Learning OutcomesAfter studying this chapter, you should be able to:
1. Describe the federal Medicaid eligibility requirements.2. Discuss the effects of the Welfare Reform Act on Medicaid
eligibility.3. Explain the difference between categorically needy and
medically needy.4. Describe the income and asset guidelines used by most
states to determine eligibility.5. List the services that Medicaid usually does not cover.6. List the types of plans that states offer to Medicaid recipients.7. Discuss the claim filing procedures when a Medicaid recip-
ient has other insurance coverage.8. Prepare correct Medicaid claims.
Medicaid
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
The Medicaid program covers more than 50 million low-income people, paysfor more than one-third of births, and finances care for two-thirds of nursinghome residents. The cost of the program, financed jointly by the federal gov-ernment and the states, exceeds $300 billion a year.
Medicaid is the nation’s largest non-employer-sponsored health insuranceprogram. Because Medicaid is run by states, rather than by the federal govern-ment, medical insurance specialists refer to the laws and regulations of theirstate Medicaid programs to correctly process claims for these patients.
The Medicaid ProgramThe Medicaid program was established under Title XIX of the Social SecurityAct of 1965 to pay for the health care needs of individuals and families withlow incomes and few resources. The federal government makes payments tostates under the Federal Medicaid Assistance Percentage (FMAP). Theamount is based on the state’s average per capita income in relation to the na-tional income average.
People applying for Medicaid benefits must meet minimum federal require-ments and any additional requirements of the state in which they live. A per-son eligible in one state may be denied coverage in another state. Coverage alsovaries, with some states providing coverage for fewer than 40 percent of resi-dents below the poverty level and other states covering as much as 60 percentof the same population. Because of this variation and because Medicaid ruleschange frequently, this chapter presents a general overview of the program.
To apply for Medicaid benefits, individuals must call or write their localIncome Maintenance office or Department of Social Services and request anapplication. Once completed, the application is returned to the office,along with proof of income, assets, and any other relevant proof of eligibil-ity. Medicaid coverage may begin as early as the third month prior to ap-plication—if the person would have been eligible for Medicaid had he orshe applied during that time. Medicaid coverage generally stops at the endof the month in which a person no longer meets the eligibility criteria.(States may provide twelve months of continuous Medicaid coverage foreligible children under the age of nineteen.) Denied coverage may be ap-pealed through a Fair Hearing. Beneficiaries must notify the agency imme-diately if their income, assets, or living situations change.
Key Termscategorically needycrossover claimdual-eligibleEarly and Periodic Screening,
Diagnosis, and Treatment (EPSDT)Federal Medicaid Assistance
Percentage (FMAP)
MediCalmedically needyMedi-Medi beneficiarypayer of last resortrestricted statusspend-down
State Children’s Health InsuranceProgram (SCHIP)
Temporary Assistance for NeedyFamilies (TANF)
Welfare Reform Act
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Code Sets, andSecurity rules applyto physicians who
are treatingMedicaid patients.
Federal EligibilityFederal guidelines mandate coverage for individuals referred to ascategorically needy—people with low incomes and few resources, includingcertain Medicare beneficiaries with low incomes. The categorically needy typ-ically include families with dependent children who receive some form of cashassistance, individuals eligible to receive Supplemental Security Income (SSI),pregnant women with low incomes, and infants and children who meet low-income requirements.
The federal government requires states to offer benefits to the following groups:
• People with low incomes and few resources who receive financial assistanceunder Temporary Assistance for Needy Families (TANF)
• People who are eligible for TANF but who do not receive financial assistance• People who receive foster care or adoption assistance under Title IV-E of the
Social Security Act• Children under six years of age who meet TANF requirements or whose fam-
ily income is below 133 percent of the poverty level• People in some groups who lose cash assistance when their work income
or Social Security benefits exceed allowable limits (temporary Medicaideligibility)
• Pregnant women whose family income is below 133 percent of the povertylevel (coverage limited to pregnancy-related medical care)
• Infants born to Medicaid-eligible pregnant women• People who are age sixty-five and over, legally blind, or totally disabled and
who receive Supplemental Security Income (SSI)• Certain low-income Medicare recipients
State Children’s Health Insurance ProgramFrom time to time, the federal government enacts legislation that affects theMedicaid program. The State Children’s Health Insurance Program (SCHIP),part of the Balanced Budget Act of 1997, offers states the opportunity to de-velop and implement plans for health insurance coverage for uninsured chil-dren. Children served by SCHIP come from low-income families whoseincomes are not low enough to qualify for Medicaid. The program covers chil-dren up to age nineteen.
The SCHIP program is funded jointly by the federal government and thestates. It provides coverage for many preventive services, physician services,and inpatient and outpatient services. A state may meet SCHIP requirementsby expanding its current Medicaid program to include uninsured children, byestablishing a new program, or by some combination of the two methods. Oncea state’s plan is approved, the federal government provides matching funds. Inrecent years, through state waivers, states have been given greater flexibility toexpand their insurance coverage to the uninsured. This has resulted in in-creased enrollment in Medicaid and SCHIP. In 2003, 5 million children wereestimated to be covered under SCHIP. Unlike in previous years, legislation in-troduced in 2003 allowed states to start carrying over a certain amount of un-spent SCHIP money from previous years, making more money available to theexpanding program.
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
EPSDTMost practice managementprograms (PMPs) have acheck box to select when apatient’s visit is part of theMedicaid EPSDT program.
Early and Periodic Screening, Diagnosis, and TreatmentEarly and Periodic Screening, Diagnosis, and Treatment (EPSDT) provideshealth care benefits to children under age twenty-one who are enrolled in Med-icaid. States are required by federal law to inform all Medicaid-eligible peoplewho are under age twenty-one of the availability of EPSDT and immunizations.Patients are not charged fees for EPSDT services, but some families do paymonthly premiums.
