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Medicaid vs. Medicare reimbursement

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Medicare and Medicaid reimbursement models vary according to federal and state regulations, but both are striving to embrace value-based reimbursement. Medicare and Medicaid are government healthcare programs that help individuals acquire coverage, but similarities between the programs more or less end there. Medicare and Medicaid reimbursement structures vary significantly by program and state. HHS describes Medicare as an insurance program, whereas Medicaid is an assistance program. The federal government offers Medicare coverage to individuals who are 65 years or older, have certain disabilities, and suffer from end-stage renal disease or ALS. 

On the other hand, Medicaid is a federal and state-sponsored program that assists low-income individuals with paying for their healthcare costs. Each state defines who is eligible for Medicaid coverage, but the program generally covers individuals who have limited income, including: 

  • Individuals 65 years or older 
  • Children under 19 years old 
  • Pregnant women 
  • Individuals living with a disability 
  • Parents or adults caring for a child 
  • Adults without dependent children 
  • Eligible immigrants 

Depending on the state, Medicaid beneficiaries may pay premiums, deductibles, co-payments, and coinsurance’s to receive coverage. The federal government also funds an average of 57% of the operating costs for each state’s Medicaid program based on the state’s Medicaid expenditures. Meanwhile, the Medicare program is primarily funded through payroll taxes and Social Security income deductions. Beneficiaries are also responsible for a portion of Medicare coverage costs through deductibles for hospital services and monthly premiums for other healthcare services.  Medicare and Medicaid reimbursement models have evolved over the past 50 years and will continue to do so as value-based care changes the way providers receive payment for their services.