Description:
Sometimes a member is covered by more than one group health plan. That member may be entitled to some level of benefits under each plan. There are rules for determining which plan pays benefits first. The plan that must pay first is called the PRIMARY plan; the SECONDARY plan pays after the primary plan. The combined benefit payments of both plans cannot exceed the total charge for covered services. The amount that either plan must pay is called its LIABILITY.

Calculating payments between the primary and secondary plans is called COORDINATION OF BENEFITS (COB). COB involves group coverage only; COB is not done with individual policies.

COB administration involves collecting and updating other health insurance information for members, processing claims, and recording savings.

The COB guidelines in this policy are based on rules developed by the National Association of Insurance Commissioners (NAIC) , which were adopted and interpreted by the State of South Carolina. The guidelines are based on standard group contract provisions also. Some plans do not follow the standard and use different COB methods than those described in this policy. The actual contract provisions must be followed with non-standard plans.

NOTE: This document outlines general COB payment policy, not processing procedures. Refer to desk procedures for instructions on claims processing.

Definitions:

Primary Liability
This is the benefit amount a plan would pay in the absence of any other coverage. It is the sum of covered charges on a claim AFTER non-covered amounts, pricing allowance reductions, deductibles and coinsurance amounts are subtracted.

Secondary Liability
The secondary liability will depend on the COB method specified by the group's contract. The three major COB methods are described below. STANDARD COB is the most common method and is included in BCBSSC's standard group contract. The other two methods are NON-DUPLICATION OF BENEFITS and MAINTENANCE OF BENEFITS. Please see Section VI of this policy for examples of claims calculations using Standard COB.

1. Standard COB: Secondary liability equals total covered charges minus primary plan payment. Compare the secondary liability with the secondary plan's primary liability. The secondary payment will be the lesser of the two amounts.
2. If the group contract is PPC, the secondary payment may be calculated slightly differently because of PPC allowances. Please see Section VI of this policy for secondary payment calculations involving PPC contracts.

NOTE: This method is sometimes called ALTERNATE COB. Groups that use Standard COB will have the indicator "A" as the COB method on their AMMS files.

3. Non-duplication COB: Secondary liability equals the secondary plan's primary liability minus the primary plan's payment. The secondary payment is the same as the secondary liability.
4. NOTE: This method is also known as REGULAR COB. Groups that use this method will have the indicator "R" on their AMMS files.
5. Maintenance of Benefits (MOB):
   There are two variations of this COB method: MOB A and MOB B.

MOB A: Secondary liability equals the secondary plan's allowed amount minus the primary plan's payment. The secondary plan's allowed amount is the amount approved for payment before deductibles and coinsurance are applied. Compare the secondary plan's primary liability to the secondary liability. The secondary payment will be the lesser of the two amounts.

MOB B: Secondary liability equals total covered charges minus primary plan payment. The secondary liability is multiplied by the secondary plan's percent payable (90%, 80%, etc.) . Compare the secondary plan's primary liability to the secondary liability. The secondary payment is the lesser of the two amounts.

NOTE: The indicator "M" on a group's AMMS file means it uses the Maintenance of Benefits method.

Total Covered Charges
The dollar amount charged for services that are medically necessary and recognized as prudent medical treatment. Charges for services that are not medically necessary or deviate from prudent medical treatment (e.g. diagnostic admissions, custodial care, and treatment not approved by Uniform Medical Policy) are not covered and not considered when determining secondary liability.

For the purpose of determining secondary liability, covered charges are the provider's billed charges for covered services prior to reductions for pricing allowance, deductible amounts and coinsurance.

Covered charges include dollar amounts for services that would have been reduced for the following reasons:

• Portion of provider's line item charge that exceeds pricing allowance.
• Portion of physician's line item charge reduced due to multiple surgical procedure guidelines.
• Charges reduced because the contract's day limitation was exceeded.

With COB, the total covered charge is the sum of billed charges for line items that are covered (wholly or partially). The only charges excluded from the secondary payment calculation are line items that are not covered. Examples of items not covered are duplicates of previously processed charges and non-covered services (cosmetic surgery, private room difference, non-prescription drugs, etc.).

Allowance
The dollar amount ALLOWED for services covered by the contract. All contract limitations and requirements (e.g. inpatient medical days maximums, medical necessity, pre-admission review, pricing allowances, uniform medical policy, and contract exclusions) are in force when determining the allowance. After the allowance is calculated, deductibles and coinsurance are applied to determine the primary liability.

