Coordination of Benefits (COB) is used to establish the order in which a health insurance plan pays claims when an individual has more than one insurance carrier. When a patient is covered by more than one health insurance policy—say, through their employer and also through a spouse, COB ensures the total payments from all insurers don’t exceed the cost of the healthcare service provided.
The primary goal is to avoid overpayment and duplicate reimbursement and to ensure the financial responsibility is properly handled between the payers involved. The process determines which plan is primary (pays first), which plan is secondary (pays after the primary plan), and whether any tertiary coverage is needed.
Why COB Matters to Health Payers
At first glance, COB might seem like a purely administrative detail. But for health plans, it has wide-reaching implications:
1. Cost Containment
One of the most direct and critical reasons payers care about COB is financial support. When COB is handled incorrectly, a payer may pay a claim in full—even if another insurer should have paid first or split the cost. This creates an unnecessary financial burden.
By correctly identifying when another payer has primary responsibility, a plan can ensure it only pays what it truly owes. In today’s healthcare economy, where high-cost claims are increasingly common, even minor COB errors can lead to significant losses over time.
2. Compliance with Regulations
COB is mandated by federal or state regulations. For example, there are strict COB rules when Medicare is the secondary payer. Or, for another example, Medicaid is always the payer of last resort. Commercial payers also must adhere to coordination rules outlined in plan documents, ERISA regulations, and state insurance laws.
Failing to properly coordinate benefits can result in audits, penalties, and reputational damage. For example, submitting claims to Medicare as the primary payer when a commercial plan should pay first can violate Medicare Secondary Payer (MSP) rules. Compliance is not only a risk mitigation strategy—it’s a legal requirement.
3. Improved Member Experience
Imagine a member receiving a surprise bill months after a claim has been processed incorrectly due to a failure to properly coordinate benefits. These situations can erode member trust, leading to negative experiences that impact retention.
In many instances, these efforts can significantly reduce out-of-pocket expenses for your members. The secondary plan is responsible for co-insurance and deductibles paid by the member prior to discovery of overlapping coverage. For payers aiming to improve member satisfaction and Net Promoter Scores (NPS), efficient COB processes are key.
4. Operational Efficiency
Speaking of efficiency, without effective COB processes, a payer’s claims and customer service teams may be overwhelmed by manual interventions. Claims are delayed, reprocessed, or denied unnecessarily, increasing administrative burden.
Operational inefficiencies are magnified when members switch coverage frequently—something that happens often due to life events like marriage, divorce, job changes, or aging into Medicare. COB-related issues also drive high call volumes to customer service centers and often require costly outreach to other payers or providers to clarify responsibility.
A streamlined COB process that includes real-time eligibility verification, automated payer hierarchy logic, and intelligent exception handling reduces administrative costs and helps payers scale operations more efficiently.
5. Prevention of Fraud, Waste, and Abuse (FWA)
Improper COB creates opportunities for fraud, waste, and abuse. For example, a provider may unknowingly (or, maybe in some cases, knowingly) submit the same claim to multiple insurers, resulting in more than one payment for the same treatment. Or a member may intentionally withhold information about other coverage to avoid cost-sharing obligations.
Robust COB procedures can detect patterns of abuse, flag duplicate claims, and provide audit trails that help plans recover overpayments or prevent them altogether.
6. Data Quality and Timeliness
One of the biggest challenges in COB is maintaining accurate, up-to-date data. Members often forget to report new coverage, employers may lag in updating enrollment records, and data sharing between payers is inconsistent.
From a payer’s point of view, this leads to a game of catch-up—chasing down other insurers, trying to retroactively identify the correct order of coverage, and manually correcting records. Timeliness matters. The longer a COB issue goes unresolved, the harder and more expensive it is to fix.
Improved data intake, proactive outreach, and AI-powered tools can help close this gap.
How Machinify Can Help with COB Efforts
Machinify’s AI platform helps payers reimagine their COB operations by shifting from reactive, manual processes to proactive, automated intelligence. Using machine learning and advanced claims analytics, Machinify identifies when other coverage is likely—even when it’s not explicitly reported—enabling payers to resolve COB issues upstream before a claim is paid incorrectly.
Key capabilities of our COB solution include:
- Real-time detection of coverage overlap signals across large data sets
- Pre-claim and pre-pay solutions with post-pay recovery support
- Predictive modeling to flag members with unreported coverage
- Workflows that streamline verification and validation of other coverage
- Human-in-the-loop exception handling to ensure accuracy and quality outcomes
- Transparent audit trails for compliance and recovery support
We offer three customizable COB solutions options:
- Pre-Claim COB: Identifies primary coverage prior to the presence of a claim
- Pre-Pay COB: Claims are reviewed prior to payment for other coverage
- Post-Pay COB: Identifies primary coverage after claim payment, supported by an expert recovery team.
Health plans using Machinify can reduce overpayments, improve payment accuracy, and lower administrative costs. The result? A smoother experience for members and providers while staying compliant with regulations.
In short: better COB, powered by smarter AI.
COB isn’t just clerical—it’s strategic. And with Machinify, it’s finally intelligent. Contact us to learn more.
