Coordination of Benefits — Benefit Reserve for Secondary Plans
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Governance of how secondary health benefit plans compute and use a benefit reserve to ensure total payments across plans do not exceed allowable expenses; applies to health insurance plans subject to Louisiana Administrative Code regulation on coordination of benefits.
No material clinical or coverage changes in this revision.
Benefit Reserve — Calculation & Application
Benefit Reserve Calculation and Application
Procedure secondary plans must follow to compute savings and apply benefit reserve:
ALL of the following
- Determine how much the secondary plan would have paid if it had been the primary plan.
- Subtract the amount the secondary plan actually paid on the claim from the amount it would have paid as primary to calculate the savings for that claim.
- Place the difference (savings) into the covered person's benefit reserve account.
ALL of the following
- Use the accumulated savings to pay outstanding allowable expenses from earlier claims to the extent savings are available (example: use savings from a later 100% payable claim to pay a prior deductible balance).
- Respect relative value schedule (RVS) limits when determining allowable amounts; the insured may be liable for any difference between the actual charge and the highest RVS amount, and savings are based on the difference between what the secondary plan would have paid as primary and what it actually paid (see RVS example).
Coding & Administrative Parameters
| No codes listed |
Provider / Plan Operational Requirements
Benefit Reserve Establishment and Use — establish account and apply savings
Secondary plans must establish and maintain a benefit reserve account for each covered person and apply savings from paying less than primary liability to that account to cover other allowable expenses within the claim determination period. The plan must (1) determine what it would have paid if it had been primary for each claim, (2) subtract that amount from what it actually paid, (3) place the difference (savings) into the covered person's benefit reserve account, and (4) apply savings from the benefit reserve to pay allowable expenses on subsequent claims (including amounts previously applied to either plan's deductible, coinsurance or copayment) during the claim determination period (a period of not less than 12 months).
- Determine, for each claim, how much the secondary plan would have paid if it had been the primary plan.
- Subtract that amount from what the secondary plan actually paid; place the difference into the covered person’s benefit reserve account.
- Use savings in the benefit reserve to pay allowable expenses on subsequent claims during the claim determination period, including claims previously applied to either plan’s deductible, coinsurance, or copayment.
- Claim determination period is a period of time not less than 12 months (usually a calendar or contract year).
Key Terms
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