The EPSDT program emphasizes preventive care. Medical, vision, hearing,and dental health screenings (known as well-child checkups) are performed atregular intervals. These examinations must include at least the following ninecomponents:
1. A comprehensive health and developmental history, including assess-ment of both physical and mental health
2. A comprehensive, unclothed physical examination3. Appropriate immunizations4. Laboratory tests (including lead blood testing at twelve and twenty-four
months and otherwise, according to age and risk factors)5. Health education, including anticipatory guidance6. Vision services7. Dental services8. Hearing services9. Other necessary health care (diagnosis services, treatment, and other
measures necessary to correct or ameliorate problems discovered by thescreening services)
EPSDT also covers health care services other than periodic screenings. Allmandatory and optional services covered under Medicaid—even if such ser-vices are not covered for adults—are covered by the EPSDT program. A childmay be referred for an additional screening by a parent, a guardian, a teacher,or another party.
The Ticket to Work and Work Incentives Improvement ActThe Ticket to Work and Work Incentive’s Improvement Act of 1999 (TWWIIA)expands the availability of health care services for workers with disabilities.Previously, people with disabilities often had to choose between health careand work. TWWIIA gives states the option of allowing individuals with dis-abilities to purchase Medicaid coverage that is necessary to enable them tomaintain employment.
New Freedom InitiativeThe New Freedom Initiative was launched in 2001 as the president’s compre-hensive plan to reduce barriers to full community integration for people withdisabilities and long-term illnesses. Under the initiative, various departmentsthroughout the government, including the Department of Health and HumanServices, were directed to partner with states to provide necessary supports toallow elders and people with disabilities to fully participate in community life.For example, through the use of Medicaid grants for community living, the ini-tiative aims at promoting the use of at-home and community-based care as analternative to nursing homes. Medicaid grants for aging and disability resourcecenters are another part of the initiative.
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Spousal Impoverishment ProtectionFederal Spousal Impoverishment legislation limits the amount of a marriedcouples’ income and assets that must be used before one of them can becomeeligible for Medicaid coverage in a long-term care facility. Before this legisla-tion, a couples’ income and assets were so depleted by the time one partnerqualified for Medicaid that the other spouse was left with few resources.
The legislation applies to situations in which one member of the couple isin a nursing facility or medical institution and is expected to remain there forat least thirty days. When the couple applies for Medicaid coverage, their jointresources are evaluated. All resources held by both spouses are considered tobe available to the spouse in the medical facility except for certain assets, suchas a home, household goods, an automobile, and burial funds.
Welfare Reform ActTraditionally, people eligible for cash assistance through another governmentprogram, such as the Aid to Families with Dependent Children (AFDC) andSupplemental Security Income (SSI), were considered eligible for Medicaidbenefits. The Personal Responsibility and Work Opportunity ReconciliationAct of 1996 (P.L. 104-193), commonly known as the Welfare Reform Act, re-placed the AFDC program with TANF. Under this more stringent legislation,some individuals receiving TANF payments are limited to a five-year benefitperiod. At the end of five years, cash assistance ceases.
Eligibility for TANF assistance is determined at the county level. Answers tothe following questions are taken into account:
• Is the income below set limits?• Are the resources (including property) equal to or less than set limits?• Does the household include at least one child under eighteen?• Is at least one parent unemployed, incapacitated, or absent from the home?• Does the individual have a Social Security number and a birth certificate?• Does the individual receive adoptive or foster care assistance?
Many states have employability assessment or job search requirements forapplicants or require child immunization or school attendance, making eligi-bility standards more stringent. The Welfare Reform Act also affected eligibil-ity rules for several other groups, including disabled children and immigrants.While the Welfare Reform Act made it more difficult for some groups to gainaccess to Medicaid benefits, individual states still have a great deal of latitudewhen implementing the program.
State ProgramsAlthough the federal government sets broad standards for Medicaid coverage,there is variation among the states. States establish their own eligibility stan-dards; their own type, amount, duration, and scope of services; and their ownpayments to providers. Table 11.1 on page 379 provides a list of state websitesto research the state’s standards.
A state’s income limits usually consider the applicant’s income relative to thefederal poverty level (FPL), taking household size into account.
Most states also provide Medicaid coverage to medically needy individu-als—people with high medical expenses and low financial resources (but notlow enough to receive cash assistance). States may choose their own names forthese programs. For example, California’s program is called MediCal.
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Examples of groups covered by state rules but not federal guidelines are:
• Aged, blind, or disabled people with incomes below the federal poverty levelwho do not qualify under federal mandatory coverage rules
• People who are institutionalized who do not qualify under federal rules, butwho meet special state income requirements
• People who would be eligible if institutionalized, but who are receivinghome or community care
• Children under age twenty-one who meet the TANF income and re-sources limits
• Infants up to one year old who do not qualify under federal rules, but whomeet state income limit rules
• Pregnant women who do not qualify under federal rules, but who meet stateincome limit rules
• Optional targeted low-income children• Recipients of state supplementary payments• TB-infected people who would be financially eligible for Medicaid at the SSI
level (only for TB-related ambulatory services and TB drugs)• Uninsured low-income women identified through the Centers for Disease
Control and Prevention (CDC) National Breast and Cervical Cancer Early De-tection Program (NBCCEDP) as needing breast or cervical cancer treatment
Income and Asset GuidelinesIn most states, general income and asset guidelines are as follows:
• People who receive income from employment may qualify for Medicaid de-pending on their income, since a portion of their earned income is notcounted toward the Medicaid income limit (income required for necessaryexpenditures).
• Only a portion of unearned income from Social Security benefits, Supple-mental Security Income (SSI), and veterans’ benefits and pensions iscounted toward income limits.
