Coordination of benefits reduces double payments

As a means of reducing the cost of duplicate health care coverage, the health insurance industry utilizes a mechanism called coordination of benefits (COB). The main purposes of COB are to limit recovery to 100 percent of actual charges and to assign insurers primary and secondary responsibilities to pay these charges. Nearly all health plans, including HMOs, Blue Cross/Blue Shield plans, and commercial insurers, coordinate benefits, mostly for group coverage, often on the basis of procedures found in state insurance codes. While COB provides an effective cost reduction mechanism to health insurers, several issues remain in its administration, including difficulties that arise when carriers refuse to pay, when HMO members self-refer, and when coordination is attempted with an uninsured plan.