Medicaid keeps the lights on for a lot of long-term care. It also has a habit of turning one small billing mistake into a slow, expensive headache. A missing authorization number, a mismatch between documentation and what was billed, a timely filing miss, or a simple eligibility gap can snowball into denials, recoupments, and A/R that ages like milk.
Here’s why this matters beyond “billing best practices.” CMS reports that a major share of Medicaid improper payments is tied to insufficient documentation, meaning the payment cannot be validated because the record does not support it. And when payment integrity programs review claims, they are not judging your intentions. They are judging your file.
This article breaks down the most common Medicaid billing mistakes we see in skilled nursing and broader LTC settings, what they cost you, and exactly how to prevent them with practical controls. In our 20+ years supporting SNFs and ALFs nationwide, we’ve learned a blunt truth: you do not need a “perfect team.” You need a repeatable system that makes the right steps hard to skip.
The Real Cost of “Small” Medicaid Billing Mistakes
Before we list mistakes, let’s name the damage:
- Delayed cash (clean claims get paid faster than corrected claims)
- Denial rework (staff time, phone time, portal time, all unpaid labor)
- Timely filing risk (miss the window, lose the revenue)
- Audit vulnerability (you cannot prove what you did, you cannot keep what you earned)
A key point: payment integrity measurement exists specifically to identify payments that did not meet requirements. The PERM program measures improper payments in Medicaid and CHIP, and CMS is clear that the improper payment rate is not a fraud rate, it’s a compliance measurement.
Mistake 1, Billing Without Verifying Eligibility for the Dates of Service
Why it happens
Eligibility changes mid-month, residents shift plans, Medicaid pending status lingers, or coverage is active but the program is not (for example, waiver vs institutional coverage).
What it costs
Denied claims, rebilling, and long A/R cycles. Sometimes the claim is unfixable if the eligibility was never valid for that date span.
Fix it with a simple control
Eligibility checkpoint (non-negotiable)
- Verify eligibility at admission
- Re-verify before each billing cycle closes
- Re-verify immediately after any plan change, discharge, or readmission
Mini case scenario (anonymized)
A facility billed the full month under one Medicaid payer, but the member shifted to a Medicaid managed care plan mid-month. Half the month rejected for wrong payer. The fix was not “more follow-up,” it was a payer-change alert workflow tied to admissions and census changes.
Mistake 2, Ignoring Timely Filing Rules Until It’s Too Late
Why it happens
Aging gets reviewed monthly, not daily, and corrected claims get stuck behind “more urgent” fires.
The rule you need to respect
Federal Medicaid regulation requires states to make providers submit claims no later than 12 months from the date of service, and it also defines timely payment standards for clean claims.
Fix it with a countdown worklist
Timely filing safeguards
- Work A/R by “days remaining to deadline,” not just aging buckets
- Escalate claims at 60, 30, 15, and 7 days remaining
- Keep proof of submission attempts and payer communication
If your team only looks at A/R once a month, timely filing will eventually eat your lunch.
Mistake 3, Missing or Mismanaging Prior Authorizations
Why it happens
Authorization is tracked in someone’s inbox, or the auth exists but never gets tied correctly to the claim.
What it costs
Denials that are slow to overturn, especially in Medicaid managed care environments.
Fix it with an “Authorization Control Tower”
What to track in one place
- Auth number
- Service type
- Start and end dates
- Approved units (and unit definition)
- Remaining units
- Payer specific submission instructions
Mini case scenario (anonymized)
An AL provider delivered authorized services, but the auth span ended two days before month-end. Two days denied, then appealed, then delayed. A simple expiration alert 10 days prior would have prevented the lapse.
Mistake 4, Documentation Does Not Support What Was Billed
This is the most expensive category because it triggers denials and can also trigger recoupments later.
CMS’s FY2024 Medicaid and CHIP supplemental improper payment data highlights “insufficient documentation” as a major error category, meaning there was no or not enough documentation to support payment.
Why it happens in LTC
- Notes exist, but they do not tie to the billed service
- Documentation is late, inconsistent, or missing signatures
- MDS, care plan, therapy notes, and nursing notes tell different stories
Fix it with “billable proof prompts”
For any billed service, make sure the record answers:
- What was done?
- Why was it necessary?
- Why did it require this level of care?
- What was the response and next plan?