• Assets are taken into account when determining eligibility. Assets include cash,bank accounts, certificates of deposit, stocks and bonds, cash surrender valueof life insurance policies, and property other than homes. The applicant’s resi-dence is not counted in arriving at the total asset calculation. Assets may beowned solely by the applicant or jointly by the applicant and another party.
• Some other possessions are not counted as assets, including essential per-sonal property such as clothing, furniture, and personal effects, and a burialplot and money put aside for burial.
• Applicants who enter a long-term care facility have their homes counted as anasset unless they are in for a short-term stay and are expected to return homeshortly, or if certain relatives will continue to live in the home. These relativesinclude a spouse, a disabled or blind child, a child who is less than twenty-one years of age, or a child or sibling under certain other circumstances.
• Assets that have been transferred into another person’s name are closely ex-amined. The asset may be included in the applicant’s asset total dependingon when the asset was transferred, to whom it was transferred, the amountpaid in return for the asset, and the state in which the applicant resides.
• Information provided on the application is checked and verified using othersources of information, including the Social Security Administration, the In-ternal Revenue Service, the state Motor Vehicle Agency, and the state De-partment of Labor, among others.
378 PART 4 Payers
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ALASKA AK http://www.hss.state.ak.us/dhcs/Medicaid/ARIZONA AZ http://www.ahcccs.state.az.us/site/ARKANSAS AR http://www.medicaid.state.ar.us/CALIFORNIA CA http://www.dhs.ca.gov/mcs/COLORADO CO http://www.chcpf.state.co.us/default.aspCONNECTICUT CT http://www.ct.gov/dss/DELAWARE DE http://www.dhss.delaware.gov/DISTRICT OF COLUMBIA DC http://doh.dc.gov/doh/site/default.aspFLORIDA FL http://www.fdhc.state.fl.us/Medicaid/GEORGIA GA http://dch.georgia.govHAWAII HI http://med-quest.us/IDAHO ID http://www.healthandwelfare.idaho.gov/ILLINOIS IL http://www.hfs.illinois.gov/medical/INDIANA IN http://www.state.in.us/IOWA IA http://www.dhs.state.ia.us/KANSAS KS http://da.state.ks.us/hpf/KENTUCKY KY http://chfs.ky.govLOUISIANA LA http://www.dhh.state.la.us/MAINE ME http://www.maine.gov/MARYLAND MD http://www.dhmh.state.md.us/MASSACHUSETTS MA http://www.mass.gov/MICHIGAN MI http://www.Michigan.gov/mdchMINNESOTA MN http://www.dhs.state.mn.us/MISSISSIPPI MS http://www.medicaid.state.ms.us/MISSOURI MO http://www.dss.mo.gov/MONTANA MT http://www.dphhs.mt.govNEBRASKA NE http://hhs.state.ne.us/NEVADA NV http://dhcfp.state.nv.us/NEW HAMPSHIRE NH http://www.dhhs.state.nh.us/NEW JERSEY NJ http://www.state.nj.us/NEW MEXICO NM http://www.state.nm.us/NEW YORK NY http://www.health.state.ny.us/NORTH CAROLINA NC http://www.dhhs.state.nc.us/NORTH DAKOTA ND http://www.nd.gov/humanservices/OHIO OH http://jfs.ohio.gov/ohp/OKLAHOMA OK http://www.ohca.state.ok.us/OREGON OR http://www.oregon.gov/DHS/PENNSYLVANIA PA http://www.dpw.state.pa.us/RHODE ISLAND RI http://www.dhs.state.ri.us/SOUTH CAROLINA SC http://www.dhhs.state.sc.us/SOUTH DAKOTA SD http://www.state.sd.us/TENNESSEE TN http://www.state.tn.us/tenncare/TEXAS TX http://www.hhsc.state.tx.us/Medicaid/UTAH UT http://health.utah.gov/medicaid/VERMONT VT http://www.ovha.state.vt.us/medicaid.cfmVIRGINIA VA http://www.dmas.virginia.gov/WASHINGTON WA http://fortress.wa.gov/dshs/maa/WEST VIRGINIA WV http://www.wvdhhr.org/bms/WISCONSIN WI http://www.dhfs.state.wi.us/medicaid/WYOMING WY http://wyequalitycare.acs-inc.com/
CHAPTER 11 Medicaid 379
T a b l e 1 1 . 1
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Unlike Medicare, Medicaid eligibility coverage varies from state to state. An in-dividual ruled ineligible in one state may qualify for coverage in another state.
1. Why do Medicaid eligibility rules and coverage vary while Medicare’sdo not?
2. What are the advantages and disadvantages of the current state-oriented system?
Spend-Down ProgramsSome states have what are known as spend-down programs. In a spend-downprogram, individuals are required to spend a portion of their income or re-sources on health care until they reach or drop below the income level speci-fied by the state. The concept is similar to an annual deductible, except that itresets at the beginning of every month. Each month, the enrollee pays a por-tion of incurred medical bills, up to a certain amount, before the Medicaid feeschedule takes effect and Medicaid takes over payments.
For example, a patient who has a $100 spend-down visits the physicianon March 3 and is billed $75. The patient is responsible for paying the en-tire $75. Later in the month, she visits the physician again and is charged$60. She must pay $25, and Medicaid will pay the remaining $35. At the be-ginning of the next month, she is once again responsible for the first $100of charges. The spend-down amount varies depending on the patient’s fi-nancial resources.
Many states also extend benefits to other groups of individuals. For exam-ple, most states offer coverage to people described as medically needy.
Medicaid Enrollment VerificationMedicaid cards or coupons may be issued to qualified individuals. Somestates issue cards twice a month, some once a month, and others every twomonths or every six months. Figure 11.1 shows sample ID cards. Figure 11.2on page 382 displays a sample ID coupon.
