2.3 Medicaid & Dual-Eligibles
Key Takeaways
- Medicaid is a joint federal-state program; the federal share is set by the Federal Medical Assistance Percentage (FMAP), which varies by state income levels.
- Federal law requires states to cover mandatory benefits such as inpatient and outpatient hospital, physician, and laboratory services, while optional benefits vary by state.
- EPSDT (Early and Periodic Screening, Diagnostic, and Treatment) is a mandatory comprehensive benefit for Medicaid-enrolled children under 21.
- Medicaid is generally the payer of last resort, so all other coverage including Medicare must be billed first.
- Dual-eligible beneficiaries qualify for both Medicare and Medicaid; Medicare Savings Programs (QMB, SLMB, QI, QDWI) help cover Medicare premiums and cost-sharing.
Medicaid Is a Federal-State Partnership
Quick Answer: Medicaid is jointly funded by the federal government and the states. Federal law sets mandatory benefits; states add optional ones. Medicaid is the payer of last resort, and patients with both Medicare and Medicaid are "dual-eligible."
Medicaid provides health coverage to low-income individuals and families. Unlike Medicare, which is uniform nationwide, Medicaid is administered by each state within federal rules, so eligibility, covered services, and reimbursement vary by state. The CPB exam tests the federal framework and the concept of state variation.
How Medicaid Is Funded — FMAP
The federal government matches state Medicaid spending through the Federal Medical Assistance Percentage (FMAP). The FMAP is higher for states with lower per-capita income, so the federal share ranges roughly from 50% to about 77%. FMAP is a funding mechanism, not something a biller calculates per claim, but it explains why Medicaid policy differs across states.
Mandatory vs Optional Services
| Mandatory Benefits (all states) | Optional Benefits (state choice) |
|---|---|
| Inpatient and outpatient hospital | Prescription drugs |
| Physician services | Dental and vision for adults |
| Laboratory and X-ray | Physical and occupational therapy |
| EPSDT for individuals under 21 | Case management |
| Nursing facility services for adults | Hospice |
| Home health for those entitled to nursing facility care | Personal care services |
EPSDT for Children
Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) is a mandatory, comprehensive benefit for Medicaid-enrolled children under age 21. It requires states to cover all medically necessary screenings and any treatment a screening identifies — even services that are optional for adults. EPSDT is a frequent exam topic because of its broad mandate.
Payer of Last Resort
Medicaid is the payer of last resort. Federal law requires that all other liable third parties — commercial insurance, Medicare, workers' compensation, liability coverage — be billed before Medicaid. A biller who sends a claim to Medicaid while other coverage exists will trigger a denial for third-party liability.
Dual-Eligible Beneficiaries
A dual-eligible beneficiary qualifies for both Medicare and Medicaid. For these patients, Medicare pays first and Medicaid may cover Medicare cost-sharing such as deductibles and coinsurance, depending on the program. Coordination here is a common source of claim errors.
Medicare Savings Programs
| Program | Helps Pay |
|---|---|
| QMB (Qualified Medicare Beneficiary) | Part A and Part B premiums, deductibles, coinsurance, and copays |
| SLMB (Specified Low-Income Medicare Beneficiary) | Part B premium only |
| QI (Qualifying Individual) | Part B premium only; limited annual funding, first-come basis |
| QDWI (Qualified Disabled and Working Individual) | Part A premium for certain working disabled individuals |
For a QMB patient, providers may not bill the patient for Medicare cost-sharing — this is the QMB balance-billing prohibition, and violating it is a compliance issue.
A patient has both commercial insurance and Medicaid. Which payer should the biller submit the claim to first?
Which Medicare Savings Program helps pay both Part A and Part B premiums plus deductibles, coinsurance, and copays?