NRPM: Standards for Electronic Transactions. Standard: Coordination of Benefits (Subpart M)


[Please label any written comments or e-mailed comments about this section with the subject: COB]

a. Background

In an effort to provide better service to their customers, many health plans have made arrangements with each other to send claims electronically in the order of payment precedence, thus saving the customer the process of waiting for another health plan’s notice. Each health plan in the chain wishes to see the original claim as well as the details of its adjudication by prior health plans that dealt with it. We believe that there should be a coordination of benefits standard to facilitate the interchange of this information between health plans.

Adoption of a standard for electronic transmission of standard data elements among health plans for coordination of benefits and sequential processing of claims would serve these goals expressed by the Congress. Currently, the coordination of benefits for patients covered by multiple health plans is a burdensome chore. The COB transaction differs somewhat from the others because there are two models in existence for conducting it. The first model is provider-to-plan, where the provider submits the claim to the primary insurer, receives payment, and resubmits the claim (with the remittance advice from the primary insurer) to the secondary insurer. The second model is plan-to- plan, where the provider supplies the primary insurer with information needed for the primary insurer to then submit the claim directly to the secondary insurer. The choice of model has been made between the providers and plans. Where the first model is used, the primary insurer essentially has no role in the COB transaction. Put another way, in the first model there is no separate COB transaction. Instead, the COB function is accomplished by a health care provider submitting a series of individual claims. This succession of transactions from health care provider to primary health plan to health care provider to secondary health plan, which often involves the production, reproduction, and mailing of paper forms and multiple claim formats, is time consuming and administratively costly. In some instances, it becomes even more burdensome when the provider shifts responsibility for these administrative tasks to the patient. Health plans have been unwilling to take on the full responsibility for coordinating benefits because of the many different forms and formats used for these transactions.

Administrative simplification and electronic standards can simplify and smooth this onerous process. The four products of administrative simplification -- (1) the uniform standards for electronic claims submissions; (2) an electronic transmission standard for coordination of benefits; (3) a uniform national standard for the data elements necessary for coordination of benefits among health plans; and (4) uniform health plan and provider identification numbers to efficiently route electronic transactions -- would combine to remove the barriers that health plans currently face in carrying out transactions. These products would facilitate the process of the second model, direct health plan to health plan coordination of benefits. Once these standards are implemented, coordination of benefits could be completed without provider or patient intervention and at a lower cost to all parties than under current practice.

Primary insurers are not required to participate in COB transactions as described in the second model. If, however, a plan does conduct COB through the second model, then it would be required to use the standard format. Primary insurers may determine whether they wish to participate in COB transactions (i.e., use the second model) based on their normal business practices. Where primary insurers do perform COB (using the second model) they must conduct the transaction electronically as standard transactions.

The ASC X12N 837 Health Care Claim (refer to E.1. above) is designed to facilitate coordination of benefits. Each health plan responsible for the claim passes the claim on to the next health plan responsible for the claim. This transaction describes the original claim and how previous health plans adjudicated the claim. In October 1994, the ASC X12N Subcommittee modified the ASC X12N 837 Health Care Claim to fully support coordination of benefits.

i. Candidates for the Standard

a. Retail drug: NCPDP Telecommunications Standard Format version 3.2.

b. Dental claim: ASC X12N 837 - Health Care Claim: Dental, version 3070.

c. Professional claim: ASC X12N 837 - Health Care Claim: Professional, version 3070.

d. Institutional claim: ASC X12N 837 - Health Care Claim: Institutional, version 3070; and the Uniform Bill (UB-92) version 4.1.

ii. Recommended Standard

The standards for the coordination of benefits exchange we are proposing are:

a. Retail drug: NCPDP Telecommunications Standard Format version 3.2 and the equivalent NCPDP Batch Standard Version 1.0.

b. Dental claim: ASC X12N 837 - Health Care Claim: Dental (004010X097)

c. Professional claim: ASC X12N 837 - Health Care Claim: Professional (004010X098)

d. Institutional claim: ASC X12N 837 - Health Care Claim: Institutional (004010X096)

Since all recommended transactions for claims or equivalent encounters and the remittance advice are ASC X12N, with the exception of the NCPDP, it was determined that this transaction was the best candidate for national implementation, as it will increase the synergistic effect of the other ASC X12N standards.

All health plans who perform COB, using the second model described above, would have to send and receive these standards for coordination of benefits. The data elements added to explain the prior payments on the claim are shown in the implementation guide, data conditions, and data dictionary. This transaction accommodates coordination of benefits through the tertiary health plan. The NCPDP telecommunication claim version 3.2 is interactive. The three X12 standards are designed for use only in batch mode.

HHS chose these standards primarily because of advice received from industry members.

Data elements for the various standards and other information may be found in Addendum 3.

b. Requirements

In § 142.1302, we would specify the following as the standards for coordination of benefits: the NCPDP Telecommunications Standard Format Version 3.2 and equivalent NCPDP Batch Standard Version 1.0; the ASC X12N 837 - Health Care Claim: Dental (004010X097); the ASC X12N 837 - Health Care Claim: Professional (004010X098); and the ASC X12N 837 - Health Care Claim - Institutional (004010X096). We would specify where to find the implementation guide and incorporate it by reference.

i. Health plans.

In § 142.1304, Requirements: Health plans, we would require health plans who perform COB to use only the standards specified in § 142.1302 for electronic coordination of benefits transactions.

ii. Health care clearinghouses.

We would require in § 142.1306 that each health care clearinghouse use the standards specified in § 142.1302 for coordination of benefits.

c. Implementation Guide and Source

The source of implementation guides for the NCPDP telecommunication claim version 3.2 and equivalent Standard Claims Billing Tape Format is the National Council for Prescription Drug Programs, 4201 North 24th Street, Suite 365, Phoenix, AZ, 85016; Telephone 602-957-9105, FAX 602-955-0749. The web site address is: NCPDP standards are available to the public on a 3½" diskette. A set is defined as containing the Telecommunications Standard, Standard Claims Billing Tape Format, Eligibility Verification and Response, and Enrollment. Membership in the NCPDP is not a requirement for obtaining the standards and associated implementation guides. The website contains information and instructions for obtaining these formats.

The implementation guides for the three ASC X12N health care claim standard implementations are available at no cost from the Washington Publishing Company site at the following Internet address: The data definitions and description of data conditions may also be obtained from this website.

Users without access to the Internet may purchase implementation guides from Washington Publishing Company directly. Washington Publishing Company, 806 W. Diamond Ave., Suite 400, Gaithersburg, MD, 20878; Telephone 301-590-9337; FAX: 301-869- 9460.

The names of the implementation guides are:

ASC X12N 837 - Health Care Claim: Professional (004010X098)

ASC X12N 837 - Health Care Claim: Institutional (004010X096)

ASC X12N 837 - Health Care Claim: Dental (004010X097)