Medicaid Payment Rules

• Payment rules govern the Medicaid program.money image by cherie from Fotolia.com
  
  Medicaid is a state and federally funded program that provides health-care services to low-income individuals. In 2007, about 40 million people were enrolled in the Medicaid program. Each state is responsible for setting the eligibility standards; the scope, amount, and type of services offered and the payment rates for services. States are required to provide certain services before receiving matching funds from the federal government.
  
  

Reimbursement Rates

• Medicaid providers are paid directly by the state for the services provided to patients on Medicaid. Providers must accept the reimbursement rates set by the Medicaid program. Providers are not allowed to bill the patient separately to make up for the lower reimbursement rate paid by Medicaid. States are given the authority to determine the reimbursement rates for services. However, the rate must fall within the federal limits and guidelines. The reimbursement rates set by states must be high enough to encourage enough providers to participate in the program so that "Medicaid care and services are available under the State Plan at least to the extent that comparable care and services are available to the general population within that geographic area."
  
  

Deductibles and Co-payments

• Medicaid providers are allowed to require payments in the form of deductibles, co-payments and coinsurance from some patients on Medicaid. Certain services are excluded, including emergency services and family planning services. Patients who are under the age of 18, some nursing home recipients, "categorically needy enrollees in HMOs", and pregnant women are not required to pay deductibles or other payments above the Medicaid payment.
  
  

Federal Contribution Rules

• The federal government pays a portion of each state's Medicaid program. The amount paid by the Federal Medical Assistance Percentage (FMAP) is based on a formula that compares a state's "average per capita income level with the national income average." The formula is calculated on an annual basis. According to Health Law Resource, "the FMAP cannot be lower than 50 percent nor higher than 83 percent." The way the law is set up, poorer states receive a larger contribution for Medicaid payments than do wealthier states. Additionally, the federal government contributes approximately 50 percent of a state's administration costs for the Medicaid program.
  
  

Hospitals

• The state must make additional payments to hospitals that serve a large number of low-income patients or provide services to a large portion of Medicaid recipients. The disproportionate share hospital (DSH) program receives Medicaid payments that are a combination of state funds and matching federal funds.
  
  

Proposed Rule

• A new Medicaid payment rule was proposed on January 13, 2010. If adopted, the new rule will provide incentive payments for medical and other eligible providers who make use of electronic health-record (HER) technology. The incentives were established as part of the Health Information Technology for Economic and Clinical Health Act (HITECH Act). The payments are designed to be higher in the beginning to encourage early adoption of HER technology and will gradually become lower over time.