When the patient has more than one insurance

Volume 6, Issue 21
www.cchgroup.com
October 27, 2003
When the patient has more than one insurance
by Allan P. DeKaye, MBA, FHFMA
This issue seems somewhat out of place amidst the headlines of healthcare’s
uninsured problem in America. However, for the provider community, the ability
to identify those patients with more than one insurance is not only a matter of
getting paid properly, it’s avoiding compliance concerns related to establishing and
correctly reporting the “coordination of benefits” that must occur. This article
will examine the process that needs to be followed, issues impeding compliance,
and consequences of incomplete or improper actions.
What Is Coordination of Benefits?
Coordination of benefits (COB) is a process determination that occurs when a patient has, or is covered by,
more than one health insurance plan. The process needs
to identif y all of the insurances covering a patient, and
establish the order in which a patient’s insurances will be
billed in order to obtain payment for services rendered. A
“primar y insurance” will pay first according to the terms
and conditions of its coverage after it has been confirmed
that the insured is eligible. If available, a “secondar y insurance” will be billed for services not included or covered,
such as deductibles, coinsurance, and in some instances
non-covered services. Any unpaid balances remaining after
all insurances have been billed and settled become the
responsibilit y of the patient.
In order to bill and collect for services rendered, hospitals and physicians must correctly identif y a patient’s
insurance carrier(s). While many patients only have one
insurance, it is incumbent on the hospital or physician
office to ascertain if a patient has more than one coverage, including coverage f rom anot her member of t he
same household or from another responsible part y. As
healthcare costs have risen, and patients have had to
assume more out-of-pocket costs associated with their
care, secondar y insurances have become more prevalent.
While an individual may have more than one insurance,
regulations preclude the sum of all insurance payments
from exceeding the cost of the care. The process to ensure
that each payer assumes its correct portion of the cost
of care is COB.
So Why All of the Fuss?
On the surface, this may look like a problem only for providers of care, who may not be paid in full for failure to properly
ascertain the proper COB. To some extent this is true. Many
providers simply stop at collecting from a patient’s primary
insurance, often failing to collect from secondary payers because
of their own inability to capture the relevant information, or
to properly deliver and have adjudicated a bill to a subsequent
(secondary) carrier. But there is another side of the story, when
the payer receives too much. The problem becomes more of a
concern when this condition exists, especially when improper
payments are made from either Medicare or Medicaid, or other
government funded program.
There are many challenges associated with implementing
an effective COB program. While most of the effort still
falls on hospitals and physician practices to secure insurance
information from direct patient contact, there has been
growing reliance on automated searching of payer databases.
However, payers have not been particularly successful in capturing and reporting the existence of multiple insurances.
Although government sponsored programs (i.e., Medicare
and Medicaid) have been more successful in capturing the
co-existence of these t wo large government programs, much
of this success is attributable to audit recover y programs
conducted at the federal, state and local levels.
On The Front Lines
Although insurance carriers usually require the disclosure of other insurance information as part of their
enrollment process, little has been done in the area of
updating or enforcement. As a result, payers are now
more often delaying claims payment until their insured
individuals (i.e., patients) update their COB forms. In
order for hospitals and physician practices to improve
t heir abilit y to identif y t he potential for more t han
one insurance carrier per patient, enhanced access and
searching capabilities are needed. Additionally, the abilit y
to digest and summarize the resulting identification of
multiple payers into a “billing hierarchy” that establishes
the COB priorit y would enable providers to improve
their billing and collection capabilit y. The availabilit y of
such tool/technology would improve data integrit y and
accounts receivable management.
Who’s on First?
Lest this sound like the Abbott and Costello routine, the
primary government payers, Medicare and Medicaid, have
done a credible job in updating their databases that providers
of care can access. Within the COB framework, there is a
hierarchy of payers, simplified with these rules:
Medicaid is the payer of last resort. (This statement is
always true.)
Medicare is the first payer–most of the time.
