Medicaid Billing

Written by Kimberly Clark
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Medicaid is a federally funded program that is administered regionally by state governments. The program was established in 1965 to provide free or low-cost medical care and health-related services to low-income individuals or families. The Centers for Medicare and Medicaid Services (CMS), governs the Medicaid program.

As with most federally funded programs, participants must adhere to strict regulatory guidelines. This is the case for both patients and providers. In fact, the regulations imposed by the CMS on Medicaid billing are so detailed they have made the process of submitting a simple medical claim for payment a very intricate process.

Why Is Medicaid Billing So Complex?

One reason Medicaid billing is so complex is the passage of the HIPAA Administrative Simplification Act. HIPAA stands for the Health Insurance Portability & Accountability Act of 1996, and this portion of the law was passed, in particular, to establish national standards for electronically transmitting healthcare claims information. In addition, HIPAA sought to establish one set of standard codes to represent the diagnosis made by the healthcare provider as well as another set for the procedures performed or recommended by the physicians.

The requirement by CMS that all Medicaid claims be electronically submitted to them, in itself, makes it almost a necessity for healthcare providers to invest in a reputable Medicaid billing software package, even if they only use it is to transmit their medical claims. However, this coupled with the fact that all their claims must be compliant with the procedural and diagnostic coding standards set forth in the HIPAA regulations, makes Medicaid billing software a smart investment for any healthcare provider.


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