It’s well-known that the Medicaid program plays an essential role in providing a safety net for millions of low-income Americans.
However, one often-overlooked aspect of Medicaid, which accounted for $824 billion in spending in 2022, is critical to ensuring the sustainability and effectiveness of the program: coordination of benefits (COB). Within the context of Medicaid, coordination of benefits refers to the management of the sources of funding that are used to cover Medicare beneficiaries’ healthcare costs.
When conducted properly, the COB process ensures Medicare funding sources – which may include Medicaid itself, Medicare (for dual-eligible individuals), private insurance, or numerous other public assistance programs – are utilized efficiently, accurately, and appropriately. COB ensures that patients receive the level of benefits that they are entitled to, and, alternatively, that patients do not receive double or excessive benefits for the same services, which can be a particular concern for dual-eligibles.
The Medicaid program utilizes a unique financing structure, in which financial responsibility is shared between the federal government, providing about 69% of the program’s funding, and states, which contribute around 31%. Although this approach adds to the program’s financial complexity, it offers benefits by enabling states to adjust their Medicaid programming to meet the needs of their own local populations and allowing for federal financial oversight.
Why coordination of benefits is essential to Medicaid
The following six major benefits illustrate the value that accurate, timely COB confers to the Medicaid program and its patients:
- Optimizing financial resources: Because Medicaid operates on a tight budget, it is important that the program strives to use every dollar efficiently. COB enables the program to leverage other, outside sources of funding, minimizing the financial burden on Medicaid itself and optimizing its budget.
- Reducing overutilization: Absent proper COB, Medicaid patients may – whether unwittingly or not – use multiple sources of insurance to obtain the same medical treatments, driving up health costs and creating overutilization of services. In this respect, COB helps the federal government and states maintain fiscal responsibility within Medicaid.
- Distributing resources equitably: To uphold equity within the Medicaid program, administrators must maintain the balance of ensuring patients receive the proper level of coverage while not receiving more benefits than they are entitled to. When resources are distributed equitably, beneficiaries obtain the care they need without putting undue financial strain on the program.
- Lessening fraud and abuse: When COB processes are inefficient and convoluted, this vulnerability may open the door to fraud and resource misallocation if unethical individuals exploit the lack of coordination to obtain double benefits. COB provides a safeguard against these illegal activities by detecting patterns and anomalies that may indicate fraud.
- Enhancing program sustainability: Given tight budgets and limited capacity, Medicaid’s sustainability is dependent on the efficient allocation and use of the program’s resources. Effective COB preserves the program’s sustainability so that it can continue to deliver the essential safety-net care that beneficiaries need.
- Safeguarding access to care: COB enhances access to healthcare by ensuring that beneficiaries receive the most appropriate and comprehensive healthcare coverage that they are entitled to under Medicaid. This is a particularly important consideration for comorbid patients with complex healthcare needs who rely on multiple sources of coverage.
How recovery liability programs improve COB
Many leading Medicaid programs have adopted recovery liability solutions to improve COB, empowering administrators to safeguard program resources with precision and speed. Recovery liability platforms help Medicaid organizations to:
- Swiftly uncover and access third-party payment resources, maximizing savings for states
- Ensure that claims are paid only after exhausting all available third-party liabilities, ultimately saving Medicaid funds
- Condense complex information into easily digestible formats, enabling informed decision-making
- Automate the approval of transactions that meet risk threshold criteria, reducing manual workloads
- Detect potential concerns rapidly, prompting further analysis when necessary
- Enhance operational efficiency by providing a consistent process and delivering dependable results
To summarize, coordination of benefits is a critical function of Medicaid, enabling administrators to efficiently allocate resources, prevent overutilization, promote equity, reduce fraud, drive program sustainability, and broaden access to care for vulnerable populations. Coordination of benefits may not be a top-of-mind issue for most, but its influence on Medicaid’s success future is indisputable.
Gerald A. Maccioli
Gerald A. Maccioli is a critical care anesthesiologist with 36 years of clinical practice and senior leadership roles in various medical organizations. He has a fellowship from Duke University, a residency from UNC Chapel Hill, an MBA from Auburn University, and over 50 publications on diverse topics in his field. He is currently the Chief Medical Officer for HHS Technology Group, a software and solutions company serving the needs of commercial enterprises and government agencies, after serving as the Chief Quality Officer for Envision Healthcare.
