How Medicaid Works with other Health Coverage

According to CMS data, more than 72 million Americans rely on Medicaid and the Children’s Health Insurance Program (CHIP) for health insurance, making Medicaid the largest source of health coverage in the nation. Since the Affordable Care Act of 2010 gave states the option to expand Medicaid to nearly all low-income Americans, Medicaid enrollment has surged, with Washington, D.C., and 36 states opting to expand coverage to date.

While the extent of coverage varies by state, the list of benefits required by federal law make Medicaid coverage quite comprehensive. There are, however, instances in which an individual might have Medicaid in addition to one or more third-party payers. These include, but are not limited to:

• Other government-subsidized coverage. An individual is entitled to additional benefits under Medicare, CHIP or another public health insurance program.
   
• Commercial health coverage. An individual might be enrolled in an employer-issued or private health plan while also qualifying for Medicaid.
   
• Managed care contracts. The state agency has contracted a managed care organization (MCO) to coordinate patient care.

Medicaid Third-Party Liability

In cases where dual or multiple coverage exists, coordination of benefits (COB) determines which payer has primary responsibility for paying a claim before Medicaid. Because Medicaid is almost always the payer of last resort, COB is especially important when it comes to uncovering liable third-party payers, as it ensures proper reimbursement rates for providers and access to the full scope of coverage for patients.

While many healthcare organizations have replaced outdated methods like mail-out COB requests with more proactive and data-driven approaches, patient reporting and administrative errors remain inherent — and expensive — flaws. Patients who have multiple coverage sources but declare Medicaid as their primary payer are inadvertently setting in motion a sequence of inefficiencies that, collectively, can cost payers and providers millions of dollars in administrative expense. And with improper Medicaid payments comprising $36.7 billion of Medicaid spending in 2017, this small oversight has a huge financial impact on the healthcare system and taxpayers.

Coordinating Medicaid and Medicare Benefits

For individuals who are eligible for both Medicare and Medicaid (i.e., dual eligibles), Medicare is the primary payer for services covered by both programs.

Dual eligibility isn’t uncommon — in 2017, CMS reported 12 million dually-eligible beneficiaries enrolled in both Medicare and Medicaid. This patient population has a substantial impact on the healthcare continuum, as they tend to have a higher instance of comorbidities (the simultaneous existence of two or more chronic diseases) as well as a wider range of physical and behavioral conditions that drive the need for long-term care. This makes the proper coordination of Medicare and Medicaid benefits vital to the proper coordination of care for dual-eligible patients.

While COB rules dictate the allocation of payment responsibility between Medicare and Medicaid, understanding the scope of benefits under each program can be confusing for patients and costly to the healthcare ecosystem. New service delivery models are seeking to better coordinate care and payment by developing personalized, team-based care plans that integrate Medicaid and Medicare benefits. These models include:

• Dual-eligible special needs plans (D-SNPs)
• Medicare-Medicaid Plans (MMPs)
• Programs of All-Inclusive Care for the Elderly (PACE)

Coordinating Medicaid and Commercial Benefits

For individuals who have Medicaid in addition to one or more commercial policy, Medicaid is, again, always the secondary payer.

Because commercial payers almost always yield a higher payment rate than Medicaid, neglecting to identify third-party coverage prior to billing is more than an administrative headache — it’s a lost revenue opportunity. In addition to realizing higher payments, identifying commercial coverage through the proper coordination of benefits helps to ensure providers meet filing requirements and reduces the need for rebilling. And for services requiring prior authorization, COB allows providers to secure these authorizations from the appropriate commercial payer, which ensures accurate payment rates and reduces scheduling delays.

Coordination of Benefits Between Medicaid and MCOs

In a managed care environment, third-party liability is determined on a contractual basis, with additional oversight by the state.  

Managed care organizations (MCOs) — health plans contracted by state Medicaid agencies to coordinate care for beneficiaries — are designed to provide higher quality care at a lower cost to both patients and states.

Proper coordination of benefits is essential to these managed care models, in which payment is tied to value rather than volume. MCOs are paid a fixed capitation fee for each member, incentivizing providers to focus on achieving better patient outcomes through the most efficient means possible. But according to Strategy+business, of the 65 percent of Medicaid beneficiaries who are enrolled in an MCO, a mere 43 percent of total Medicaid spending occurs under managed care contracts.

Controlling Healthcare Costs Through the Streamlined Coordination of Benefits
Continuous innovation in revenue cycle management is the key to healthcare cost containment and avoidance. Relying on patient-self reporting and other antiquated data collection methods for COB not only puts patient health information at risk, but it contributes substantially to the billions of dollars of waste in healthcare system.

For providers, maximizing reimbursement rates and reducing administrative burden starts with streamlining the COB process — and for the best results, it should happen prior to the point of care.

How are you coordinating Medicaid benefits in your organization?