EZ 2000 Manual - Coordination of Benefits (COB)

Coordination of Benefits (COB) 

Coordination of benefits are the rules for how insurance pays when a patient has coverage under more than one plan.  You can setup defaults in Family Module Setup.  There are many different ways to calculate COB, made even more complicated by various State laws.  Sometimes, non-duplication means that the plan will never pay anything when they are in the secondary position.  So far, EZ has the following different COB options.

Basic (prior to Version 2.0, this was the only option)
Secondary pays the lesser of:
1. The amount that it would have paid in the absence of any other coverage.
2. The secondary allowed amount minus what primary paid.

For example, on a $100 procedure, primary might pay $80 (80% of its allowed fee).
If the secondary allowed amount was $110, secondary would pay the lesser of $88 or ($110 - $80), so $30.
If the secondary allowed amount was $90, secondary would pay the lesser of $72 or ($90 - $80), so $10.
As a second example, on a $100 procedure, primary might pay $50 (50% of its allowed fee).
If the secondary allowed amount was $110, secondary would pay the lesser of $55 or ($110 - $50), so $55.
If the secondary allowed amount was $90, secondary would pay the lesser of $45 or ($90 - $50), so $40.

Standard
Secondary pays the lesser of:
1. The amount that it would have paid in the absence of any other coverage.
2. The patient's portion under the primary plan. 

For example, on a $100 procedure, primary might pay $80 (80% of its allowed fee).
If the secondary allowed amount was $110, secondary would pay the lesser of $88 or $20, so $20. 
If the secondary allowed amount was $90, secondary would pay the lesser of $72 or $20, so $20.
As a second example, on a $100 procedure, primary might pay $50 (50% of its allowed fee).
If the secondary allowed amount was $110, secondary would pay the lesser of $55 or $50, so $50.
If the secondary allowed amount was $90, secondary would pay the lesser of $45 or $50, so $45.

Carve Out (Non-Duplication)
Secondary reduces what they will pay by what primary paid. 

For example, on a $100 procedure, primary might pay $80 (80% of its allowed fee).
If secondary allowed amount was $110, secondary would pay $88 - $80 = $8.
If secondary allowed amount was $90, secondary would pay $72 - $80 = $0.
As a second example, on a $100 procedure, primary might pay $50 (50% of its allowed fee).
If secondary allowed amount was $110, secondary would pay $55 - $50 = $5.
If secondary allowed amount was $90, secondary would pay $45 - $50 = $0.

Secondary PPO Writeoffs
In Unit Test #1, the question comes up about why there is no secondary writeoff of $250. According to the Coordination of Benefits Model Regulation written by the NAIC, in Section 3 Paragraph A.5.(c) it states: “If a person is covered by two (2) or more plans that provide benefits or services on the basis of negotiated fees, any amount in excess of the highest of the negotiated fees is not an allowable expense.”   We interpret this to mean that the dentist must write off the amount in excess of the highest negotiated fee, but no more than that.