Understanding Primary & Secondary Insurance Billing

Introduction

In this document, we will delve into the complex world of primary and secondary insurance billing. Navigating insurance billing can be tricky, especially when patients have multiple insurance providers. Understanding how primary and secondary insurances process and pay claims is essential in ensuring accurate billing and maximizing reimbursements. We will use a simplified example to illustrate the basic process, keeping in mind that real-world scenarios can be much more complex due to the variety of insurance plans and coverage details.

Important Points to Remember

1. Privacy: Due to privacy concerns, she cannot use real-world examples of Explanation of Benefits (EOBs) from primary and secondary payers. Instead, she uses a simplified example to explain the basic process.
2. Complexity: There are many different scenarios and insurance plans, so the example presented is a basic one. However, it provides a foundation for understanding more complex situations.

The Example

The example involves a patient with Blue Cross Blue Shield as their primary insurance and Aetna as their secondary insurance. Here's a breakdown of their plans:

• Blue Cross Blue Shield:
• $1,000 annual deductible
• 80/20 coinsurance
• $30 copay
• Aetna:
• $50 deductible
• 80/20 coinsurance
• No copay

The patient has not met any deductibles for either plan yet. They visit a provider who bills $180 for a level three established patient visit (99213) and $20 for blood draw (36415).

Processing the Claim with the Primary Insurance

The claim is first sent to Blue Cross Blue Shield. Here's how they process it:

1. Adjustment: They apply a $60 discount to the 99213 charge, leaving a balance of $120.
2. Allowed Amount: Since the patient has not met their deductible, they are responsible for the entire allowed amount of $120 (80% of $120 is covered by insurance, but the patient hasn't met their deductible yet).
3. Deductible and Copay: The $120 is further broken down into:

• $105 deductible (patient responsibility)
• $15 copay (patient responsibility)

Explanation of Benefits (EOB) from the Primary Insurance

The EOB from Blue Cross Blue Shield would show the following:

• 99213:
• Charge: $180
• Adjustment: -$60
• Allowed Amount: $120
• Patient Responsibility: $120 (due to deductible and copay)
• 36415:
• Charge: $20
• Adjustment: -$15
• Allowed Amount: $5
• Patient Responsibility: $5 (due to deductible)

Forwarding the Claim to the Secondary Insurance

Since the patient has a secondary insurance, the remaining balance of $125 ($120 + $5) needs to be submitted to Aetna. The claim should include the EOB from the primary insurance so Aetna can see how the primary processed it.

Explanation of the EOB

Aetna will send you an EOB (Explanation of Benefits), which is a breakdown of how they processed the claim. EOB for a 99213 code, which was billed at $120. Aetna's allowed amount for this code is $90.

Patient Responsibility

The patient has a $50 deductible, so they are responsible for the first $50 of the allowed amount. The remaining $40 is then split 80/20 between the patient and the insurance company. This means that the patient is responsible for $32 of the remaining balance.

Venipuncture

The patient has already met their deductible, so they are only responsible for 20% of the allowed amount for the venipuncture, which is $3. This means that the patient is responsible for $0.60.

Key Points

• The patient's responsibility is typically shown as co-insurance and deductible on the EOB.
• If the patient has Medicare as their primary insurance and Medicaid as their secondary insurance, Medicaid will usually not pay anything because Medicare's reimbursement rates are higher than Medicaid's.
• You cannot balance bill patients after Medicaid processes as a secondary insurance.
• EOBs are not standardized, but they will all have the same basic information. Be sure to read the remark codes to understand what they mean.