In insurance terminology, what is referred to as the payer of last resort?

Medicaid is known as the payer of last resort because it is designed to pay for healthcare services only after other available sources of payment have been exhausted. This means that if a patient has access to any form of private insurance, Medicare, or employer-sponsored insurance, those sources must first be billed for the services rendered. Only when those options have been fully utilized or if they do not provide coverage for certain services will Medicaid step in to cover the remaining costs.

This principle is essential in managing the Medicaid program and ensuring that its resources are used efficiently. By having other forms of insurance act as primary payers, Medicaid can preserve its funds for those who are truly in need and may not have any other coverage options available. This helps to reduce the financial burden on the state and federal budgets that support Medicaid.

Understanding this concept is vital for anyone involved in the revenue cycle and billing processes, as it affects how claims are processed and how healthcare providers are reimbursed for services provided to Medicaid beneficiaries.