Medicare & Medicaid Billing Solutions for U.S. Providers

Medicare and Medicaid remain the pillars of governmental reimbursement in U.S. healthcare. The regulatory framework established by CMS defines explicit rules for medicare and medicaid billing, coding, documentation, claim submission and reimbursement. Providers who do not adhere strictly to these rules face substantial financial risk denials, recoupments, audit exposure and potential exclusion.

This guide provides a step-by-step roadmap for billing Medicare and Medicaid, including enrollment, coding, claim submission, managed care integration and upcoming changes that can directly affect your practice.

Understanding Medicare vs. Medicaid

Medicare

Medicare is a federal health insurance program primarily for:

• Individuals 65 and older
• Younger patients with specific disabilities
• People with End-Stage Renal Disease (ESRD)

Medicare is uniform across all states, which simplifies eligibility and billing rules. It is divided into three main parts:

1. Medicare Part A (Hospital Insurance)
   Covers inpatient hospital stays, skilled nursing facilities, hospice, and limited home healthcare services.
   Example: CPT 99223 – initial hospital care (high complexity, admission-level).
2. Medicare Part B (Medical Insurance)
   Covers physician services, outpatient care, preventive services, and durable medical equipment (DME).
   Example: CPT 99214 – office visit for an established patient with moderate complexity medical decision-making.
3. Medicare Part D (Prescription Drug Coverage)
   Covers medications through private insurance plans approved by CMS.
   Example: ICD-10 Z79.899 – long-term medication use (billing for chronic prescriptions).

2025-2026 Updates: CMS finalized the 2026 Physician Fee Schedule (PFS) rule (CMS-1832-F), introducing efficiency adjustments and different conversion factors (CFs) for providers in qualifying Alternative Payment Models (QPs) vs. non-QPs. The CF for QPs is $33.57 and for non-QPs $33.40, with Work RVU reductions of 2.5% for certain services.

Medicaid

Medicaid is jointly run by federal and state governments, providing coverage to:

• Children
• Pregnant women
• Low-income adults
• Individuals with disabilities
• Seniors who also have Medicare (“dual eligibles”)

Unlike Medicare, Medicaid rules and fee schedules vary by state, meaning billing requirements differ across locations. Using expert medical billing services can help navigate these variations efficiently.

Why Providers Should Accept Medicare & Medicaid

Despite concerns about lower reimbursement rates compared to private insurance, billing these programs offers significant advantages:

1. Large Patient Pool – Medicaid covers over 80 million Americans, particularly in underserved areas.
2. State-Level Incentives – Some states provide enhanced payments for primary care, preventive services, or value-based care programs.
3. Community Impact – Treating low-income and vulnerable populations improves access and strengthens your community reputation.

Revenue Optimization – Proper billing reduces denials and ensures maximum reimbursement.

Step-by-Step Process to Billing Medicare and Medicaid

Step 1: Enroll as a Provider

Before submitting claims, healthcare providers must enroll in Medicare and state Medicaid programs.

Medicare Enrollment:

• Submit an NPI (National Provider Identifier), tax ID, medical license, and specialty information via the CMS PECOS portal (cms.gov/pecos).
• Credentialing verification usually takes 30-90 days.

Medicaid Enrollment:

• Use your state Medicaid portal (e.g., Texas TMHP, California PAVE).
• Submit required documentation, including NPI, DEA license, specialty, service locations, and banking info for direct deposit.

Tip: Keep a copy of all approval letters for audit purposes.

Step 2: Verify Patient Eligibility

Eligibility verification prevents claim denials due to inactive coverage.

• Check via state Medicaid portal, EHR, or clearinghouse.
• Confirm:
  • Active coverage
  • Service limitations
  • Managed Care Organization (MCO) plan details
  • Third-party insurance coverage (TPL)

Example: If a patient is under a Molina Medicaid HMO plan, the claim must be routed to Molina, not directly to the state.

Step 3: Confirm Service Coverage & Prior Authorization

Providers must ensure that the service is covered and obtain prior authorization (PA) if required:

• Review state Medicaid fee schedules for CPT/HCPCS codes.
• Services commonly requiring PA:
  • MRI/CT/PET scans
  • Elective surgeries (tonsillectomy, joint replacement)
  • Ongoing therapies (PT/OT, mental health counseling)
  • Durable medical equipment (hospital beds, wheelchairs)

Example CPT/ICD Pairing for PA:

• CPT 72148 – MRI lumbar spine
• ICD-10 M51.26 – Other intervertebral disc displacement, lumbar region

Documentation Tip: Attach clinical notes, imaging results, and referring provider letters to strengthen approval.