Insurance ProceduresPatients’ eligibility should be checked each time they make an appointmentand before they see the physician. Most states are moving to electronic verifi-cation of eligibility under the Electronic Medicaid Eligibility Verification Sys-tem (EMEVS). Many states have both online and telephone verificationsystems. In addition to eligibility dates, the system also specifies whether thepatient is required to pay a copayment or coinsurance.
Some patients may require treatment before their eligibility can be checked.Figure 11.3 on page 383 is an example of an eligibility verification log for pa-tients who have not yet been assigned ID numbers or who have misplacedtheir cards.
Some individuals enrolled in Medicaid are assigned restricted status. In re-stricted status, the patient is required to see a specific physician and/or use a
ComplianceGuideline
Fraud and AbuseThe Medicaid Alliance forProgram Safeguards hasmembers from CMSregional offices and atechnical advisory groupcalled the Medicaid Fraudand Abuse ControlTechnical Advisory Group,or TAG. This alliance workstogether to exchangeexperiences, resources,and solutions to prevent aswell as detect Medicaidfraud and abuse.
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
specific pharmacy. This physician’s name is listed on the patient’s ID card. If thepatient sees a provider other than the one listed on the card, Medicaid benefitswill be denied. Likewise, a restricted status patient is limited to a certain phar-macy for filling prescriptions. People are assigned restricted status because ofpast abuse of Medicaid benefits.
After a patient’s Medicaid enrollment status has been verified, most practicesalso require a second form of identification. A driver’s license or other cardsmay be requested to confirm the patient’s identity.
F I G U R E 1 1 . 1 Sample Medicaid Identification Cards
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
F I G U R E 1 1 . 2 Sample Medicaid Identification Coupon
Medicaid Fraud and AbuseUnder the Deficit Reduction Act of 2005 the federal False Claims Act was ex-panded to allow states to enact their own False Claims Acts, which can bringincreased recovery amounts if their act is as strong as the one enacted by thefederal government. For example, if a state’s federal matching rate was 57 per-cent, it would only receive 43 percent of the amount recovered. However, if the
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
state enacts a False Claims Act meeting the government’s standard it would re-ceive 53 percent of the recovered amount.
In addition, the federal government has a provision that requires large facil-ities that receive Medicaid payments of or exceeding $5 million, such as hos-pitals, to include the provisions of the False Claims Act and the rights ofwhistleblowers in their employee handbook.
F I G U R E 1 1 . 3 Sample Medicaid Eligibility Verification Log
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
PreauthorizationSome services covered un-der Medicaid require priorauthorization before theyare performed. If theprovider does not obtainpreauthorization, the planmay refuse to pay theclaim.
Covered and Excluded ServicesSince plans are administered at a state level, each state determines coverage andcoverage limits and sets payment rates, subject to federal guidelines establishedunder Title XIX of the Social Security Act.
Covered ServicesTo receive federal matching funds, states must cover certain services, including:
• Inpatient hospital services• Outpatient hospital services• Physician services• Emergency services• Laboratory and X-ray services• Prenatal care• EPSDT services for people under age twenty-one, including physical exam-
inations, immunizations, and certain age-relevant services• Skilled nursing facility services for people age twenty-one and older• Home health care services for people eligible for skilled nursing services• Vaccines for children• Family planning services and supplies• Nurse midwife services• Pediatric and family nurse-practitioner services• Rural health clinic services• Federally qualified health-center (FQHC) services
Some states also provide coverage for prescription drugs, for dental or visioncare, and for such miscellaneous services as chiropractic care, psychiatric care,and physical therapy. The federal government provides matching funds forsome of these optional services, the most common of which include:
• Diagnostic services• Clinic services• Prescription drugs• Vision care• Prosthetic devices• Transportation services• Rehabilitation and physical therapy services• Home and community-based care to certain people with chronic impairments
In recent years, however, because of large state budget deficits, state lawshave cut back on some of these benefits, such as prescription drug benefits andhearing, vision, and dental benefits for adults. Many states have also had to re-strict eligibility for Medicaid and to reduce Medicaid payments to doctors, hos-pitals, nursing homes, or other providers.
Excluded ServicesRules regarding services not covered under Medicaid vary from state to state.For example, the following services may not be covered:
• Services that are not medically necessary• Experimental or investigational procedures• Cosmetic procedures
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Types Of PlansIn most states, Medicaid offers both fee-for-service and managed care plans.
Fee-for-ServiceMedicaid clients enrolled in a fee-for-service plan may be treated by theprovider of their choice, as long as that provider accepts Medicaid. Theprovider submits the claim to Medicaid and is paid directly by Medicaid.
Managed CareMany states have shifted the Medicaid population from fee-for-service pro-grams to managed care plans. Client enrollment in a managed care plan is ei-ther mandatory or voluntary, depending on state regulations. Some states, suchas New York, California, and Florida, are shifting increasing numbers of Med-icaid beneficiaries to managed care programs.
Medicaid managed care plans restrict patients to a network of physicians,hospitals, and clinics. Individuals enrolled in managed care plans must obtainall services and referrals through their primary care provider (PCP). The PCPis responsible for coordinating and monitoring the patient’s care. If the patientneeds to see a specialist, the PCP must provide a referral; otherwise, Medicaidwill not pay for the service. In many states, a PCP may be an internist, a gen-eral practitioner, a family physician, a pediatrician, a nurse-practitioner, or aphysician’s assistant.
Managed care plans offer Medicaid recipients several advantages. SomeMedicaid patients experience difficulty finding a physician who will treatthem, in part due to the lower fee structure. Under a managed care plan, indi-viduals choose a primary care physician who provides treatment and managestheir medical care. The patient also has access to specialists should the needarise. In addition, managed care programs offer greater access to preventivecare such as immunizations and health screenings.
