Social Security system, there are two ways they may receive Medicare Part A benefits:
- Through a spouse who has contributed enough quarters to the Social Security system. This is identified by the letter B following the spouse's Medicare claim number on his or her Medicare ID card.
- Purchase Medicare Part A benefits. This is identified by the letter M following the Medicare claim number on his or her Medicare ID card.
Disabled individuals under age 65 are entitled to Medicare under the disability provisions of the Social Security Act. They must be unable to work and must have been receiving Social Security disability payments for 24 months. Beginning with the first day of the 25th month of receiving Social Security payments, they are entitled to Medicare Part A benefits at no cost. Medicare Part B benefits may be purchased.
Having End-Stage Renal Disease (ESRD)
A person becomes eligible for Medicare under the ESRD provisions after beginning a regular course of renal dialysis. He/She is entitled to Medicare benefits after completing a three-month waiting period beginning the first day of the month after the start of a regular course of renal dialysis. The waiting period continues until the first day of the fourth month following the initiation of renal dialysis. On the first day of the fourth month, such a person is entitled to Medicare Part A at no cost. Medicare Part B benefits may be purchased.
The three-month eligibility waiting period for ESRD Medicare benefits may not apply when the Medicare-eligible individual:
- Receives a kidney transplant. In this circumstance, the individual is entitled to Medicare the first day of the month in which the transplant occurred.
- Initiates a course of self-dialysis training during the three-month waiting period. In this circumstance, the individual becomes entitled to Medicare the first day of the month of his or her eligibility.
MEDICARE SECONDARY PAYER
There are three ways to determine if Medicare or the employer group health program is primary:
- End-stage renal disease (ESRD).
Please see the chart on the next page for more detailed information.
When a person becomes entitled to Medicare at age 65, there is the possibility that he or she has health insurance through an employer group health account. It is important to know whether the policyholder (subscriber) is retired or actively working.
To determine who is primary, three questions need to be asked of the Medicare beneficiary who has a group health policy through Horizon:
- Are you or your spouse actively employed?
- Are there 20 or more employees (regardless if full-time or part-time employees) where you or your spouse work?
- Are you covered under that insurance policy?
If the answers to all three questions are YES, then the Horizon group health policy would be primary to Medicare for the Medicare-eligible person.
- Patient is 67 years old and is entitled to Medicare. She is actively working for a company that employs 25 full-time and part-time employees and receives health coverage through her employer. The health coverage through her employer would be primary since she is actively working and Medicare would be secondary.
- Patient is 76 years old, retired and is entitled to Medicare. He is covered under his wife's group health coverage. His wife is actively working for a group of more than 20 employees. She is not yet entitled to Medicare. For this patient, his wife's coverage would be primary and Medicare secondary. Even if the wife were Medicare-entitled, they would both be primary with the group insurance because the wife is actively working.
- Patient is 70 years old, actively working for a group of more than 20 employees and also entitled to Medicare. Additionally, his wife is actively working and has health coverage through her employer. In this situation, the husband's coverage would be primary for him, his wife's health coverage would be secondary and Medicare would be tertiary.
- Patient is older than age 65, entitled to Medicare and actively employed. His employer only has 10 employees, so Medicare would be primary and his group health care coverage secondary. In this case, the patient should enroll in both Medicare Part A and Part B. Since the Medicare Secondary Payer (MSP) provisions do not apply, Medicare is primary and Horizon BCBSNJ will never pay more than we would have had the patient purchased Medicare Part B.