Practical tip
Standardize note templates for high-risk services. Consistency beats heroic writing.
Mistake 5, Wrong Payer, Wrong Plan, Wrong Claim Type
Why it happens
Mixed payer environments, dual eligibility, spend-down situations, and plan changes.
What it costs
Hard rejections and delayed payment because the claim never enters the right pipeline.
Fix it with a “coverage truth” snapshot
At minimum, track for every resident:
- Active payer and plan name
- Member ID
- Coverage dates
- Any secondary coverage and coordination notes
- Contact info and portal access details
Mistake 6, Incorrect Patient Liability or Share of Cost Handling
Why it happens
Patient liability changes, notices come late, or the business office and billing office are not aligned.
What it costs
Underpayments, takebacks, resident balance confusion, and time-consuming corrections.
Fix it with a weekly reconciliation
Weekly check
- Patient pay amount updates received and logged
- Resident account updated
- Billing adjusted to reflect liability correctly
- Documentation stored (notices, determinations)
Mistake 7, Coding and Billing Data Errors, Simple but Brutal
Common examples
- Incorrect dates of service
- Incorrect provider identifiers
- Wrong codes or revenue code mapping
- Missing required fields for a specific payer
Why it costs so much
These errors create “dirty claims,” and timely payment standards apply to clean claims.
Fix it with a pre-bill scrub
Pre-bill scrub checklist
- Eligibility confirmed for the exact date span
- Authorization present and active (if required)
- Required fields complete, payer-specific rules met
- Documentation supports the service billed
- Timely filing clock checked
This is one of the highest ROI processes you can install.
Mistake 8, Denials Are Not Worked Like a System
Why it happens
Denials land, people react, and nothing is standardized.
Fix it with denial operations
Denial workflow that actually works
- Triage within 48 hours
- Categorize (eligibility, auth, documentation, coding, timely filing)
- Assign an owner and deadline
- Use a standard appeal packet structure
- Trend the top 10 denial reasons monthly and fix upstream
Remember, measurement programs like PERM exist because errors repeat at scale. Treat denials as signals, not annoyances.
Mistake 9, Treating Compliance Reviews Like Rare Events
Why it happens
Facilities plan for “an audit” like it’s a once-in-a-decade storm.
Reality
PERM and other oversight processes are part of the ecosystem. CMS describes PERM as measuring improper payments across fee-for-service, managed care, and eligibility components.
Fix it with audit-ready habits
- Standard resident file structure
- Fast record retrieval standard (24 to 48 hours)
- Monthly internal spot checks on high-risk claims
- A “missing documentation” worklist before billing closes
Quick Reference, The Mistake-Proof Medicaid Billing Checklist
Use this as your monthly close playbook:
- Eligibility verified for dates of service
- Payer and plan confirmed, including mid-month changes
- Authorizations tracked, active, and referenced properly
- Documentation supports billed services, consistent across teams
- Pre-bill scrub completed
- Denials triaged quickly with owners and deadlines
- Timely filing countdown reviewed
FAQ
What is the biggest reason Medicaid payments get flagged as improper?
A major driver is insufficient documentation, meaning there is not enough record support to validate the payment as proper.
Are Medicaid improper payments the same as fraud?
No. CMS states the PERM improper payment rate is not a fraud rate, it measures payments that did not meet requirements.
What is the maximum time limit for submitting Medicaid claims?
Federal regulation requires states to set provider claim submission limits no later than 12 months from the date of service.
Most Medicaid billing mistakes are not mysterious. They’re predictable, repeatable, and preventable. The facilities that keep cash moving are not doing “more work.” They’re doing the right work earlier, with simple gates that stop bad claims from leaving the building.
Key takeaways
- Verify eligibility and payer details for the exact dates of service
- Track authorizations like inventory and catch expirations early
- Protect timely filing with countdown worklists and escalation rules
- Build documentation that clearly supports what you bill, because insufficient documentation is a major payment integrity driver
- Run denials as an operation with SLAs, templates, and trend fixes
If your team is stuck in denial loops or A/R keeps aging, LTCPro can help you simplify the process and tighten controls without adding chaos. Our back-office support is built for SNFs and ALFs, focused on measurable outcomes: fewer denials, faster resolution, and cleaner billing cycles.
What’s costing you more right now, eligibility mess, authorization gaps, documentation issues, or denial follow-up?
