How to Reduce Administrative Costs for Coordination of Benefits

Aug 21, 2018

Make Your Processes More Efficient for COB Cost Savings

It has been estimated that the administrative costs for coordinating benefits is $800 million. Let that sink in for a second – $800 million is a lot of money to spend on a process that can be improved. Other sources say that these administrative COB costs amount to about 12% of a health plan’s total spend, even for MCOs. (Despite reports to the contrary, experts estimate these costs to be the same for public and private payers.)

Coordination of benefits (COB): A process that payers use to determine which benefits should be applied when an enrollee has coverage from multiple payers.

Where managed care organizations (MCOs) are concerned, reducing the administrative burden can seem a little more complex. This article will specifically look at areas where administrative benefit coordination costs can be reduced for MCOs. ClarisHealth can significantly reduce or even eliminate the administrative expense associated with COB while significantly improving member coordination.

Medicare MCOs and Private Payers: Are COB Costs Any Different

On average, health plans have reported that the administrative costs surrounding coordination of benefits equal about 12% of plan premiums. According to Medicare, public payer costs in this area are much lower – around 3%. However, a 2018 AHIP infographic indicates that Medicare administrative costs are much higher, around 13%. We can reasonably assume that Medicaid MCOs and private health plans are paying about the same in administrative costs.

Reducing the costs associated with coordination of benefits often means reducing administrative inefficiencies. The burden of cumbersome, manual admin processes lead MCOs to miss timely provider payments, tightening their provider network and placing an unnecessary burden on patients and providers.

How Medicare (and Medicaid) MCOs Can Reduce Administrative Costs in COB

At ClarisHealth, our work with managed care organizations has given us insight into how coordination of benefits costs can be reduced. Streamlining your COB costs essentially means improving efficiencies in your administrative processes.

Here are 5 ways to accomplish that goal:

1. Think Big Picture

Accessing accurate information in a timely manner is essential to improving efficiency. Big data process digitization is something we’ve discussed in the past, as we encourage health plans to look for better ways to manage their data. Within this wheelhouse is eliminating data silos, or data that cannot be accessed outside of departments or even individuals.


2. Streamline

Adopting standardized processes will make your managed care organization more efficient, but it may also assist you in audits. Failure of MCOs to be able to provide the data needed to comply with audits led one politician to say, “This goes beyond negligence, beyond incompetence. To me this almost borders on the criminal when you look at the failure to keep track of administrative costs.”

A good area for MCOs to look at when streamlining are internal utilization management programs. These programs may have been tweaked to fit in with legacy processes but now’s the time to revisit UM requirements to eliminate administrative waste.


3. Go Paperless

Your managed care organization can reduce administrative costs by transitioning from paper to electronic documents. Technology platforms like Pareo, which offer a digitized claims process, can be extremely useful in eliminating paper processes in MCOs.

It has been estimated that health plans would save $47 billion by utilizing digital processes like predictive modeling (which pre-score claims for coordination of benefits). The focus of this suggestion is to not only eliminate paper but to accept the strategy behind that, which is one of focusing on accessible electronic records and documents (rather than having administrative staff manually look for these items).


4. Automate Tasks

Yet another way that MCOs can realize cost savings for coordination of benefits is by automating tasks that technology can easily replace. This often includes transactional activities like claims processing. Many health plans are already automating some of the tasks in their claims workflow, so with a little training and the right technology they can increase usage.

It’s worth mentioning that in some ways, effective automation will depend on standardization of plans to decrease benefit exceptions. So as your MCO looks to reduce administrative costs related to coordination of benefits, consider a long-term strategy to mitigate the clog that complex plans create.


5. Outsource to Experts

Medicare coordination of benefits processes can actually be outsourced completely to companies like ClarisHealth, a move that can really save your MCO money according to this article. While we primarily see small plans outsource coordination of benefits, even larger plans can realize cost savings in this model. ClarisHealth, for example, has formed several “hybrid” models of managing outsourced cost of benefits solutions, some of which include insourced and outsourced co-working arrangements.

If you are looking for more guidance on how your managed care organization can reduce the administrative costs of coordination of benefits, contact ClarisHealth today for a free proof of concept meeting.

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