The Payor of Last Resort

Remember one thing Medicaid is always the last payor.
If third party liability exists, then Medicaid is always the payor of last resort. This simply means that Medicaid always pays last where other insurance is present.


Whenever you receive a Medicaid denial advising you to bill the primary insurance, it is because Medicaid has on file that the recipient has other insurance. Recipients are required to keep Medicaid informed of any health insurance information. Providers are also responsible for notifying Medicaid of third party insurance they find out about as well as informing Medicaid of any third party payments they receive on behalf of the recipient.

State Medicaid agencies are required to reject claims wherever third party liability exists if they receive a claim without documentation of the primary insurance payment.

In instances that third party exists, if the Medicaid allowed amount is greater than the third party payment, Medicaid will pay the difference up to Medicaid's allowed amount. However, in instances that the third party payment is more than what Medicaid allows, Medicaid makes a "zero payment". This means that the provider must accept the primary insurance payment as payment in full and cannot balance bill the patient.

It is important to keep in mind that Medicaid is not an insurer. Medicaid is a program that makes medical payments on behalf of the recipient. If the provider or recipient fail to comply with any health insurance requirements that results in a denied payment, Medicaid can deny also due to noncompliance.

Third party liability is not just limited to Medicare and health insurance. It also refers to liability insurance due to motor vehicle accidents and work-related injuries or illness. For specific information on billing Medicaid claims, refer to your state Medicaid agency.