Step 4: Submit Claims Accurately

Accurate claim submission is crucial to avoid denials:

4.1 Claim Forms & Electronic Submission

• CMS‑1500 / 837P for professional/supplier claims (physician, DME, outpatient)
• UB‑04 / 837I for institutional/facility claims (inpatient, outpatient hospitals, SNF, home health facility billing)

Electronic Data Interchange (EDI) using ANSI ASC X12N 837 5010A1 format is the standard. Clearinghouses may be used to validate, scrub, and forward claims to CMS or Medicaid.

4.2 MACs: Claims Adjudication Entities

Each U.S. region is serviced by a Medicare Administrative Contractor (MAC) (e.g., Noridian, CGS, WPS). Claims are sent to the appropriate MAC based on provider PTAN and ZIP code. MACs adjudicate based on CMS policies, LCD/NCDs and issue payments or denials via ERA (835) + EOB.

Medicaid claims are adjudicated by state Medicaid agencies or delegated Managed Care Organizations (MCOs), depending on state structure.

Step 5: Track Claims and Payments

Monitoring claim status ensures timely reimbursement and identifies discrepancies:

• Tools: State portal, clearinghouse dashboard, remittance advice (RA)
• Common Denials:
  • CO-16: Incorrect or missing info
  • CO-96: Incorrect code or modifier
  • PR-49: Patient not eligible
  • Action: Correct errors and resubmit within 90-180 days of service date.

Step 6: Managed Care & MCO Integration

Many Medicaid patients are part of Managed Care Organizations (MCOs):

• Verify MCO enrollment
• Submit claims according to MCO-specific rules
• Understand capitated payments vs. fee-for-service

Tip: Maintain eligibility logs and PA documentation to streamline claims across multiple MCOs.

Step 7: Maximizing Reimbursement Rates

• Ensure complete documentation for medical necessity
• Bill all services provided, including add-on codes
• Leverage electronic claim submissions and automated payment processing
• Track performance metrics to identify trends and gaps in medicare &medicaid billing efficiency

CPT Example:

• 99215 – Comprehensive evaluation and management for established patients (high complexity)
• 93000 – Electrocardiogram (ECG) with interpretation

ICD Example:

• I10 – Essential hypertension
• E11.9 – Type 2 diabetes mellitus without complications

Step 8: Medicare Enrollment & Compliance Importance

Medicare enrollment ensures providers can:

• Bill for Part A, B, and D services
• Access Medicare Advantage (MA) patients
• Avoid penalties for unregistered providers

Part A Compliance Example: Correct coding of inpatient admissions and discharge summaries prevents DRG misassignments and underpayment.

Part B Compliance Example: Accurate office visit coding (99202-99215) with proper modifiers and MDM documentation ensures full reimbursement.

Part D Compliance Example: Document prescriptions and refills according to ICD-10 diagnosis requirements for chronic disease medications.

Step 9: 2026 Forward-Looking Considerations

• Review Physician Fee Schedule (PFS) updates, including efficiency adjustments
• Adjust internal charge masters to reflect new RVU rates
• Audit telehealth, CCM, BHI, and outpatient billing workflows
• Prepare for Ambulatory Specialty Models (ASM) and value-based reimbursement initiatives

Tip for Specialists: Early adoption of performance metrics and care coordination documentation positions your practice for QPs and bonus incentives.

Key Takeaways for Providers in 2026

1. Stay Updated: Medicare and Medicaid rules change annually; 2026 PFS brings efficiency adjustments and new RVU structures.
2. Documentation is Critical: Medical necessity, MDM, and time must be clearly documented for CPT/HCPCS billing.
3. Medicaid Integration: Verify eligibility, PA requirements, and MCO billing workflows to minimize denials.
4. Monitor Revenue: Audit claims, track payments, and resubmit denials promptly.
5. Prepare for Value-Based Care: ASM and other performance-based models will influence specialty reimbursement.
6. Leverage Technology: EHR, clearinghouse, and electronic claims help reduce errors and improve efficiency.

Providers who implement a structured billing process with clear documentation, compliance checks and regular auditing will maximize reimbursements while reducing denials in 2025-2026.

Conclusion

Medicare and Medicaid Billing is not just about submitting a claim. It is a complex, regulated, compliance-driven process that demands accuracy, discipline, and ongoing vigilance. From enrollment, coding, claim submission to reimbursement and appeals. Every step must adhere strictly to CMS and state Medicaid policies. Providers who master this complexity with clean coding, scrubbing, compliant documentation and effective claim workflows are rewarded with reliable reimbursement, minimized denials and sustainable revenue cycles. For any practice that treats Medicare or Medicaid patients (hospital-based, outpatient, ambulatory, SNF, home health, DME, etc.), adopting robust billing protocols is not optional. It is the foundation of financial stability and compliance in 2025 and beyond.

Schedule an appointment or call us today at 561-774-8940 to learn how our expert medical billing services can optimize your practice revenue.