What is "coordination of benefits"?

Coordination of benefits refers specifically to the method used to determine the order in which multiple insurance policies will pay for a particular healthcare expense. When a person has more than one health insurance plan, coordination of benefits ensures that claims are paid appropriately and that there is no overlapping coverage that leads to excess payments or duplication of benefits.

This process is crucial for minimizing out-of-pocket expenses for the insured while preventing insurance companies from overpaying. It typically involves rules that define which plan is primary (the one that pays first) and which is secondary (the one that pays the balance after the primary plan has paid). This systematic approach helps streamline claims processing and ensures that healthcare providers are reimbursed accurately for the services rendered.

Other options, while relevant to healthcare and insurance, do not accurately define coordination of benefits. For instance, managing chronic diseases is a separate aspect of healthcare that involves treatment and care strategies rather than payment coordination. Reconciling discrepancies in billing pertains to addressing errors in charges and payments, which is distinct from how insurance benefits are coordinated. Monitoring insurance fraud activities involves investigating fraudulent claims but does not relate directly to determining payment order among insurance policies.