An official website of the United States Government -

How Medicaid interacts with other payers

Medicaid interacts with other payers when Medicaid beneficiaries have other sources that are legally liable for payment of their medical costs. These may include private insurance, Medicare, other public programs such as the Ryan White program, workers’ compensation, and amounts received for injuries in liability cases. The program also interacts with the State Children’s Health Insurance Program (CHIP) when states provide Medicaid coverage to beneficiaries using CHIP funds. In addition, there are circumstances in which state Medicaid programs arrange for another entity to pay providers for Medicaid-covered services, such as through managed care contracts or premium assistance programs.

When Medicaid benefits supplement another coverage source, such as Medicare or private insurance, it is often referred to as wrap-around coverage. Providers who accept Medicaid payment for beneficiaries with another coverage source may in some cases charge cost sharing for services covered by both sources, but only up to allowable Medicaid amounts (if any) and only to the extent that payment from the other source is less than Medicaid’s rate. (See Chapter 4 of MACPAC’s March 2013 report.) Providers are prohibited from charging cost sharing to beneficiaries for Medicare Part A and Part B services provided to certain individuals who are dually eligible for Medicare and Medicaid.

In most cases, Medicaid acts as the payer of last resort for most services. Under the program’s third-party liability (TPL) rules, other legally responsible sources are generally required to pay for medical costs incurred by a beneficiary before the Medicaid program will do so. As a condition of eligibility, Medicaid enrollees must identify potential third-party sources of coverage, and assign the Medicaid agency the right to pursue third-party liability on their behalf. Exceptions include certain prenatal and pediatric services, for which Medicaid may pay and then seek reimbursement. There are also cases where Medicaid may pay for services that might otherwise be financed by other public agencies or programs, either because they are statutorily designated as payers of last resort after Medicaid (such as Ryan White HIV/AIDS, Title V Maternal and Child Health Block Grant, Indian Health Service, and Individuals with Disabilities Education Act programs) or are not considered to be legally liable third parties (such as schools and public health or child welfare agencies carrying out their general responsibilities to ensure access to needed health care).

In addition to interacting with other payers on a TPL basis, Medicaid may make arrangements for private plans and other entities to pay providers for Medicaid-covered services. For example, the majority of Medicaid enrollees receive at least some of their benefits through managed care plans, which contract directly with states and must comply with requirements that are specific to the Medicaid program and its population. In contrast, under premium assistance programs, which historically have had limited enrollment but whose use is now growing, states may pay for private market coverage (typically offered through exchanges or employers) that was designed to serve a non-Medicaid population. Under a provision of law separate from other Medicaid premium assistance authorities, states are required to pay Medicare Part B (and, in some cases, Part A) premiums for certain beneficiaries who are dually eligible for both programs.