Medicaid, a federally funded program, is designed to provide healthcare coverage to low-income individuals and families. However, the program is considered the payer of last resort. What does this mean and why is it important?
What is Payer of Last Resort?
Payer of last resort means that Medicaid will only pay for healthcare services after all other sources of payment have been exhausted. This includes private health insurance, worker’s compensation, and even personal injury settlements.
This policy ensures that Medicaid is not being used as a primary source of payment when there are other options available. It also helps prevent fraud and abuse within the system.
Why is Medicaid the Payer of Last Resort?
There are several reasons why Medicaid is considered the payer of last resort:
1. Cost Containment
One of the primary reasons for this policy is cost containment. By requiring other sources of payment to be utilized first, Medicaid can reduce its overall spending on healthcare services.
2. Preventing Fraud and Abuse
Another reason for this policy is to prevent fraud and abuse within the system. If Medicaid were to become a primary source of payment, individuals could potentially take advantage of the program by using it instead of their private health insurance or other sources.
3. Encouraging Personal Responsibility
The payer of last resort policy also encourages personal responsibility by requiring individuals to exhaust all other sources before turning to Medicaid for coverage.
4. Ensuring Access to Healthcare Services
Finally, by only paying for healthcare services after all other sources have been exhausted, Medicaid can ensure that individuals who truly need the program’s assistance have access to necessary healthcare services.
The Bottom Line
While being considered the payer of last resort may seem like a disadvantage for some individuals seeking healthcare coverage through Medicaid, it is an important policy that helps ensure the program’s sustainability, prevent fraud and abuse, and encourage personal responsibility.
By utilizing other sources of payment first, Medicaid can continue to provide healthcare coverage to those who truly need it while also reducing overall spending on healthcare services.