The exceptions to Medicare are classified within the Medicare Secondary Payer (MSP) program requirements, which
are discussed below. These two rules work most of the time,
especially for “dual eligibles” (i.e., those covered by both
Medicare and Medicaid). But first, the Medicare exceptions
need to be presented, and then where the rest of the commercial insurances and managed care plans fit in.
Understanding MSP Requirements
Medicare provides aged Americans with healthcare coverage.
Through its Part A coverage, most qualified citizens can obtain
inpatient hospital coverage, while under Part B, which is an
optional coverage that can be purchased, Medicare covers doctor visits and many outpatient hospital and related services.
However, Medicare has established the following conditions
where its role as the “primary” payer will be reversed to that
of the “secondary” carrier. As such, instead of paying for
the services less deductibles and co-insurances, it will allow
other payers or programs to pay first. Medicare would then
be responsible for resulting deductibles and co-insurances.
Six conditions have been designated where this reversal of
payer priorit y must occur.
Medicare is the primary payer, except when any of the following criteria is present:
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1. Working aged (over age 65, but still working--or a covered
spouse--and covered by a group health insurance plan)
2. Worker’s compensation
3. No fault or other liabilit y insurance
4. Veterans Administration
5. Black lung disease
6. End-stage renal disease
For the most part, hospitals utilize a format called the Medicare Secondary Payer Questionnaire. Many hospitals have automated the MSP Questionnaire. Generally, an indication of
Medicare coverage entered in a hospital’s information system
(or its Admission, Discharge and Transfer (ADT) system) “triggers” the appearance of the questionnaire sometime during
the admission or registration process. A series of proscribed
questions are then “asked and answered” specifically looking
to identify the presence of any of the six conditions noted
above. The results are captured in the system, and can be
retrieved for review, especially in the event of audit.
When an affirmative answer to one of the six conditions
is obtained, the hospital’s registration staff would identify
another insurance plan as “primary” and place Medicare in
the “secondar y” insurance position. Many systems require
the staff to further select a COB billing priorit y. Where
the questionnaire has not been made part of the system
functionalit y, a manual (paper) version of the questions is
then administered. In manual systems, the abilit y to retain
and retrieve the questionnaire for audit purposes can be
more challenging.
While this is a mandatory process for hospitals, physicians
have the option of completing this questionnaire. The benefit
should not be viewed solely as a compliance matter, but rather
as a necessary step in “perfecting the registration.” Although
hospitals may treat this as a routine process (almost as though
they were “Mirandizing” their Medicare patients), when used
properly, and prepared for in a training environment that
stresses the importance of data integrit y, the benefit can
translate to other multiple insurance payer situations.
Applying COB Procedures to
Other Payer Combinations
It is common to find family households where working
spouses each elect healthcare coverage from their respective
employers. With the increasing cost of healthcare coverage,
employers tend to provide employee coverage (even with
some small premium contribution), but charge a larger premium contribution if an employee selects spousal or family
coverage. As a result, many employees elect “single” coverage
for themselves. However, in many instances, because of the
increasing “deductible and co-payment” provision of these
policies, spouses working for different companies often elect
CCH Healthcare Compliance Letter • October 27, 2003
On The Front Lines
to buy the spousal coverage, in order to have coverage for
out-of-pocket expenses such as deductibles and co-insurance.
Keep in mind that each of these policies may be different.
Some many be managed care or HMO policies, and others
may be more flexible POS or PPO plans. Each will come with
its own rules, regulations and requirements. This area often
provides confusion for payers and providers when trying to
determine the correct COB order.
As part of the admitting process, hospital staff must determine a patient’s marital status (among the many data elements
needed to register a patient) when the patient is scheduled for
inpatient or outpatient services. In instances when working
spouses each have insurance, the staff must determine several
factors, including (but not limited to):
1. Employer for both husband and wife
2. Insurance company for each spouse
3. Identification numbers and type of coverage of each plan
4. Determine who is the “subscriber,” and/or the relationship of the patient to the subscriber
5. Establish which insurance company is primary, and which
is secondary (i.e., the “coordination of benefits”).
