Medicare vs Medicaid Billing: Key Differences for Providers

Program Overview: Medicare vs Medicaid

Both Medicare and Medicaid are government health insurance programs, but they serve different populations and operate under fundamentally different structures. Confusion between them — and between their many sub-programs — is one of the most persistent sources of billing errors in US healthcare.

Medicare is a 100% federally funded and administered program. It was established in 1965 under Title XVIII of the Social Security Act. The Centers for Medicare & Medicaid Services (CMS) sets all coverage rules, billing requirements, and fee schedules nationally. A Medicare claim for a specific CPT code reimburses at the same geographic-adjusted rate whether the patient is in Alabama or Oregon.

Medicaid was established under Title XIX of the same Act. It is jointly funded by the federal government and each state, but each state administers its own program — which means billing rules, covered services, fee schedules, and prior authorization requirements can differ dramatically from state to state. There are effectively 50 separate Medicaid programs, plus the District of Columbia and US territories. What is covered and reimbursed in Texas may be excluded or paid at a different rate in California.

Who Qualifies for Each Program

Medicare eligibility is primarily age-based and disability-based, without an income test for Parts A and B:

• Adults aged 65 and older who have worked at least 10 years and paid Medicare taxes
• Adults under 65 who have received Social Security Disability Insurance (SSDI) for 24 months
• Any age with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS)

Medicaid eligibility is income-based and categorically based, set by each state within federal minimum requirements:

• Low-income adults under 65 (in expansion states, up to 138% of the Federal Poverty Level)
• Children in families meeting income thresholds (also covered under CHIP)
• Pregnant women below state-set income limits
• People receiving Supplemental Security Income (SSI)
• Certain foster care youth and individuals with qualifying disabilities

The key practical difference: Medicare eligibility is relatively predictable from the patient's age and disability status. Medicaid eligibility can change month to month as a patient's income or household situation changes — which is why real-time Medicaid eligibility checks before every visit are critical, not optional.

Billing Rules and Fee Schedules

Medicare Part B (outpatient physician services) is billed on the CMS-1500 claim form (or 837P electronic equivalent) to your regional Medicare Administrative Contractor (MAC). Reimbursement is based on the Medicare Physician Fee Schedule (MPFS), which CMS updates annually. Rates are adjusted by geographic locality using Geographic Practice Cost Indices (GPCIs). For the current year's conversion factor and RVU values, use the CMS MPFS lookup tool — the same tool used by MACs to calculate payments. See our 2026 Medicare Physician Fee Schedule guide for a breakdown of this year's conversion factor changes and specialty-level impacts.

Medicare generally allows timely filing up to 12 months from the date of service for initial claims. Appeals must typically be filed within 120 days for a redetermination (Level 1), with escalating levels of appeal available through the OMHA (Office of Medicare Hearings and Appeals) and beyond.

Medicaid billing requires enrollment in each state's Medicaid Management Information System (MMIS) — a separate portal for each state where you intend to bill. Timely filing limits vary significantly by state: some require submission within 90 days, others allow up to 365 days, and a handful allow up to 2 years for certain claim types. Always verify your state's Medicaid Provider Manual for the applicable limits and covered service list. Medicaid fee schedules are typically 60–80% of Medicare rates for equivalent services, though primary care and behavioral health rates have been enhanced in many states following ACA expansions.

Medicare Advantage plans (Part C) are administered by private insurers approved by CMS. They must cover at minimum the same benefits as traditional Medicare, but they set their own billing rules, network requirements, and prior authorization policies. Never assume that a Medicare Advantage plan bills or pays like traditional Medicare — operationally, it does not.

Prior Authorization Differences

This is one of the starkest operational differences between the two programs:

Traditional Medicare (Parts A & B) has very limited prior authorization requirements for most physician services. CMS has expanded prior authorization requirements for certain high-cost imaging (CT, MRI, PET), certain outpatient hospital procedures, and some DME. But for the vast majority of office visits, E&M services, and standard procedures, traditional Medicare does not require prior authorization.

Medicare Advantage is the exception. MA plans frequently require prior authorization for services that traditional Medicare approves automatically — hospital admissions, specialist referrals, home health, imaging, and many procedures. PA requirements vary by plan and change annually. A patient switching from traditional Medicare to an MA plan mid-year can create a sudden surge in denied claims if your staff is not tracking the change.

Medicaid almost universally requires prior authorization for many services: specialist visits, behavioral health, certain medications, DME, home health, physical therapy, and more. PA requirements are set by each state's Medicaid program and further modified by each Medicaid Managed Care plan. Track PA requirements at the plan level, not just the program level.

Dual-Eligible Patients: Who Pays What

Approximately 12 million Americans are enrolled in both Medicare and Medicaid simultaneously — referred to as "dual-eligible" or "Medicare-Medicaid enrollees" (CMS Medicare-Medicaid Coordination Office). Billing these patients incorrectly is a common and expensive mistake.

The cardinal rule: Medicare is always primary. For any service covered by Medicare, submit to Medicare first. Medicare processes the claim and issues an Explanation of Medicare Benefits (EOMB). Only after receiving the EOMB do you submit to Medicaid as the secondary payer — attaching the Medicare payment details.

What Medicaid covers as secondary depends on the specific dual-eligible category:

• Full dual-eligibles (QMBs, SLMBs, etc.) — Medicaid may pay some or all of the Medicare cost-sharing (deductibles, copays, coinsurance)
• Qualified Medicare Beneficiaries (QMB) — Medicaid pays Medicare premiums and cost-sharing; providers enrolled in Medicaid cannot bill QMB patients for Medicare cost-sharing under any circumstances
• Partial dual-eligibles — Medicaid covers only Medicare premiums, not cost-sharing

Billing a QMB patient for Medicare cost-sharing is a violation of federal law. Patients who complain about such billing can file a complaint with CMS or the State Insurance Commissioner.

Dual-eligible coordination of benefits also applies to pharmacy (Medicare Part D is primary for most drugs over Medicaid) and for long-term care services where Medicaid often covers services Medicare does not.

Enrollment and Credentialing Requirements

You must be separately enrolled in Medicare and in each state's Medicaid program where you intend to bill. Holding a Medicare provider number does not automatically enroll you in any state's Medicaid program — and vice versa.

Medicare enrollment is managed through the Provider Enrollment, Chain, and Ownership System (PECOS). Individual providers enroll using Form CMS-855I; organizations use Form CMS-855B or CMS-855A depending on provider type. The NPI (National Provider Identifier) obtained through NPPES is the same number used for both programs.

Medicaid enrollment is processed through each state's Medicaid portal or paper enrollment process. Requirements, application forms, processing times, and re-enrollment cycles differ by state. Some states require annual re-validation; CMS mandates Medicaid provider re-enrollment every 5 years at minimum. Keep track of expiration dates — billing Medicaid without active enrollment results in claim denial and potential overpayment recovery.

For Medicare Advantage and Medicaid Managed Care plans, you must also complete the plan's own credentialing process — holding government program enrollment alone does not mean you are in-network with MA or MCO plans. See our credentialing guide for the full provider enrollment process.

Side-by-Side Comparison Table