Health Care Reform and Coordination of Benefits

The current discussion of expanding health care options through federal legislation deals primarily with big issues - like how to pay for the new coverage and how proposed reforms would change the current medical care system. One of the smaller questions not showing up on many radar screens is how health care reform would impact coordination of benefits issues.

The current method of paying for health care in the U.S. is comprised of many different medical coverage "silos". Any given individual- depending on the nature of the disease or injury and how it arose- may be entitled to have medical treatment paid for by any one of many different plans that provide for payment of medical expenses: group health, workers' compensation, automobile no-fault, homeowner's, liability and a government-sponsored plan like Medicare or Medicaid.

When Uncle Larry was hurt in a motor vehicle collision while making a delivery for his employer, the hospital that treated his broken arm could have conceivably billed Larry or Larry's employers' workers' compensation insurance carrier or Larry's group health insurer or Larry's auto no-fault insurance carrier or Medicare. Traditionally, those potential payers have operated within separate silos, with little or no sharing of information between them about who had coverage for Larry and about the circumstances of Larry's arm getting broken. Any one of those health coverage plans could have ended up being billed for and paying the hospital charges.

Under the existing Medicare Secondary Payer statute Medicare is not obligated to pay Larry's hospital bill and would only be responsible for payment if none of the other coverages was in force. Any workers' compensation, liability, no fault and group health plan or policy in effect for Larry must pay before Medicare is obligated to pay.

Currently, systems are in place for Medicare to discover what other health care coverages are in effect for its beneficiaries, to find out what payments other health coverages have made on behalf of its beneficiaries and to recover reimbursement for Medicare payments made when a primary coverage is in effect. The Centers for Medicare and Medicaid Services, the federal agency tasked with administering the Medicare program, has a rather robust system in place for enforcing the secondary payer rules and minimizing the number of cases in which Medicare pays for treatment that another payer is obligated to pay.

Medicaid, on the other hand, is administered by state agencies. Due in part to very low-income-eligibility standards, the typical Medicaid beneficiary would not have other, private medical payment coverages in force. Accordingly, there is no single, effective process in place to coordinate benefits between Medicaid and any other medical treatment payers available to a Medicaid beneficiary.

The health care reform proposals now being debated in Congress would -in very basic terms- expand health care coverage in four ways:

increasing the number of people who qualify for Medicare (e.g. dropping eligibility age from 65 to 55)
increasing the number of people who would qualify for Medicaid (e.g. increasing maximum income levels to 150% of the federal poverty level)
easing qualification requirements for existing private insurance policies, and
creating a new publicly-administered health insurance plan.

Clearly, enactment of legislation expanding the number of people covered by health insurance will increase the incidence of overlapping or duplicative coverage. That will increase opportunities for payment of medical expenses by the wrong payer. That will increase the need for effective information sharing among the payer silos and enforcement of payment priorities.

One aspect of the health care reform movement that will be particularly helpful in the coordination of benefits is expansion of electronic data exchange between the health care payers. If the hospital that treated Uncle Larry's broken arm was able to put Larry's social security number and a few other key data elements into a web-based database accessed and fed by all potential health expense payers, it could be a pretty simple process to determine who the bill should be sent to, avoid payment by the wrong payer and find opportunities for reimbursement when payment is made by the wrong party.

Federal law (42 USC 1320d-2) already requires CMS to develop a system for electronic data exchange of health information for the purpose of improving the operation and reducing the costs of the health care system. The principle health care reform bill pending in Congress - H.R. 3200- covers over 1,000 pages of text. One sentence of that bill deals with coordination of benefits:

"Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall promulgate a final rule to establish a standard for health claims attachment transaction described in section 1173(a)(2)(B) of the Social Security Act (42 U.S.C. 1320d-2(a)(2)(B)) and coordination of benefits."

Bingo.

Get everybody on the same (web) page, and make sure that includes Medicaid (since expanding eligibility for Medicaid will increase opportunities for duplicative coverage and need for coordination.)

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