Introduction
In this document, we will delve into the complex world of primary and secondary insurance billing. Navigating insurance billing can be tricky, especially when patients have multiple insurance providers. Understanding how primary and secondary insurance process and pay claims is essential in ensuring accurate billing and maximizing reimbursements. We will use a simplified example to illustrate the basic process, keeping in mind that real-world scenarios can be much more complex due to the variety of insurance plans and coverage details.
Important Points to Remember
Privacy: Due to privacy concerns, she cannot use real-world examples of Explanation of Benefits (EOBs) from primary and secondary payers. Instead, she uses a simplified example to explain the basic process.
Complexity: There are many different scenarios and insurance plans, so the example presented is a basic one. However, it provides a foundation for understanding more complex situations.
The Example
The example involves a patient with Blue Cross Blue Shield as their primary insurance and Aetna as their secondary insurance. Here's a breakdown of their plans:
Blue Cross Blue Shield:
$1,000 annual deductible
80/20 coinsurance
$30 copay
Aetna:
$50 deductible
80/20 coinsurance
No copay
The patient has not met any deductibles for either plan yet. They visit a provider who bills $180 for a level three established patient visit (99213) and $20 for a blood draw (36415).
Processing the Claim with the Primary Insurance
The claim is first sent to Blue Cross Blue Shield. Here's how they process it:
Adjustment: They apply a $60 discount to the 99213 charge, leaving a balance of $120.
Allowed Amount: Since the patient has not met their deductible, Blue Cross Blue Shield pays nothing for this visit, and the patient is responsible for the entire allowed amount of $120.
Deductible and Copay: The $120 is further broken down into:
$105 deductible (patient responsibility)
$15 copay (patient responsibility)
Explanation of Benefits (EOB) from the Primary Insurance
The EOB from Blue Cross Blue Shield would show the following:
99213:
Charge: $180
Adjustment: -$60
Allowed Amount: $120
Patient Responsibility: $120 (due to deductible and copay)
36415:
Charge: $20
Adjustment: -$15
Allowed Amount: $5
Patient Responsibility: $5 (due to deductible)
Forwarding the Claim to the Secondary Insurance
Since the patient has a secondary insurance, the claim is then sent to Aetna. This process is called coordination of benefits: the primary payer processes the claim first, and the secondary decides what it will pay toward the patient responsibility left over, which here is $125 ($120 + $5). The claim should include the primary’s payment and adjustment details, either electronically on the claim or with the EOB attached on paper, so Aetna can see how the primary processed it.
Explanation of the EOB
Aetna will send you an EOB (Explanation of Benefits), which is a breakdown of how they processed the claim. The EOB shows the 99213 code, billed at $180. Aetna’s allowed amount for this code is $90.
Patient Responsibility
The patient has a $50 deductible, so they are responsible for the first $50 of the allowed amount. The remaining $40 is then split 80/20 between Aetna and the patient. Aetna pays $32, and the patient is responsible for $8.
Venipuncture
The patient has already met their deductible, so they are only responsible for 20% of the allowed amount for the venipuncture, which is $3. This means that the patient is responsible for $0.60.
Key Points
The patient's responsibility is typically shown as coinsurance and deductible on the EOB.
If the patient has Medicare as their primary insurance and Medicaid as their secondary insurance, Medicaid will usually not pay anything because Medicare's reimbursement rates are higher than Medicaid's.
You cannot balance bill patients after Medicaid processes as a secondary insurance.
EOBs are not standardized, but they will all have the same basic information. Be sure to read the remark codes to understand what they mean.
Coordination of benefits becomes a recurring cost when a patient is seen many times in a short span. Wound care patients are often Medicare beneficiaries with a supplement or a Medicaid secondary, and because the episode runs weekly, a coordination error established on the first claim repeats on every subsequent one until someone catches it. Supplies and skin substitute products add a second layer, since secondary payers vary in whether they cover the patient responsibility on those lines at all. Confirming the order of benefits and the secondary’s product coverage at the start of the episode saves a round of corrected claims later, which is why a wound care billing company verifies it before the second visit rather than at month-end.
