The Difference Between Medicaid and Medicare

Medicaid and Medicare are often mentioned in the same breath, but the two programs perform completely separate functions in the American healthcare system.

Medicare

Medicare is a federal healthcare program created in 1965 with the passage of the Social Security Amendments to ensure that citizens 65 and older as well as younger persons with certain disabilities have access to quality healthcare. Medicare is administered by the Centers for Medicare and Medicaid Services (CMS). CMS manages Medicare programs by selecting official Medicare administrative contractors (MACs) to process the Medicare claims associated with various parts of Medicare. Medicare as a healthcare plan is divided into different parts, each of which cover a specific healthcare service:

• Part A (Medically necessary services): Part A of Medicare covers basic healthcare necessary to treat a pressing medical condition. Covered services may include hospital care, skilled nursing care, nursing home care, hospice care, and other support deemed essential to treating an illness or a condition.
• Part B (Preventive Care): Services covered in Part B include services or supplies needed to treat or prevent a medical condition. Part B of Medicare also covers some preventive care services such as inpatient/outpatient mental health, clinical research, and ambulance services.
• Part C (Medicare Advantage Plan): Part C of Medicare covers all healthcare services through a provider organization such as a hospital or a private practice. Patients must be enrolled in Medicare Parts A and B to qualify for Part C.
• Part D (Prescription Drugs): Part D was created in 2003 with the passage of the Medicare Prescription Drug, Improvement, and Modernization Act. It covers many prescription drug costs and is paid for by monthly premiums of Medicare enrollees.

Medicaid

Medicaid is a program that provides healthcare coverage for low-income families and individuals, for persons with disabilities, and in some cases the elderly. For medical billing purposes, the most important difference between Medicare and Medicaid is the organization of each program. Medicare is a program provided by the federal government through CMS and has universal applications across state boundaries. Medicaid is a program funded by both state governments and the federal government. States provide Medicaid benefits in cooperation with CMS and federal guidelines. Medicaid programs differ from state to state, though they must all meet certain standards established by the federal government.

Medicaid coverage plans can change from state to state. Some states have extended their Medicaid programs to cover comprehensive healthcare issues for recipients, while other states only meet the minimum program requirements as mandated by the federal government. The following are some of the minimum Medicaid services covered:

• Inpatient/outpatient hospital services
• Family planning care
• Pediatric services
• Prescription drug costs
• Dental healthcare and services
• Mental health services
• Occupational, physical, and speech therapy

Rules of Medicaid eligibility also vary by state. Some states have stricter rules for eligibility, while others are more relaxed. As a medical billing specialist you should understand Medicaid eligibility in your state.