Medicaid coverage for drugs and services varies by state. Some states impose utilization management techniques like prior authorization to administer coverage parameters. When drugs are covered under the pharmacy benefit, states may use preferred drug lists (PDLs) to manage access to drugs. It is important that you understand the patient-specific benefits and coverage guidelines for the state Medicaid program that may apply to the service or drug being provided to your patient.
Medicaid Payment
States employ various payment methodologies but often pay for drugs and services based on mechanisms like fee schedules, a percentage of average wholesale price (AWP) or wholesale acquisition cost (WAC), invoice cost, or follow the payment methodologies used for certain sites of service by Medicare. Depending on the payment methods used, providers may or may not receive separate payment for physician-administered drugs in addition to services provided to the patient.
Individuals who are enrolled in both Medicare and Medicaid are called “dual eligibles.” For dual eligible patients, Medicaid is always the payer of last resort, meaning that all other available insurers, including Medicare, must be billed for payment before Medicaid. When billed as the secondary payer, Medicaid considers paying the patient co-insurance. The amount of the co-insurance Medicaid will pay depends on a state’s rules for paying after Medicare. The amount Medicaid pays may or may not equal the total co-insurance amount typically paid by a Medicare patient. Healthcare providers cannot bill Medicaid patients for the difference between the amounts paid by Medicaid and the amount Medicare paid.
To understand reimbursement issues specific to your patients, please contact your state Medicaid program or request assistance from an ARS reimbursement specialist at
Additional information about Medicaid is available at www.cms.hhs.gov.