PPC Allowance
This is determined in the same way as "Allowance" except that the PPC pricing schedule is used to determine the actual dollar amount. For inpatient hospital claims, the allowance will be determined using DRGs or per diem. For physicians and suppliers the appropriate schedule of allowances will be used.

There are two COB situations where secondary liability will be calculated using the PPC allowance instead of total covered charges: 1) Blue-on-Blue when both contracts are PPC and a PPC provider rendered the service; 2) Blue-on-Blue when the primary contract is PPC and the secondary contract is not PPC and a PPC provider rendered the service.
The PPC allowance rather than total covered charges is used in these cases because the PPC provider has agreed not to charge the patient the difference between his billed charges and the BCBS PPC allowance. Therefore, payment between both contracts does not need to exceed the PPC allowed amount in order for the patient to be "paid in full" because there is no balance due to the provider.

Policy Statement
When Does COB Apply to a Claim?
Each state's Department of Insurance sets the rules that determine when a plan pays primary and when it pays secondary. These rules are called The Order of Benefits Determination. The National Association of Insurance Commissioners (NAIC) established the rules and recommended that all states adopt them to eliminate confusion about when a plan is primary or secondary. Most states agreed with the NAIC and adopted these rules.

Rules Establishing The Order Of Benefits Determination

1. Each state's Department of Insurance determines COB rules.
2. Insurance policies containing no COB provisions are considered primary over plans that do contain COB provisions.
3. When a person is covered as an employee or contract holder under one plan and is also covered as a dependent under another plan, primary benefits are paid by the plan that covers the individual as the employee or contract holder.
4. When determining order of benefits for a person with coverage under one plan as a laid-off or retired employee, the plan that covers the person as an active employee (or dependent of that employee)
    pays before the plan that covers the person as a laid-off or retired employee. The same rule applies to dependents of laid-off and retired employees. This rule is called the ACTIVE/INACTIVE PROVISION.

The Active/Inactive rule applies in the following instances:

5. Dependent Children Whose Parents Are Not Divorced or Separated:

   When dependent children are covered by both parents' insurance plans, either the GENDER or BIRTHDAY rule determines which plan is primary for the children.

   1. GENDER RULE: The father's insurance plan is primary for dependent children.
   2. BIRTHDAY RULE: The plan of the parent born earlier in the year is primary-for dependent children. For example, if the father's birth date is 03/01/50 and the mother's birth date is 02/01/52, the mother's plan will be primary for the children because her birthdate occurs earlier in the year than the father's.
      
      Each state decides whether the Gender or the Birthday Rule will be used. In South Carolina the Birthday Rule is used for fully insured group plans with effective or anniversary dates on or after 06/01/90. If BCBSSC must coordinate with an insurance plan that uses the Gender Rule, and this results in a conflict, the Gender Rule will be followed.
6. Dependent Children of Divorced or Separated Parents:
   If there is a court decree establishing financial responsibility for a child's health care, the plan of the parent assigned that responsibility is primary. If the parents have joint custody, either the Birthday or Gender Rule will apply, depending on which rule governs the contracts.
   
   When there is no court order, or when parents do not have joint custody, the following order of liability applies:
   1. Plan of the custodial parent.
   2. Plan of the spouse of the custodial parent.
   3. Plan of the non-custodial parent.
   4. Plan of the spouse of the non-custodial parent. 
   Dependent children who have group coverage at their place of employment or individual policies where they are the policyholder are NOT eligible for coverage under either of their parent's contracts.
7. Continuation Coverage: When a person has coverage as an active employee (or dependent of an active employee)
   and continuation of coverage (such as COBRA) under another plan, the following order
   of liability applies:
   1. The plan that covers a person as an employee or dependent of an employee pays first.
   2. The plan that provides continuation of coverage pays secondary benefits.
8. Overage dependents (Dependents 18 or older): 
   1. We will use the birthday rule when the parents are still married.
      • The rule for children states:  BIRTHDAY RULE:  Children are covered first under the plan of the parent born earlier in the year without regard to year of birth.  For example the plan of the parent with the February 1 birthday is primary over the plan of the parent with a March 1 birthday.  When both parent's birthdays are in the same month, then the date determines primary over secondary.  For example, the plan of the parent with the September 4 birthday is primary over the plan of the parent with the September 17 birthday.  The Birthday Rule determines who is primary.  If both parents have the same month and date (which is really rare), then the policy with the oldest effective date is primary.  This is only if the birthdates are the same.
   2. We will use the Longer or Shorter Length of Coverage when the parents are divorced or separated.
      • Longer or Shorter Length of Coverage states:  If none of the above rules determines the order of benefits, the benefits of the plan which covered an employee longer are determined before those of the plan which covered that person for the shorter time.  NOTE:  "Plan" means the health benefits provided by an employer over time without regard to changes in carriers or administrators during that time period.

