Medicare and Medicaid help millions of people access health care, but deciding whether to accept them can raise difficult questions for a mental health practice.
Will the reimbursement support your costs? How much administrative work will enrollment and billing require? And what happens when a patient has more than one form of coverage?
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Medicare and Medicaid Serve Different Populations
Medicare and Medicaid were both established in 1965, but they are separate programs with different eligibility requirements and structures.
Medicare is a federal health insurance program primarily for people age 65 and older. Some younger people also qualify because of a disability, end-stage renal disease, or ALS. Medicare Part B covers many outpatient services, including eligible mental health visits.
Medicaid provides coverage for eligible people with limited income and resources, including children, adults, older adults, and people with disabilities. It is funded jointly by the federal government and the states, but each state administers its own program within federal requirements. That means eligibility, benefits, reimbursement, and administrative rules can vary by state.
For a mental health practice, the distinction affects more than which patients you can see. It also affects how you enroll, submit claims, and plan for reimbursement.
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Medicare Plans Aren’t All Billed the Same Way
Patients can receive Medicare coverage through Original Medicare or a Medicare Advantage plan.
With Original Medicare, practices submit covered claims to their regional Medicare Administrative Contractor. Medicare uses a published physician fee schedule to determine payment rates for many outpatient services, with adjustments based on factors such as location.
Medicare Advantage plans are offered by private insurers. Practices submit claims to the patient’s plan, and the plan’s network and coverage rules matter. Accepting an insurer’s commercial plans does not automatically mean your practice is in network with its Medicare Advantage plans, so verify the specific plan before a patient’s visit.
Patients may also have different out-of-pocket costs depending on their coverage. Medicare can involve premiums, deductibles, and coinsurance, while Medicaid cost-sharing rules vary by state and eligibility. Checking coverage ahead of time helps your practice explain potential costs and avoid surprises for patients.
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The Decision Starts With Your Patients and Your Numbers
For a practice serving older adults, accepting Medicare can make care accessible to more patients. Its reimbursement rates may also be competitive with those of your existing insurance contracts, depending on the services you provide.
Medicaid can help a practice reach patients who might otherwise struggle to afford care. The financial picture, however, depends on the state, the services provided, and the practice’s costs. Before making assumptions about either program, look up the rates that apply to your clinicians and commonly billed services.
As you evaluate the opportunity, consider:
How much you would be reimbursed for your most common visits.
How those amounts compare with the cost of providing care.
How much staff time enrollment, billing, and follow-up will require.
How many patients with each type of coverage your practice can sustainably serve.
The goal is to find a way to expand access that your practice can sustain.
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Keep an Eye on Your Payer Mix
Accepting a payer and building a practice around that payer are two different decisions.
Relying too heavily on a single source of reimbursement can be risky. If payments are delayed or a payer changes its processes, a practice with most of its revenue tied to that payer may have less flexibility to cover expenses.
That doesn’t mean there’s one ideal percentage of Medicare or Medicaid patients. Your payer mix should reflect your mission, patient population, costs, and financial reserves. Knowing those numbers gives you a better foundation for deciding how much capacity you can commit.
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Plan for Enrollment and Administrative Work
Wanting to accept Medicare or Medicaid is only the beginning. Practices need to complete the applicable enrollment process and verify the requirements for the clinicians and plans they intend to work with.
For Medicare, that generally involves applying through the Medicare enrollment process and working with the contractor for your region. Medicaid requirements depend on the state and the type of practice or program. Joining a Medicare Advantage network may involve additional steps with the plan.
Enrollment can take time, and paperwork issues may cause additional delays. Build that time into your plans—especially if you’re hiring clinicians or expecting a new service to generate revenue by a particular date.
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Check for More Than One Insurance Plan
One of the biggest billing complications is a patient having more than one form of coverage.
A patient can qualify for both Medicare and Medicaid. In that situation, Medicare generally pays first for Medicare-covered services, and Medicaid may help with remaining costs according to the patient’s eligibility and state rules. If a patient has other coverage, such as an employer plan, which insurer pays first depends on the circumstances.
It’s also important to check whether a patient is enrolled in the Qualified Medicare Beneficiary (QMB) program. Medicare providers cannot bill QMB patients for Medicare-covered deductibles, coinsurance, or copayments—even if the state does not pay the full amount.
Make insurance verification part of your intake process, and ask patients about all of their coverage. Getting that information upfront can help your team submit claims in the right order and avoid inappropriate patient bills.
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In this week’s business moment…
A mental health practice received a call from an insurer looking for care for one of its members. The practice had openings, and one of its new clinicians had been waiting longer than expected to complete credentialing with that insurer.
The practice asked the insurance representative to contact the credentialing team about the delay and copy the practice on the message. The representative agreed and sent the email shortly afterward, giving the practice another way to follow up.
When an insurer asks your practice for help meeting a patient’s needs, it can be an opportunity to raise an issue that’s holding your practice back. It may not resolve the problem immediately, but it can open a useful line of communication.
Making the Right Choice for Your Practice
Medicare and Medicaid can create opportunities to serve more patients, but accepting either program requires planning. Reimbursement, enrollment, payer mix, and billing all affect whether those services will work for your practice over time.
Start by understanding the patients you want to serve, then look closely at the applicable rates and requirements. With that information, you can make a decision that supports both access to care and the financial health of your practice.
If you’re in the early stages of starting a practice, we’ve created a free course that walks through how to set up everything, all in under two hours.
Learn more at ripsytech.com/practice.
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