|Medicare Beneficiary is ...||Medicare is Primary||Group is Primary|
|AGE 65 or older and:|
|Actively working for an employer with fewer than 20 employees.||✓|
|Actively working for an employer with 20 or more employees.||✓|
|Retired but have group coverage through your spouse who is actively working for an employer with fewer than 20 employees.||✓|
|Retired, but have group coverage through your spouse who is actively working for an employer with 20 or more employees.||✓|
|Retired, spouse retired.||✓|
|Under age 65 years, on Medicare due to disability and:|
|Actively working for an employer with fewer than 100 employees.||✓|
|Actively working for an employer with more than 100 employees.||✓|
|Not an active employee, but have group coverage through a family member who is actively working for an employer with fewer than 100 employees.||✓|
|Not an active employee, but have group coverage through a family member who is actively working for an employer with 100 or more employees.||✓|
|Not an active employee, but have group coverage through a family member who is not actively working.||✓|
|Eligible for Medicare due to end-stage renal disease (ESRD) after March 1, 1996, regardless of age:|
|Within the first 30 months of Medicare eligibility.¹||✓|
|Beyond 30 months of Medicare eligibility.||✓|
|Medicare eligibility due to age or disability occurred prior to ESRD eligibility and Medicare was the primary payer due to other Medicare secondary payer rules.||✓|
¹This does not apply if the member was Medicare-eligible due to age or disability prior to ESRD eligibility and the group health plan was primary due to other Medicare Secondary Payer rules. In this case, the group health plan would remain primary for the first 30 months of ESRD eligibility.
If you need help understanding if Medicare or a group health plan is primary, please call the Medicare Coordination of Benefits Call Center at 1-800-999-1118.
Special Enrollment Period for Medicare Part B Benefits
A Medicare-eligible person may choose not to purchase Medicare Part B since it may not be necessary if the group is primary. When Medicare becomes primary, the subscriber may sign up for Medicare Part B benefits, with no increase in premiums. Coverage begins the first day of the month following the month the primary coverage ends. The person must sign up immediately upon becoming eligible once Medicare is primary, since the Medicare Part B benefits will only begin the first of the month that he/she signs up. This is called the Special Enrollment Period (SEP).
If an individual is entitled to Medicare because of age and is covered under the MSP provisions, he/she has the right to select Medicare as primary. If the person selects Medicare as primary, he/she must be dropped from his/her employer's group health benefits with the exception of prescription drug and dental coverage. The employer may not subsidize a supplemental Medicare plan under these circumstances.
If Medicare is primary and the subscriber chooses not to purchase Medicare Part B benefits, we will never pay more than we would have if that individual had Medicare Part B benefits. In addition, this person would not be eligible for the SEP and would face increased premiums and be restricted when he/she signs up for Medicare Part B benefits.
MSP regulations only apply when the insurance coverage is through an employer. A Medicare supplemental policy, or Medigap policy, may be offered by an employer (if there are less than 20 employees or if the employee is not actively working) or it may be purchased on an individual basis; however, a Medicare supplemental policy will never be primary over Medicare.
Medicare Part A
If there are no Medicare Part A benefits, MSP regulations do not apply. Medicare Part A services are billed to the group health plan.
Individuals who have purchased Medicare Part A benefits are identified with an M at the end of the Medicare claim number on their Medicare ID card.
Individuals entitled to Medicare due to disability must be under the age of 65, otherwise the working-aged provisions apply. You should ask the following questions to determine primacy:
- Are you, your spouse or a family member actively employed?
- Are there 100 or more employees (regardless if full-time or part-time) where you, your spouse or family member works?
- Are you covered by that insurance policy?
The two important differences between the MSP working-aged and the disability provisions are:
- Who the active employee is; and
- The number of employees in the group.
Unlike the working-aged provisions, under the MSP disability provision, the Medicare-eligible individual may be covered by a family member other than his/her spouse. This typically occurs when a parent or legal guardian covers a disabled dependent – either child or adult.
Under the disability provisions, the employer must employ 100 or more employees. It is important to verify the number of employees because the patient may be part of a subgroup within a group, such as the New Jersey State Health Benefits Program (SHBP) and School Employees' Health Benefits Program (SEHBP). There may be local municipalities with fewer than 100 employees, but the larger group has greater than 100 employees. The number of employees in the entire employer group is considered when making the determination of eligibility for Medicare due to disability.
- The patient is entitled to Medicare due to disability. He is not actively working, but his wife is and she has family health coverage through her employer, which has more than 100 employees. The patient would be primary under his wife's group health policy since she is actively employed by an employer of 100 or more employees and her group health insurance covers him.