Additional Administrative Rules

1. COB applies only if both coverages are group plans.
2. In Blue-on-Blue situations where the primary plan is PPC and the provider is PPC, total payment between both plans is limited to the PPC allowance.
3. If COB overpayments are not refunded to BCBSSC, we may pursue the refund if the amount is $200 or more. For payments made to a provider, COB overpayments will be recovered by deducting the amount from the provider's remittance. For payments made to a member, the amount of overpayment will be deducted from benefits payable on future claims.
4. COB will apply when both contracts are held by Blue Cross and Blue Shield of South Carolina groups (Blue-on-Blue) using the rules of the Order of Benefits Determination.
5. Except when a group requests otherwise, the sum of the primary and secondary payments will equal the total covered charges. The secondary payment, however, may not exceed the plan's normal liability (the amount the plan would have paid in the absence of other insurance).
6. Charges that are not covered under the secondary plan will not be used in calculating the secondary liability or payment even if the charge was covered by the primary plan.
7. COB does not usually apply to individual contracts, which are sometimes called Individual, Legacy, ACA, Exchange, nongroup, or supplemental policies.  Examples of these are BlueEssentials, Personal Blue, or Mark IV.  Some individual policies do allow COB; these will have "SE" in the name of the product.
8. All freestanding dental contract claims are coordinated according to the rules and procedures for health coverages.
   COB is not administered for other Blue Cross and Blue Shield Plans under "Host Bank" arrangements.
9. Other health insurance (OHI) information can be accepted in writing or over the telephone according to the guidelines listed below.

POSITIVE OHI Can be accepted over the telephone from subscribers, providers, group leaders and other carriers.  Positive OHI is also received in writing. Common sources of written positive OHI are:

NEGATIVE OHI Can be accepted over the telephone only from subscribers and group leaders. Negative OHI is never accepted from providers, either by phone or in writing. Negative OHI can be accepted in writing from the following sources:

11. When Blue Cross is secondary and the primary plan withholds benefits to recover their prior overpayments, we will contact the other plan or use the EOB to determine what payment would have been made and maintain secondary payer position (PHANTOM COB). If no information is divulged by primary payer, we will pay at the contractual benefit amount (20%, 15%, etc.)

How are COB Claims Detected and Investigated?

1. If Other Health Insurance(OHI) records show there may be other primary coverage, but no information about payment under that other coverage is submitted with the claim, the claim must be denied. Such a denied claim can be reconsidered only when the proper information is received.
2. When a claim is received and OHI records show other coverage, the claim can be processed for secondary benefits if information about any payment under the other coverage is received with the claim. Without information, the claim is denied but will be reconsidered when information is received.
3. If OHI shows old information (the claim date of service is more than 12 months from the "response date" shown on SEBF-COB Information screen), that there is no other coverage, or if no OHI record exists, the claim is denied and a
   COB questionnaire is sent to the member. Claims with charges that exceed the amounts listed below are denied for investigation.

Fully Insured Groups $125
ASO Plans $250
State Group $500

4. When a claim with OHI information is received, and primary payment is being considered, OHI must be checked and updated, or a questionnaire must be sent before any final determination of liability or payment.

SECONDARY PAYMENT CALCULATIONS: PPC/NON-PPC SITUATIONS
Secondary payment calculations require special guidelines when one or both plans are PPC. The rendering provider's network status (PPC or Non-PPC) can also affect the calculation. The Standard COB guidelines for calculating secondary benefits based on the types of contracts and provider follow.

