Coordination of Benefits

Coordination of benefits (COB) allows plans that provide health and/or prescription coverage for a person with Medicare to determine their respective payment responsibilities (i.e., determine which insurance plan has the primary payment responsibility and the extent to which the other plans will contribute when an individual is covered by more than one plan).  

The COB Process:

• Ensures claims are paid correctly by identifying the health benefits available to a Medicare beneficiary, coordinating the payment process, and ensuring that the primary payer, whether Medicare or other insurance, pays first.
• Shares Medicare eligibility data with other payers and transmits Medicare-paid claims to supplemental insurers for secondary payment. Note: An agreement must be in place between the Benefits Coordination & Recovery Center (BCRC) and private insurance companies for the BCRC to automatically cross over claims. In the absence of an agreement, the person with Medicare is required to coordinate secondary or supplemental payment of benefits with any other insurers he or she may have in addition to Medicare.
• Ensures that the amount paid by plans in dual coverage situations does not exceed 100% of the total claim, to avoid duplicate payments.
• Accommodates all of the coordination needs of the Part D benefit. The COB process provides the True Out of Pocket (TrOOP) Facilitation Contractor and Part D Plans with the secondary, non-Medicare prescription drug coverage that it must have to facilitate payer determinations and the accurate calculation of the TrOOP expenses of beneficiaries; and allowing employers to easily participate in the Retire Drug Subsidy (RDS) program. Please click the Coordinating Prescription Drug Benefits link for additional information.

COB Data Sources

COB relies on many databases maintained by multiple stakeholders including federal and state programs, plans that offer health insurance and/or prescription coverage, pharmacy networks, and a variety of assistance programs available for special situations or conditions. Some of the methods used to obtain COB information are listed below:

Voluntary Data Sharing Agreements (VDSAs) - CMS has entered into VDSAs with numerous large employers. These agreements allow employers and CMS to send and receive group health plan enrollment information electronically. Where discrepancies occur in the VDSAs, employers can provide enrollment/disenrollment documentation. The VDSA data exchange process has been revised to include Part D information, enabling VDSA partners to submit records with prescription drug coverage be it primary or secondary to Part D. Employers with VDSAs can use the VDSA to submit their retiree prescription drug coverage population which supports the CMS mission of a single point of contact for entities coordinating with Medicare. Please click the Voluntary Data Sharing Agreements link for additional information.

COB Agreement (COBA) Program - CMS consolidates the Medicare paid claim crossover process through the COBA program. The COBA program established a national standard contract between the BCRC and other health insurance organizations for transmitting enrollee eligibility data and Medicare paid claims data. This means that Medigap plans, Part D plans, employer supplemental plans, self-insured plans, the Department of Defense, title XIX state Medicaid agencies, and others rely on a national repository of information with unique identifiers to receive Medicare paid claims data for the purpose of calculating their secondary payment. The COBA data exchange processes have been revised to include prescription drug coverage.

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) – This law added mandatory reporting requirements for Group Health Plan (GHP) arrangements and for liability insurance, including self-insurance, no-fault insurance, and workers' compensation. Insurers are legally required to provide information.

Other Data Exchanges - CMS has developed data exchanges for entities that have not coordinated benefits with Medicare before, including Pharmaceutical Benefit Managers (PBMs), State Pharmaceutical Assistance Programs (SPAPs), and other prescription drug payers. CMS has worked with these new partners to educate them about coordination needs, to inform CMS about how the prescription drug benefit world works today, and to develop data exchanges that allow all parties to efficiently serve our mutual customer, the beneficiary.

COB Entities

Benefits Coordination & Recovery Center (BCRC) - The BCRC consolidates the activities that support the collection, management, and reporting of other insurance coverage for beneficiaries. The BCRC takes actions to identify the health benefits available to a beneficiary and coordinates the payment process to prevent mistaken payment of Medicare benefits. The BCRC does not process claims, nor does it handle any GHP related mistaken payment recoveries or claims specific inquiries. The Medicare Administrative Contractors (MACs), Intermediaries and Carriers are responsible for processing claims submitted for primary or secondary payment.

The BCRC is responsible for the following activities:

• Initiating an investigation when it learns that a person has other insurance. The investigation determines whether Medicare or the other insurance has primary responsibility for meeting the beneficiary's health care costs.
• Collecting information on Employer Group Health Plans and non-group health plans (liability insurance (including self-insurance), no-fault insurance and workers’ compensation), and updating this information on Medicare databases every time a change is made to insurance coverage. Information comes from these sources:  beneficiary, doctor/provider of service, employer, GHP, liability, no-fault and workers’ compensation entity, and attorney.
• Establishing MSP occurrence records on CWF to keep Medicare from paying when another party should pay first. The CWF is a single data source for fiscal intermediaries and carriers to verify beneficiary eligibility and conduct prepayment review and approval of claims from a national perspective. It is the only place in the fee for service claims processing system where full individual beneficiary information is housed.
• Transmitting other health insurance data to the Medicare Beneficiary Database (MBD) for the proper coordination of Rx benefits.
• Recovery of Non-Group Health Plan (NGHP) related mistaken payments where the beneficiary must repay Medicare. Please see the Non-Group Health Plan Recovery page for additional information.

Once the BCRC has completed its initial MSP development activities, it will notify the Commercial Repayment Center (CRC) regarding GHP MSP occurrences and NGHP MSP occurrences where a liability insurer (including a self-insured entity), no-fault insurer or workers’ compensation entity is the identified debtor. The BCRC will maintain responsibility for NGHP MSP occurrences where Medicare is seeking reimbursement from the beneficiary.   

When to contact the BCRC:

• To report employment changes, or any other insurance coverage information.
• To report a liability, auto/no-fault, or workers’ compensation case.
• To ask a general MSP question.
• To ask a question regarding the MSP letters and questionnaires (i.e. Secondary Claim Development (SCD) questionnaire.) For more information, click the Reporting Other Health Insurance link.

Please see the Contacts page for the BCRC’s telephone numbers and mailing address information.

Commercial Repayment Center (CRC) – The CRC is responsible for all the functions and workloads related to GHP MSP recovery with the exception of provider, physician, or other supplier recovery. The CRC is responsible for identifying and recovering Medicare mistaken payments where a GHP has primary payment responsibility. Some of these responsibilities include: issuing a Primary Payment Notice (PPN) to verify MSP information, issuing recovery demand letters when mistaken primary payments are identified, receiving payments, resolving outstanding debts, and referring delinquent debt to the Department of Treasury for further collection actions, including the Treasury Offset Program, as appropriate. Please see the Group Health Plan Recovery page for additional information.

The CRC will also perform NGHP recovery where a liability insurer (including a self-insured entity), no-fault insurer or workers’ compensation entity is the identified debtor. Please see the Non-Group Health Plan Recovery page for additional information.

Medicare Administrative Contractors (MACs) – A/B MACs and Durable Medical Equipment Medicare Administrative Contractors (DME MACs) are responsible for processing Medicare Fee-For-Service claims submitted for primary or secondary payment. These entities help ensure that claims are paid correctly when Medicare is the secondary payer. They use information on the claim form, electronic or hardcopy, and in the CMS data systems to avoid making primary payments in error. Where CMS systems indicate that other insurance is primary to Medicare, Medicare will not pay the claim as a primary payer and will deny the claim and advise the provider of service to bill the proper party.