Medicare and Medicaid – Differences RCM Professionals Should Understand

Medicare and Medicaid are two of the most important terms for anyone in the revenue cycle management profession in the healthcare industry that are programs administered by the government to support and provide aid to the needy people for their healthcare in the USA. Both these programs are funded by the taxpayers and are governed by the Centers for Medicare and Medicaid Services (CMS). These terms are similar and many RCM services professionals who have just started in their profession may get confused with these healthcare programs and hence, it is worthwhile to understand the differences between the two.


People in RCM services should know that Medicare is a social health insurance program administered by the federal government of the US that is useful for the US citizens and those permanent residents of at least five years in a row. Those people who are aged more than 65 years are eligible for this program and at times, even younger people may also qualify if they have received some specified disability benefits or with severe kidney failures that require dialysis or a kidney transplant. The main aim of Medicare is to address the health issues of the elderly who tend to have high medical bills but low income means. RCM services providers should take necessary care in training their employees regarding Medicare program that includes four parts –

Part A: Hospitalization coverage: Under this, a qualified citizen is eligible for hospitalization coverage free of charge without any monthly premium. A citizen is eligible under Part A, regardless of the income, if the citizen is 65 years old or older and the patient or the spouse has worked and paid the Medicare taxes for at least 10 years.

Part B: Medical insurance: Eligibility of Part A automatically qualifies a person for Part B that provides health insurance coverage and covers doctors’ office visits, test reports, any other medically necessary services, and equipment along with the preventive services.

Part C: A person eligible for Part A and Part B is also eligible for Part C that refers to insurance plans that are given by the private insurance companies rather than the federal government.

Part D: This part provides coverage for prescription drugs which is generally provided to those who enroll in Part C.

The expenses of the Medicare coverage include yearly deductibles, co-payments for lengthy hospitalizations, monthly premiums and varying costs as decided by private insurance providers for Part C.


Medicaid is an assistance program funded jointly by the federal and state governments with an intention to provide aid to individuals and families with low income. The eligibility conditions for Medicaid vary from state to state and are determined by income. Services that are covered under Medicaid differ from state to state but, certain mandatory benefits are common in all states. Some of them are specific inpatient and outpatient hospital services, early and periodic screening for children, nursing facilities, doctors’ services, lab services etc. For Medicaid, the states have the right to charge premiums and set cost-sharing requirements for Medicaid enrollees.

Professionals in RCM services should get to know the differences in Medicare and Medicaid and other private insurance plans so as to provide accurate bills to the insurance providers for sufficient reimbursement for the services provided and collect any further fee from the patient if the services are not covered by both Medicare and Medicaid.