Medicaid managed care claims are filed differently than other Medicaidclaims. Claims are sent to the managed care organization instead of to the stateMedicaid department. Participating providers agree to the guidelines of themanaged care organization, provided that they are in compliance with federalrequirements.
Payment for ServicesA physician who wishes to provide services to Medicaid recipients must sign acontract with the Department of Health and Human Services (HHS). Managedcare plans may also contract with HHS to provide services under Medicaid.Medicaid participating providers agree to certain provisions.
Providers must agree to accept payment from Medicaid as payment in fullfor services; they may not bill patients for additional amounts. The differencemust be entered into the billing system as a write-off. The amount of paymentis determined by several factors, including Title XIX of the Social Security Act,HHS regulations, and state rules.
States may require Medicaid recipients to make small payments in the formof deductibles, coinsurance, or copayments (copays are usually in the $2 to $5range). These patient payments are referred to as cost-share payments. Federal
ComplianceGuideline
Discrimination Is NotPermittedParticipating providers maynot discriminate on thebasis of race, age, color,sex, creed, national origin,or disability and mustagree to treat all eligiblepatients.
ComplianceGuideline
When Medicaid conducts apost-payment review, thefollowing information abouta referral is expected to beshown in the patientrecord:
PCP’s name
PCP’s Medicaid PIN
Date the PCPcontacted thereferring provider
Reason forthe referral(clinical data)
Patient’s name
Patient’s MedicaidID number
Patient’s date ofbirth
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
I understand _________________________________ is accepting me as a private pay patient for
the period of _______________________, and I will be responsible for paying for any services I
receive. The Provider will not file a claim to Medicaid for services provided to me.
Signed: _______________________________
Date: _________________________________
(Provider name)
F I G U R E 1 1 . 4 Sample Private Pay Agreement
law mandates exempting emergency services and family planning servicesfrom copayments. In addition, federal law excludes certain categories of recip-ients from making copayments, including children under age eighteen, preg-nant women, hospital or nursing home patients who contribute the majorityof their income to that institution for care, and categorically needy recipientswho are enrolled in HMOs.
If Medicaid does not cover a service, the patient may be billed if the follow-ing conditions are met:
• The physician informed the patient before the service was performed thatthe procedure would not be covered by Medicaid.
• The physician has an established written policy for billing noncovered ser-vices that applies to all patients, not just Medicaid patients.
• The patient is informed in advance of the estimated charge for the procedureand agrees in writing to pay the charge.
If the physician has reason to believe that a service will not be covered, thepatient must be informed in advance and given a form to sign. An sample formis shown in Figure 11.4.
If a claim is denied for the following reasons, the physician may not bill thepatient for the amount:
• Necessary preauthorization was not obtained prior to the procedure.• The service was not medically necessary.• The claim was not filed within the time period for filing (typically one year
after the date of service).
Providers in capitated managed care plans who are paid flat monthly feesmust still file claims with the Medicaid payer, since the payer uses the claimdata to assess utilization. Utilization reviews examine the necessity, appropri-ateness, and efficiency of services delivered.
Third-Party LiabilityBefore filing a claim with Medicaid, it is important to determine whether thepatient has other insurance coverage.
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Payer of Last ResortIf the patient has coverage through any other insurance plan or if the claim iscovered by another program, such as workers’ compensation, the other plan isbilled first, and the remittance advice from that primary payer is forwarded toMedicaid. For this reason, Medicaid is known as the payer of last resort, sinceit is always billed after another plan has been billed, if other coverage exists.
Medicare-Medicaid Crossover ClaimsSome individuals, called Medi-Medi beneficiaries or dual-eligibles, are eligi-ble for both Medicaid and Medicare benefits. Claims for these patients are firstsubmitted to Medicare, which makes payments to the provider and then sendsthe claims to Medicaid with a Medicare remittance notice. Claims billed toMedicare which are automatically sent to Medicaid are called crossover claims.
In many instances, Medicare requires a deductible or coinsurance payment.When an individual has Medi-Medi coverage, these payments are sometimesmade by Medicaid. The total amount paid by Medicare and Medicaid is subjectto a maximum allowed limit. In most states, Medicaid plans do not pay for aparticular service if Medicare does not.
Medicaid programs in some states pay Medicare Part B premiums forMedi-Medi patients. For example, in California, MediCal pays the MedicarePart B premiums, and physicians may not bill patients for Medicare de-ductible and coinsurance amounts. However, MediCal does not reimburseMedicare HMO patients for required copayments. Depending on the specificprocedures and diagnoses, MediCal sometimes reimburses providers forcharges denied by Medicare, including charges for services normally notcovered by Medicare.
Claim Filing GuidelinesBecause Medicaid is a state-based program, coordination of the requirementsfor completion of the HIPAA 837 are handled by a national committee calledthe National Medicaid EDI HIPAA Workgroup (NMEH). This organization ad-vises CMS about HIPAA compliance issues related to Medicaid.
Where to FileClaims are submitted to different agencies, depending on the particular state.Some states use fiscal intermediaries. These are private insurance companiesthat contract with Medicaid to process and pay claims. In other states, thestate’s Department of Health and Human Services or the county welfare agencymay handle claims. Medical offices obtain specific claim filing and completionrequirements from the agency responsible for processing Medicaid claims intheir state.
Medicaid CodingFor the most part, Medicaid procedures and services are reported using theCPT/HCPCS coding system that is mandated by HIPAA; the ICD-9-CM is usedto code diagnoses. However, since Medicaid is state-based, some payers maynot recognize all standard codes. CPT modifiers are often not honored by Med-icaid; and most states do not use the Medicare CCI edits.
