Colorado Medicaid as Secondary Payer: Understanding Write-Offs

If your client has a commercial insurance (like Tricare) as their primary payer and Colorado Medicaid as their secondary, you may notice that some claims result in a $0 patient responsibility and a lower-than-expected payout. Here's why — and what it means for your clinic.

How Dual Coverage Normally Works

When a patient has two payers, the primary payer processes the claim first. Any remaining patient responsibility (copay or coinsurance) is then sent to the secondary payer, which may cover some or all of it.

Example without the write-off issue:

• Primary allowed amount: $50/unit

• Primary pays 80% → $40

• Patient owes 20% → $10

• Medicaid (secondary) covers the $10 patient responsibility

• You receive: $50 total

When the Primary Rate Exceeds the Medicaid Rate

The issue arises when your primary payer's allowed amount is higher than what Colorado Medicaid would pay for the same service.

Example:

• Primary payer allowed amount: $100/unit

• Primary pays 80% → $80

• Patient owes 20% → $20

• Medicaid rate for this service: $50/unit

When Medicaid receives the secondary claim, it compares what you were already paid against its own rate:

"Our allowed amount for this service is $50. You've already received $80 from the primary payer — that exceeds our rate. We will not make an additional payment."

As a result, the $20 patient responsibility goes unpaid by Medicaid. And critically, federal law prohibits billing Medicaid patients for any remaining patient responsibility — so you cannot collect it from the family either.

That $20 is a write-off.

What This Means for Your Clinic

The client's share of the session cost is effectively $0 — which is correct and legally required — but your clinic absorbs the gap between the primary payer's patient responsibility and the Medicaid rate.

How Alpaca Handles This

When Alpaca detects that a claim falls into this scenario, we automatically adjust the expected payout to reflect reality:

• Patient responsibility is set to $0 — because Medicaid will not pay it and you cannot bill the family

• Your contracted amount is recalculated based on the actual dollars received, not the original allowed amount

This ensures your financial reporting reflects what you'll actually collect, and your client's portion of the cost is accurately shown as $0.

Key Takeaway

This is not a billing error — it's an intended feature of how Medicaid works as a secondary payer. Medicaid acts as a rate floor: if you've already been paid at or above the Medicaid rate by the primary payer, Medicaid considers the claim satisfied. The trade-off is that patient responsibility cannot be collected when Medicaid is involved, and the write-off is absorbed by your clinic.

If you have questions about specific claims or want to understand how this affects your overall reimbursement, reach out to your Alpaca support contact.