1. PPC PRIMARY PLAN/PPC SECONDARY PLAN/PPC PROVIDER
   This is one of the two situations where total payment between both contracts is limited to the PPC allowance rather than total covered charges.
   1. To calculate secondary benefits in this situation:
      Calculate the secondary plan's primary liability. (This is the amount the plan would pay in the absence of other insurance.)
   2. Subtract the primary plan's payment from the secondary plan's PPC allowance. This amount is called the secondary liability.
   3. Compare the liabilities calculated in Steps 1 and 2 and pay the lesser of the two amounts.

Example A:

Compare the Primary Liability ($5800) and Secondary Liability ($200) and pay the lesser of the two amounts. The secondary payment will be $200.PPC PRIMARY PLAN/PPC SECONDARY PLAN/NON-PPC PROVIDER
In this situation, the combined payments of both contracts is limited to total covered charges.

Calculate secondary benefits as follows:

2. 1. Calculate the secondary plan’s primary liability.
   2. Subtract the primary plan's payment from the total covered charges. This is called the secondary liability.
   3. Compare the liabilities calculated in Steps 1 and 2 and pay the lesser of the two amounts.

EXAMPLE B:

Compare the Primary and Secondary Liabilities and pay the lesser of the two amounts. The secondary payment will be $4800.

1. PPC PRIMARY PLAN/NON-PPC SECONDARY PLAN/PPC PROVIDER
   This is one of two situations where total payment between both contracts is limited to the PPC allowance. The primary plan's PPC allowance is needed to calculate secondary benefits.
   1. Determine the primary plan's PPC allowance and payment. (These can usually be found through claims history research using the CRT.)
   2. Calculate the secondary plan as primary liability.
   3. Subtract the primary plan's payment from its PPC allowance. This is the secondary liability. (NOTE: The PPC allowance is used to calculate the secondary liability because PPC providers have agreed to accept the PPC allowance as payment in full when the primary contract is PPC.).
   4. Compare the secondary plan's primary and secondary liabilities (Steps 2 and 3) and pay the lesser of the two amounts.

EXAMPLE C

Compare the Primary and Secondary Liabilities and pay the lesser of the two amounts. The secondary payment will be $25.

1. PPC PRIMARY PLAN/NON-PPC SECONDARY PLAN/NON-PPC PROVIDER
   Total payment between both contracts is limited to total covered charges. To calculate the secondary payment:
   1. Calculate the secondary plan's primary liability.
   2. Subtract the primary plan's payment from the covered charges. This is the secondary liability.
   3. Compare the secondary plan's Primary and Secondary liabilities and pay the lesser of the two amounts.

EXAMPLE D:

Compare the Secondary Plan's Primary and Secondary Liabilities and pay the lesser of the two amounts. The secondary payment will be $28.

1. NON-PPC PRIMARY PLAN/PPC SECONDARY PLAN/PPC PROVIDER
   Total payment between both contracts is limited to total covered charges.  Calculate the
   secondary payment as follows:
   1. Calculate the secondary plan's primary liability
   2. Subtract the primary plan's payment from the covered charge. This is the secondary liability.
   3. Compare the liabilities (Steps 1 and 2) and pay the lesser of the two amounts.

Example E:

Compare the Secondary Plan's Primary and Secondary Liabilities. The secondary payment will
be $560.
NOTE: For this contract combination, the sum of the primary plan's payment and secondary plan's payment should never exceed covered charges.

1. NON-PPC PRIMARY PLAN/PPC SECONDARY PLAN/NON-PPC PROVIDER
   Total payment between both contracts is limited to total covered charges.
   Calculate secondary benefits as follows:
   1. Calculate the secondary plan’s primary liability.
   2. Subtract the primary plan's payment from the covered charge. This is the secondary liability.
   3. Compare the liabilities (Steps 1 and 2) and pay the lesser of the two amounts.

Example F:

Compare the Secondary Plan's Primary and Secondary Liabilities and pay the lesser of the two amounts.

1. OTHER CONTRACT COMBINATIONS
   For any other combination of contracts, calculate secondary payments using the guidelines listed below. 
   1. Calculate the secondary plan’s primary liability.
   2. Subtract the primary plan's payment from the covered charge. This is the secondary liability.
   3. Compare the liabilities calculated in Steps 1 and 2. The secondary payment will be the lesser of the two amounts.

Example G:

Compare the Secondary Plan's Primary and Secondary Liabilities and pay the lesser of the two amounts. The secondary payment will be $2600.
See Exhibit CAM 081attached.