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Y = Family planning services involvementN = No family planning services involvement
EPSDTIndicator
Y = The services are the result of a screening referral
N = The services are not the result of a screening referral
Special ProgramCode
Codes reported for Medicaid beneficiaries such as 03for Special Federal Funding program and 09 forSecond Opinion or Surgery
Service Autho-rizationException Code
Required when providers are required by state law toobtain authorization for specific services and authoriza-tion was not obtained for reasons such as emergency care
Unacceptable Billing PracticesPhysicians who contract with Medicaid to provide services may not engage inany of the following unacceptable billing practices:
• Billing for services that are not medically necessary• Billing for services not provided, or billing more than once for the same
procedure• Submitting claims for individual procedures that are part of a global procedure• Submitting claims using an individual provider NPI when a physician work-
ing for or on behalf of a group practice or clinic performs services
After FilingOnce a claim has been filed and approved for payment, the provider receivespayment and an RA/EOB. Claims that are denied may be appealed within a cer-tain time period, usually thirty to sixty days. Appeals should include relevantsupporting documentation and a note explaining why the claim should be re-considered. The first level of appeal is the regional agent for Medicaid. If theappeal is denied, it goes to the state’s welfare department for consideration. Thehighest level for a Medicaid appeal is the appellate court.
Medicaid Claim CompletionBecause Medicaid is a health plan that is categorized as a covered entity underHIPAA, Medicaid claims are usually submitted using the HIAA 837 claim. Insome situations, however, a paper claim using the CMS-1500 format may beused, or a state-specific form may be requested.
HIPAA ClaimsA number of special data elements may be required for completion of HIPAA-compliant Medicaid claims. The requirements are controlled by state guide-lines. These are:
The physician’s Medicaid number is reported as a secondary identifier.
CMS-1500 Paper ClaimsIf a CMS-1500 paper claim is required, follow the general guidelines shown inTable 11.2 and illustrated in Figure 11.5 on page 390.
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Medicaid InstructionsMay VaryThe NUCC instructions donot address any particularpayer. Best practice forpaper claims is to checkwith the payer for specificinformation required onthe form.
n Medicaid CMS-1500 (08/05) Claim Completion
ITEM NUMBER DATA
1 Choose Medicaid1a Medicaid ID number2 Patient’s name3 Patient’s eight-digit date of birth and gender4 Blank5 Patient’s address6 Blank7 Blank8 Blank9 Blank9a Blank9b Blank9c Blank9d Blank10a–10c Choose appropriate box10d Blank11 Blank11a Blank11b Blank11c Blank11d Blank12 Blank; signature not required13 Blank; signature not required14 Blank15 Blank16 Blank17 Name and credentials of referring or ordering physician17a Provider’s NPI or Medicaid ID number18 Complete as appropriate according to state guidelines19 Complete as appropriate according to state guidelines20 No21 Appropriate ICD codes22 Complete for resubmission23 Preauthorization/precertification number24A Dates of service (eight-digit format); no consecutive dates permitted24B Appropriate POS code24C Emergency indicator, if required24D Appropriate CPT/HCPCS codes with up to three modifiers24E Diagnosis key number for CPT/HCPCS codes24F Amount charged24G Appropriate days or units reported (use “1” if a single service)24H Enter appropriate codes if services provided under EPSDT (varies by state)24I–24J NPI or other ID number for rendering provider25 Follow state guidelines26 Blank27 Choose Yes28 Total of charges in FL 24F29 Blank or $0.0030 Follow state guidelines31 Enter the legal signature and credentials of the provider or supplier (or representative), ”Signature
on File,” or “SOF.” Enter the date the form was signed.32 Name and address of facility where services were rendered if other than provider’s office or
patient’s home, or enter SAME33 Billing provider’s name, address, and NPI or Medicaid ID number
T a b l e 1 1 . 2
Billing Tip
Secondary Claims/COBChapters 14 and 15 discussprocessing secondaryclaims, coordination ofbenefits, and appeals forMedicaid.
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
4. INSURED’S NAME (Last Name, First Name, Middle Initial)
7. INSURED’S ADDRESS (No., Street)
CITY STATE
ZIP CODE TELEPHONE (INCLUDE AREA CODE)
11. INSURED’S POLICY GROUP OR FECA NUMBER
a. INSURED’S DATE OF BIRTH
b. EMPLOYER’S NAME OR SCHOOL NAME
c. INSURANCE PLAN NAME OR PROGRAM NAME
d. IS THERE ANOTHER HEALTH BENEFIT PLAN?
13. INSURED’S OR AUTHORIZED PERSON’S SIGNATURE I authorizepayment of medical benefits to the undersigned physician or supplier forservices described below.
SEX
F
OTHER1. MEDICARE MEDICAID TRICARECHAMPUS
CHAMPVA
READ BACK OF FORM BEFORE COMPLETING & SIGNING THIS FORM.12. PATIENT’S OR AUTHORIZED PERSON’S SIGNATURE I authorize the release of any medical or other information necessary
to process this claim. I also request payment of government benefits either to myself or to the party who accepts assignmentbelow.
MM DD YY15. IF PATIENT HAS HAD SAME OR SIMILAR ILLNESS.
GIVE FIRST DATE MM DD YY14. DATE OF CURRENT:
17. NAME OF REFERRING PHYSICIAN OR OTHER SOURCE
19. RESERVED FOR LOCAL USE
21. DIAGNOSIS OR NATURE OF ILLNESS OR INJURY. (Relate Items 1,2,3 or 4 to Item 24e by Line)
17a.
17b. NPI
From To PLACE OFSERVICE
DAYS ORUNITS
ID.QUAL.
EPSDTFamilyPlanDD YY EMGMMDD YYMM
1
2
3
4
5
625. FEDERAL TAX I.D. NUMBER SSN EIN 26. PATIENT’S ACCOUNT NO. 27. ACCEPT ASSIGNMENT?
(For govt. claims, see back)
31. SIGNATURE OF PHYSICIAN OR SUPPLIERINCLUDING DEGREES OR CREDENTIALS(I certify that the statements on the reverseapply to this bill and are made a part thereof.)
