When an individual has dual health coverage—both private insurance and Medicaid—confusion often arises regarding payment responsibilities. Many Medicaid recipients maintain private coverage through an employer or family member. This coexistence raises a fundamental question about which entity pays first when medical care is needed, requiring a specific process to determine financial responsibility.
Medicaid’s Status as Payer of Last Resort
The relationship between Medicaid and other coverage is governed by the principle of Coordination of Benefits (COB). This federal mandate requires states to ensure that Medicaid is always the “Payer of Last Resort.” This means that all other coverage, including private health insurance, Medicare, and liability settlements, must process the claim before Medicaid considers payment.
The primary insurer must be billed first. Medicaid steps in as the secondary payer only after the primary insurer has adjudicated the claim. This rule protects taxpayer funds by ensuring the primary payer pays its share first. A healthcare provider cannot submit a claim directly to Medicaid without proof that the primary insurer has acted on the claim. Medicaid will then only cover the remaining balance, up to the maximum amount it normally allows for that service.
Evaluating the Primary Insurer’s Denial Reason
Medicaid does not automatically assume financial responsibility simply because a primary insurer issued a denial. The state Medicaid agency closely scrutinizes the reason for the denial before considering payment. The Explanation of Benefits (EOB) from the primary insurer must clearly detail why the primary insurer did not pay, and the provider must submit this document to Medicaid.
Medicaid generally considers payment if the denial is based on the patient not meeting their deductible or co-payment obligation. Denials resulting from the patient reaching annual or lifetime policy limits may also be acceptable reasons for Medicaid to step in. If the provider is an enrolled Medicaid participant but is out-of-network for the private plan, Medicaid may cover the service, provided it is a covered benefit under the state’s Medicaid plan.
Medicaid often refuses payment if the denial suggests a failure to follow standard billing or administrative procedures. Unacceptable denial reasons include the provider failing to obtain required pre-certification or prior authorization from the private insurer. Denial due to a provider’s error, such as missing the primary insurer’s timely filing deadline, means the provider cannot bill the Medicaid patient for the amount denied due to the administrative error.
Medicaid will also likely deny the claim if the primary insurer denied it for lack of medical necessity or because the service was deemed experimental. Since both insurers must determine the service meets their established criteria, a clinical denial by the first payer indicates the service may not meet Medicaid’s standards either. The administrative denial must align with a scenario where Medicaid would normally cover the out-of-pocket costs of an otherwise covered service.
Services Medicaid Will Never Cover
Even a denial from the primary insurer will not obligate Medicaid to pay if the service is excluded from the state’s program. Medicaid coverage is strictly defined by state and federal statutes, which outline specific services that are never reimbursed, regardless of other coverage. A denial from a private insurer does not expand the scope of Medicaid benefits.
For instance, many state Medicaid programs do not cover certain types of adult dental care beyond emergency procedures. Cosmetic procedures, experimental therapies, or specific non-emergency transportation services may also be explicitly excluded. If the primary insurer denies a claim for one of these services, Medicaid will also deny it because the service is statutorily non-covered.
The list of exclusions is state-specific, focusing on services not deemed medically necessary or those not considered standard medical treatment. Understanding the state’s covered benefits is necessary to manage expectations. If a service is non-covered, the patient may be responsible for the cost, but only if they were notified in advance that the service was not a Medicaid benefit.
Steps for Claim Submission After Denial
Once the primary insurer denies the claim, the healthcare provider must initiate the process for submitting the claim to Medicaid. This process relies heavily on obtaining the correct documentation, primarily the Explanation of Benefits (EOB) or a formal denial letter, which proves the primary insurer has acted on the claim.
The provider must submit the claim to the state Medicaid agency, often using a specific electronic or paper format indicating third-party liability. This submission must include the original claim information and the primary insurer’s EOB, showing the amount paid, the amount applied to the deductible, and the exact reason for the denial. The provider must also be an enrolled Medicaid participant in the state, as Medicaid only pays enrolled providers.
Patients should confirm their provider has the correct Medicaid eligibility information and a copy of the primary EOB to expedite the process. Although providers handle the submission, the patient should verify the claim is processed promptly, as Medicaid has timely filing limits that must be met after the primary denial. The goal is for Medicaid to pay the remaining patient responsibility, such as deductibles or co-insurance, up to the Medicaid allowable amount.