Coordination of Benefits HIPAA Basics

Coordination of BenefitsCoordination of Benefits requirements and basic procedure descriptions subject to the rules of the X12 837 HIPAA Technical Reports Type 3 (TR3s) as the national standard for provider electronic submission of health care claims to payers such as Medicare. It also contains the requirements for electronic transfer of claims from Medicare to another payer – coordination of benefits (COB).
It happens that two health insurance plans work together to pay claims for the same person. That process is called coordination of benefits. Coordination of benefits (COB) is used to:
  • Avoid duplicate payments by making sure the two plans don’t pay more than the total amount of the claim
  • Establish which plan is primary and which plan is secondary—the plan that pays first and the plan that pays any remaining balance after your share of the costs is deducted
  • Help reduce the cost of insurance premiums

Through the Coordination of Benefits Contractor (COBC), Medicare transmits outbound ASC X12 837 claim Coordination of Benefit (COB) and Medigap claims to COB trading partners and Medigap plans, collectively termed “trading partners,” on a postadjudicative basis. This type of transaction, originating at individual Medicare contractors following their claims adjudication activities, includes incoming claim data, as modified during adjudication if applicable, as well as payment data.

All Medicare contractors are required to accept all ASC X12 837 claim segments and data elements permitted by the in- force applicable guides on an initial ASC X12 837 claim professional or institutional claim from a provider, but they are not required to use every segment or data element for Medicare adjudication.

Segments and data elements determined to be extraneous for Medicare claims adjudication shall, however, be retained by the Medicare contractor within its store-and-forward repository (SFR). Incoming claims data shall be subjected to standard syntax and applicable TR3 edits prior to being deposited in the SFR to assure non-compliant data will not be forwarded on to another payer as part of the Medicare crossover process. SFR data shall be re-associated with those data elements used in Medicare claim adjudication, as well as with payment data, to create an ASC X12 837 claim IG-compliant outbound COB/Medigap transaction. The shared systems shall always retain the data in the SFR for a minimum of 6 months.


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