SIGNED DATE
32.SERVICE FACILITY LOCATION INFORMATION
SIGNED
MM DD YY
FROM TO
FROM TO
MM DD YY MM DD YY
MM DD YY MM DD YY
CODE ORIGINAL REF. NO.
$ CHARGES
28. TOTAL CHARGE 29. AMOUNT PAID 30. BALANCE DUE
NPI
NPI
NPI
NPI
NPI
NPI
$ $ $
33. BILLING PROVIDER INFO & PHONE #
a. b.a. b.
PICA
1500
PICA
2. PATIENT’S NAME (Last Name, First Name, Middle Initial)
5. PATIENT’S ADDRESS (No., Street)
CITY STATE
ZIP CODE TELEPHONE (Include Area Code)
9. OTHER INSURED’S NAME (Last Name, First Name, Middle Initial)
a. OTHER INSURED’S POLICY OR GROUP NUMBER
b. OTHER INSURED’S DATE OF BIRTH
c. EMPLOYER’S NAME OR SCHOOL NAME
d. INSURANCE PLAN NAME OR PROGRAM NAME
NUCC Instruction Manual available at: www.nucc.org
YES NO
( )
If yes, return to and complete item 9 a-d.
16. DATES PATIENT UNABLE TO WORK IN CURRENT OCCUPATION
18. HOSPITALIZATION DATES RELATED TO CURRENT SERVICES
20. OUTSIDE LAB? $ CHARGES
22. MEDICAID RESUBMISSION
23. PRIOR AUTHORIZATION NUMBER
MM DD YY
REI
RR
AC
NOI
TA
MR
OF
NID
ER
US
NID
NA
TN
EIT
AP
NOI
TA
MR
OF
NIR
EIL
PP
US
RO
NAI
CIS
YH
P
M F
YES NO
YES NO
1. 3.
2. 4.
PROCEDURES, SERVICES, OR SUPPLIES(Explain Unusual Circumstances)
CPT/HCPCS MODIFIERDIAGNOSISPOINTER
RENDERINGPROVIDER ID.#
HEALTH INSURANCE CLAIM FORM
NPI NPI
APPROVED BY NATIONAL UNIFORM CLAIM COMMITTEE 08/05
Steps to Success❒ Read this chapter and review the Key Terms
and the Chapter Summary.
❒ Answer the Review Questions and ApplyingYour Knowledge in the Chapter Review.
❒ Access the chapter’s websites and completethe Internet Activities to learn more aboutavailable professional resources.
❒ Complete the related chapter in the MedicalInsurance Workbook to reinforce yourunderstanding of Medicaid coverage andbilling procedures.
Chapter Summary1. The federal government requires the states to
provide individuals in certain low-income orlow-resource categories with Medicaid cover-age. Coverage is available to people receivingTANF assistance; people eligible for TANF butnot receiving assistance; people receiving fostercare or adoption assistance under the Social Se-curity Act; children under six years of age fromlow-income families; some people who lose cashassistance when their work income or Social Se-curity benefits exceed allowable limits; pregnantwomen with low incomes; infants born to Med-icaid-eligible pregnant women; people age sixty-five and over or legally blind or totally disabledpeople who receive Supplemental Security In-come (SSI); and certain low-income Medicarerecipients.
At times, federal programs and initiatives areenacted that give states the opportunity to ex-pand Medicaid coverage in particular ways totargeted groups. Recent examples include theState Children’s Health Insurance Program(SCHIP), Early and Periodic Screening, Diagno-sis, and Treatment (EPSDT) services for chil-dren under age twenty-one who are enrolled inMedicaid, the Ticket to Work and Work Incen-tives Improvement Act (TWWIIA) of 1999 forpeople with disabilities who want to work, andthe New Freedom Initiative aimed at reducingbarriers to full community integration for peo-ple with disabilities and long-term illnesses.
2. The Welfare Reform Act made it more difficultfor certain groups to obtain coverage, includingdisabled children and immigrants.
3. Categorically needy individuals qualify forMedicaid based on their low income and lack ofresources; medically needy people receive assis-tance from some states because they encounterhigh medical bills and have limited income andresources. Medically needy individuals mayhave incomes that exceed Medicaid limits.
4. When determining eligibility, states examine aperson’s income, current assets (some assets arenot counted), and assets that have recently beentransferred into another person’s name.
5. Medicaid usually does not pay for services thatare not medically necessary, procedures that areexperimental or investigational, and cosmeticprocedures.
6. States offer a variety of plans, including fee-for-service and managed care plans. The trend is toshift recipients from fee-for-service plans tomanaged care plans.
7. When a Medicaid recipient has coverage underanother insurance plan, that plan is billed first.Once the remittance advice from the primarycarrier has been received, Medicaid may bebilled.
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Review QuestionsMatch the key terms with their definitions.
392 PART 4 Payers
A. medically needy
B. Temporary Assistancefor Needy Families(TANF)
C. payer of last resort
D. Welfare Reform Act
E. restricted status
F. categorically needy
G. State Children’sHealth InsuranceProgram (SCHIP)
H. Federal MedicaidAssistancePercentage(FMAP) program
I. Medi-Medibeneficiaries
J. spend-down
____ 1. The program through which the federal government makesMedicaid payments to states
____ 2. A program that requires a patient to see a specific physician and/oruse a specific pharmacy
____ 3. Patients who receive benefits from both Medicare and Medicaid
____ 4. A description that applies to Medicaid, since it is always billed afteranother plan has been billed, if other coverage exists
____ 5. Applicants who qualify based on low income and resources
____ 6. Another name for the Personal Responsibility and WorkOpportunity Reconciliation Act of 1996
____ 7. A program that requires states to develop and implement plans forhealth insurance coverage for uninsured children
____ 8. The government financial program that provides financialassistance for people with low incomes and few resources
____ 9. A program that requires individuals to use their own financialresources to pay a portion of incurred medical bills before Medicaidmakes payments
____ 10. Individuals with high medical expenses and low financial resources
Decide whether each statement is true or false.
