Revenue Cycle Foundations

Medicare, Medicaid, and Commercial Payers

Distinguish payer programs, plan administration, member identification, and operational billing differences.

Estimated time: 48 minutes / Reviewed 2026-07-12

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Learning objectives

Explain medicare, medicaid, and commercial payers using current claim facts and official sources.
Apply the 8-step workflow to a de-identified reimbursement case.
Distinguish administrative, coding, coverage, documentation, and procedural-status questions.
Document a bounded conclusion, unresolved facts, and the next supported action.

Core instruction

The payer is determined claim by claim, not by diagnosis or equipment alone. Original Medicare usually processes covered home DME under Part B through a DME MAC; Medicare Advantage claims go to the member's plan; Medicaid follows state and managed-care rules and may be primary or secondary; and commercial payment follows the member's current plan, contract, network, benefit, authorization, and coordination-of-benefits rules.

Learn how Original Medicare, Medicare Advantage, Medicaid, managed care, dual eligibility, and commercial plans determine who processes and pays a DME claim.

Medicare Part A is hospital insurance, Part B is medical insurance and generally contains the DME benefit, Part C is Medicare Advantage delivery through private plans, and Part D covers outpatient prescription drugs rather than the general DME benefit.
For covered DME under Original Medicare, the claim generally routes to the appropriate DME MAC. After the Part B deductible, Medicare commonly pays 80% of the Medicare-approved amount and the beneficiary commonly owes 20%, subject to assignment, secondary coverage, item-specific rules, and other exceptions.
A Medicare Advantage member uses the plan shown on the current card and eligibility response. The plan must cover at least what Original Medicare covers but may use its own network, authorization, supplier, documentation, and cost-sharing rules.
CMS February 2026 data reports 51.2% of Medicare enrollment in Medicare Advantage and other health plans. That dated national statistic never substitutes for checking the individual member's coverage on the date of service.
Medicaid is jointly federal and state administered. DME benefits, limits, fee schedules, prior authorization, supplier enrollment, incontinence-supply coverage, and managed-care routing vary by state, eligibility category, age, and plan.
EPSDT requires states to furnish Medicaid-coverable, medically necessary services needed to correct or ameliorate conditions for eligible members under age 21; this can make pediatric coverage broader than the state's adult benefit but does not eliminate medical-necessity or documentation review.
For a person with both Medicare and Medicaid, Medicare is generally billed before Medicaid for Medicare-covered DME. Verify payer order, QMB status, state crossover behavior, managed-care enrollment, and supplier participation before collecting money.
Federal law prohibits Medicare providers and suppliers from billing QMB members for Medicare Part A or Part B deductibles, coinsurance, or copayments, even when the state pays little or none of that cost sharing.
Commercial DME payment depends on the actual contract and benefit: active eligibility, network status, covered benefit, authorization, medical policy, HCPCS, rental or purchase terms, deductible, coinsurance, coordination of benefits, and timely filing must align.
An insurance card is an identification clue, not proof of active coverage, authorization, network status, medical necessity, or payment. Read the payer and plan identifiers, then verify electronically and resolve inconsistencies before delivery.

How this affects the revenue cycle

This lesson is part of Medical Billing and Medicare Reimbursement Professional Program. Apply it to the payer, plan, jurisdiction, service date, provider or supplier, item or service, and evidence actually under review.

An accurate code or accepted transaction does not independently prove eligibility, coverage, medical necessity, authorization, documentation sufficiency, or payment. Each control answers a different question and must remain traceable to its source.

Intake owns accurate patient, payer, plan, and service facts.
Clinical and coding teams must work from authenticated records and current code sets.
Billing owns transaction accuracy, submission evidence, and reconciliation.
Denial teams must preserve procedural rights while correcting the actual root cause.

Professional standard of work

A professional billing record should be reproducible by another trained reviewer. Record the source consulted, effective date, claim or line affected, evidence reviewed, missing facts, conclusion, owner, and next deadline.

Do not alter clinical meaning, manufacture support, append a modifier solely to bypass an edit, or promise payment. Escalate conflicts involving clinical judgment, legal interpretation, payer contracts, suspected overpayments, or potential fraud to the appropriate qualified role.