- A patient is entitled to Medicare due to disability and is covered under his mother's insurance. She is actively employed and has family group health coverage through the employer who employs more than 100 individuals. In this case, the son's primary insurance is the mother's group health insurance plan.
- The patient is Medicare-eligible due to disability and is actively employed by a municipality that provides group health coverage. While she is no longer collecting Social Security disability payments, she still continues under the Medicare program. The municipality has only 35 employees but their health coverage is through the New Jersey State Health Benefits Program (SHBP) and School Employees' Health Benefits Program (SEHBP), and the state employs more than 100 individuals. The group health insurance would be primary for the patient and Medicare would be secondary.
- A local union may appear to employ fewer than 100 employees, however, the patient's coverage is through the Health and Welfare Fund for all union members. If just one of the local unions that belong to that Health and Welfare Fund has 100 or more employees, then any local union covered by the Health and Welfare Fund's health plan would be covered by the MSP regulations.
End-Stage Renal Disease (ESRD)
A person becomes Medicare-eligible due to ESRD when he or she begins a regular course of renal dialysis. There is a three-month waiting period to receive Medicare Part A and Part B benefits (unless an exception applies).
When a person is entitled to Medicare due to ESRD, the MSP regulations will apply when:
- The patient has group health coverage of their own or through a family member (including spouse).
- That group health coverage is through a current or former employer.
When the Medicare beneficiary meets the above conditions, he/she is primary under the group health coverage for a specific period of time known as the COB period. The COB period always begins on the first date of entitlement, and all medical services are covered by the group health coverage – not just renal services.
If the individual became entitled to Medicare due to ESRD on or after March 1, 1996, they have a 30-month COB period, beginning with the first date of entitlement.
- The patient is not working but his wife works. She has family group health coverage through her employer who has 25 employees. The patient began a regular course of renal dialysis on February 20, 2005, and became entitled to Medicare due to ESRD on May 1, 2005. The patient has a 30-month COB period beginning with his first date of entitlement and the COB period will end on October 31, 2007.
- The patient had a kidney transplant in August 2004. He had not yet begun a regular course of renal dialysis, but since he had a kidney transplant he became entitled to Medicare on August 1, 2004. The patient is a covered dependent under his mother's family health coverage through her employer. In this case, the dependent son would be primary with the group health coverage under a COB period of 30 months ending on January 1, 2007.
- The patient began a regular course of renal dialysis on October 10, 2005. She has group health coverage through a former employer. The following month, she initiated a course of self-dialysis training so her entitlement begins the first day of the month she began a regular course of renal dialysis, October 1, 2005. The three-month waiting period would be waived and her COB period would end on March 31, 2008.
Extending Health Coverage through COBRA
An individual who is Medicare-eligible due to ESRD may extend his or her health coverage through the COBRA provisions.
Typically, when a person becomes Medicare-entitled, the COBRA provisions no longer apply and that individual may be dropped from the group health coverage. This is not automatic and may vary depending on the employer.
Some may allow the Medicare beneficiaries to continue their coverage while other employers do not. It is up to the individual employer to make that decision.
If a patient has extended their employer health benefits through COBRA, those benefits will be primary over Medicare for the COB period or the duration of COBRA coverage.
Prior to August 10, 1993, an individual who was entitled to Medicare because of ESRD and disability, or ESRD and attaining age 65, automatically became primary to Medicare upon the date of their dual entitlement. On August 10, 1993, the law changed to require the individual to remain primary to the group health plan for the applicable COB period under ESRD, if the group health plan had already been paying primary.
To determine who is the primary payer, apply the following rules:
The group health plan is primary when:
- The group was already paying as primary because the individual was not Medicare-eligible.
- The Medicare-eligible individual was covered under the Working-Aged or Disability rules of the MSP provisions.
Medicare is primary when:
- Medicare was already paying primary for a Medicare-eligible individual due to attaining age 65 or disability because they did not fall under either the Working-Aged or Disability provisions.