____ 1. A person who sees a provider for family planning services may not be charged a copayment.
____ 2. Medicaid is known as the payer of last resort because an individual must exhaust all other resourcesbefore Medicaid pays for health care.
____ 3. Individuals who are employed are ineligible for Medicaid.
____ 4. After receiving payment from Medicaid, participating physicians may bill patients for the remainingamount of the charges.
____ 5. Providers in capitated managed care plans must still submit claims to Medicaid.
____ 6. Crossover claims are submitted to Medicare first, and then to Medicaid.
____ 7. Individuals must receive financial assistance from the federal government to qualify for Medicaid.
____ 8. Medicaid benefits differ from state to state.
____ 9. The SCHIP is fully funded by individual states, without funds from the federal government.
____ 10. States may extend health insurance coverage to groups excluded by Welfare Reform Act legislation.
Select the letter that best completes the statement or answers the question.
____ 1. Applicants who have high medical bills and whose incomes exceed state limits may be eligible forhealth care coverage under a state _____ program.A. TANFB. categorically needyC. restricted statusD. medically needy
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
____ 2. Under the Federal Medicaid Assistance Program, the federal government makes payment directly toA. statesB. individuals eligible to receive TANFC. individuals who are blind or disabledD. categorically needy individuals
____ 3. Most individuals receiving TANF payments are limited to a _____ -year benefit period.A. twoB. fiveC. sevenD. ten
____ 4. Medicaid identification cards must be checked for eligibilityA. once a yearB. every six monthsC. only when there is a change in the patient’s addressD. every time the patient receives services
____ 5. People classified as restricted statusA. must select a provider within the networkB. receive a limited set of benefitsC. receive emergency care onlyD. must see a specific provider for treatment
____ 6. If family planning services are provided to a patient, what data element is affected?A. family planning indicatorB. the dollar amount of the chargeC. HCPCS codesD. ICD-9 codes
____ 7. If services were provided in an emergency room, what place of service code is reported?A. 24CB. 18C. 24ID. 23
____ 8. The Medicaid Alliance for Program SafeguardsA. specifies civil and criminal penalties for fraudulent activitiesB. audits state Medicaid payers on a regular basisC. is a CMS program that came about as a result of the Welfare Reform ActD. oversees states’ fraud and abuse efforts
____ 9. The national committee to coordinate Medicaid data elements on health care claims is calledA. NMEHB. NUBCC. EDID. HIPAA
____10. Individuals apply for Medicaid benefits by contactingA. the Department of Health and Human ServicesB. the local Income Maintenance officeC. the Federal Medicaid Assistance ProgramD. the insurance carrier that processes Medicaid claims in their state
Answer the following question.What steps should be taken to verify a patient’s Medicaid eligibility?
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Address 1400 West Center StreetToledo, OH 43601-0213
Telephone 555-967-0303
Medicaid ID MCD00123
NPI 1288560027
BCBS PIN 18A09
Aetna PIN RZX334
Assignment Accepts
Signature On File 01/01/08
Applying Your Knowledge
The objective of these exercises is to correctly complete Medicaid claims, applying what you havelearned in the chapter. Following the information about the provider for the cases are two sections.The first section contains information about the patient, the insurance coverage, and the current med-ical condition. The second section is an encounter form for Valley Associates, P.C.
If you are using Medisoft to complete the cases, read the Guide to Medisoft before beginning. Infor-mation from the first section, the patient information form, has already been entered in the programfor you. You must enter information from the second section, the encounter form, to complete theclaim. If you are gaining experience by completing a paper CMS-1500 claim form, use the blank claimform supplied to you (from the back of the book or printed from the Student Data Template CD ROM)and follow the instructions on page 390.
The following provider information, which is also preloaded in the Medisoft database, should be usedfor Cases 11.1 and 11.2
Provider Information
Case 11.1
From the Patient Information Form:
Name Mary Pascale
Sex F
Birth Date 03/22/1979
SSN 246-71-0348
Address 412 Main St., Apt. 2AShaker Heights, OH44118-2345
Telephone 555-324-6669
Employer Unemployed
Insurance Plan Medicaid
Member ID 246710348MC
Assignment of Benefits Y
Signature on File On File 10/01/2008
Condition unrelated to Employment, Auto Accident, or Other Accident
Valerius−Bayes−Newby−Seggern:Medical Insurance: An Integrated Claims Process Approach, Third Edition
Internet Activities1. Access the official website for California’s MediCal program at http://www.medi-cal.ca.gov. Look
for publications that describe eligibility requirements. Also look up current information on HIPAAupdates. What are some of the challenges unique to Medicaid HIPAA compliance?
2. Go to the Centers for Medicare and Medicaid Services website for Medicaid athttp://www.cms.gov/medicaid/. Select the Gov’t Info link. Read the overview of the Medicaidprogram. Also look up information on the Medicaid program in your state. Has the SCHIP programin your state expanded in recent years?
3. Go to the Medicaid Alliance for Program Safeguards home page at the Centers for Medicare andMedicaid Services website at http://www.cms.gov/states/fraud/. Select the underlined link at thebottom of the page for Medicaid Alliance for Program Safeguards Background. How has CMS’s roleevolved in overseeing states’ fraud and abuse efforts? Select the underlined link for guidance andreports. Locate information about preventing Medicaid fraud and abuse in a managed careenvironment.
