The presence of both a primary insurance plan, such as a private health plan or Medicare, and Medicaid creates a complex payment situation for healthcare services. This dual-eligibility status means the patient has two separate payers whose benefits must be coordinated. Medicaid is legally established as the “payer of last resort,” meaning any other insurance coverage must process and pay for a claim before Medicaid will consider contributing toward the remaining balance.
The Coordination of Benefits Priority Rule
The federal government mandates a strict order of operations known as Coordination of Benefits (COB) for individuals with dual coverage. This rule dictates that a provider must first submit the claim to the primary insurer, which is the entity determined to have the first legal obligation to pay. Only after the primary insurer has processed the claim and issued a payment or denial can the provider then bill Medicaid.
The primary insurer is legally required to maximize its payment according to its own coverage policy. Providers must secure the primary insurer’s decision, documented in an Explanation of Benefits (EOB), before submitting the claim to the state Medicaid agency. This EOB details the amount the primary plan paid, the portion applied to deductibles or co-insurance, and any remaining balance.
When Medicaid Steps In After Primary Insurance Denial
Medicaid’s role as the secondary payer is to potentially cover the remaining cost of a service if the primary insurer has paid less than the Medicaid allowable rate. When the primary insurer issues a denial, the reason for that denial becomes the determining factor for Medicaid’s involvement. If the primary insurer denies the claim for a procedural reason, such as a failure to bill at the point of sale or an administrative error, Medicaid typically requires the provider to correct the issue and resubmit the claim to the primary insurer first.
If the primary insurer pays a portion but leaves a balance due to patient cost-sharing, Medicaid often steps in to cover these amounts. Medicaid will frequently cover the patient’s remaining co-pays, deductibles, and co-insurance, provided the service is covered under the state’s Medicaid plan. The total payment from both the primary insurer and Medicaid will not exceed the maximum amount that Medicaid would have paid for the service if it had been the sole payer. Medicaid may also cover a service that the primary insurer denied because the patient was out-of-network, as long as the provider is enrolled with Medicaid and the service is included in the state’s Medicaid benefit package.
Key Scenarios Where Medicaid Will Not Pay
Medicaid will not automatically cover a service simply because the primary insurer denied the claim; the service must also be a covered benefit under the state’s Medicaid plan. If the primary insurer denies a service because it is an explicit exclusion under its policy, such as certain cosmetic procedures or experimental treatments, Medicaid will review the service against its own coverage rules. If the service is not part of the state’s Medicaid benefit package, Medicaid will also deny the claim, leaving the patient with a balance.
A claim may also be denied by Medicaid if it does not meet the program’s standards for medical necessity. Medicaid has its own separate rules regarding prior authorization, and failure to obtain a required Medicaid pre-approval, even after the primary insurer has processed the claim, will result in a denial. Furthermore, Medicaid cannot pay for any service rendered by a healthcare provider who is not actively enrolled in the state’s Medicaid program. In these cases, the provider should not bill the patient for the services, as balance billing a Medicaid recipient is generally prohibited.