In the above scenario, when either spouse is the patient,
it is that spouse’s insurance that is generally primary. The
other spouse’s insurance plan is then made secondary. “Generally” is used because there will be exceptions. This can occur
when either or both insurance companies cannot provide the
definitive response to a hospital inquiry (which may be made
electronically or telephonically). As noted earlier, a subscriber
may not have disclosed or been requested to provide other
insurance coverage when enrolling. Or if provided, the information may not have been entered, or may not have been
updated upon subsequent renewal.
Also, providers often don’t obtain all of the insurance
information. In some instances, weak or poor interview
skills or registration processes contribute to the problem.
Special care and circumstances apply to patients seen in
the Emergency Room (ER) setting. The EMTALA requirements indicate that “patients will be entitled to medical
screening by qualified personnel regardless of their abilit y
to pay...in emergency situations.” Many states have statutes
that require patients to be “treated regardless of their abilit y to pay” when presenting in the ER. In efforts to ensure
compliance with these t ypes of regulations, coupled with
the occurrence of patients entering the ER comatose or unable to communicate, hospitals are often unable to effect a
complete and accurate registration.
Many hospitals rely on post-admission patient interviews,
including bedside visits and discharge processing, as a final
attempt to secure this information before an inpatient leaves.
In cases where patients are “treated and released,” it often
takes a bill from the hospital to prompt patient responsiveness
and identify “other” insurances.
CCH Healthcare Compliance Letter • October 27, 2003
Truth or Consequences and the
Impact of HIPAA
Hospitals are subjected to audits and penalties, especially
in the review of the MSP requirements. Penalties can be
substantial, especially if as a result of not complying with the
MSP questionnaire, the resulting bill is deemed to be a “false
claim.” But like the football team receiving several penalties
on the same play, the volume of Medicare patients seen by
most hospitals makes the potential impact quite significant and
serious. Hospitals need to continue to improve the training
and development of their front-end admitting and registration personnel in order to improve the effectiveness of their
interview skills, and data capture and entry.
Similarly, the failure to properly identif y all patient
responsible insurances, as well as establishing the proper
COB, will result in claim denials and payment delays.
However, the inabilit y of the payer communit y to provide
complete and up-to-date information presents logistical
and financial impediments for the hospital. While much
has been said about the securit y and privacy provisions
of HIPA A, one area that should receive attention is the
transaction sets related to eligibilit y and claims. In the area
of eligibilit y, electronic transactions that can provide more
robust information, especially as it relates to COB, would
be helpful to both the hospital and payer communities.
With more accurate and complete patient data, the abilit y
to generate a “clear claim” for both primar y and secondary
payers will be greatly improved, allowing payers to promptly
pay for services rendered to their insured patients.
Patients have a role and responsibilit y in this process,
too. All too often, uncooperative patients fail to provide
the necessar y information to ensure that demographic
and financial data is properly capt ured. Improving patient
awareness about insurance is an insurance company responsibilit y. Communit y awareness and education of the general
population is becoming a more prevalent need given today’s
economic condition and the growing number of uninsured
citizens. In many instances, hospitals find that patients
only respond with missing or previously withheld information as a result of the account being sent to collection.
In the area of COB, it would seem that the industr y and
public interest would be better served if each segment of
the “communit y” discharged its respective responsibilities
more effectively. Perhaps then we could attain “an ounce
of prevention (leading to a) pound of cure.”
Mr. DeKaye is President and CEO of DEKAYE Consulting, Inc. His firm assists
healthcare clients with financial, operational and compliance issues. He is a
frequent speaker at national conferences, author/editor of The Patient Accounts
Management Handbook, and creator of the hospital benchmarking system,
PFS Power Rankings(sm). For more information: call (516) 678-2754; write
[email protected], or visit www.dekaye.com.
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