Medicaid
A joint federal-state health insurance program for low-income individuals, paying hospitals less than Medicare and covering over 80 million Americans as of 2025.
Medicaid is a term from U.S. hospital cost and quality reporting — the field that produces the CMS Hospital Compare program, the Medicare Inpatient Payment files, and the patient-facing tools built on top of them. The definition below covers what the term means in CMS files, what it does not mean, and how it interacts with the other measures CMS publishes. On the LakeQuality value rubric, Medicaid is one of the inputs (directly or indirectly) to the combined cost-and-quality grade. Understanding how the term is computed at CMS — what counts and what does not — is part of reading hospital pages defensibly.
Each hospital page on LakeQuality surfaces the specific Medicaid value for that facility (when CMS reports one), so the general definition here translates into a concrete data point on the per-hospital pages you actually use.
How It Works
Medicaid is the largest source of health insurance coverage in the United States by enrollment, covering approximately 79 million Americans as of mid-2025 after post-pandemic continuous coverage unwinding reduced peak enrollment of 94 million in 2023. Medicaid covers low-income adults (in the 41 ACA expansion states and DC), children (through CHIP and traditional Medicaid), pregnant women, elderly requiring long-term care, and people with disabilities. The program is jointly financed by federal and state governments through the Federal Medical Assistance Percentage (FMAP), which ranges from 50% in wealthier states (California, New York, Massachusetts) to 77% in Mississippi, with ACA expansion populations at a flat 90% federal match. Each state administers its own program within broad federal guidelines, setting eligibility thresholds, benefits, and provider payment rates. Medicaid fee-for-service typically pays hospitals 60-80% of what Medicare pays for the same services, with some states paying below 50%. For a DRG 470 knee replacement paying $14,500 on Medicare, a state Medicaid program may pay $8,000-$11,000. Most states now use Medicaid managed care, contracting with private plans (Centene, Molina, UnitedHealthcare, Elevance, Aetna, and state-specific carriers like L.A. Care) that receive capitation and bear financial risk. Roughly 75% of Medicaid beneficiaries are in managed care. Hospitals serving high Medicaid volumes (disproportionate share hospitals) receive supplemental DSH payments from federal Medicaid funds ($12-$14 billion annually) to offset unreimbursed costs; these payments face scheduled ACA-era cuts that continue to be delayed by Congress. Safety-net systems like NYC Health + Hospitals, Cook County Health, LA County Health Services, and Harris Health rely on Medicaid and DSH for the majority of their revenue.
Related Terms
- Medicare, Federal health insurance for Americans aged 65+ and certain younger people with disabilities, covering hospital stays (Part A), outpatient care (Part B), Medicare Advantage (Part C), and prescription drugs (Part D).
- Disproportionate Share Hospital (DSH) Payments, Supplemental Medicare and Medicaid payments to hospitals that serve a disproportionate number of low-income patients, totaling approximately $28 billion annually across both programs.
- Centers for Medicare & Medicaid Services (CMS), The federal agency within the Department of Health and Human Services that administers Medicare, Medicaid, CHIP, and the ACA marketplace, setting hospital payment rates, quality standards, and the data that HospitalCostData uses.
- Charity Care (Financial Assistance), Free or reduced-cost hospital care provided to patients who cannot afford to pay, required of all 501(c)(3) nonprofit hospitals under IRS Section 501(r) and frequently offered voluntarily by for-profit and government hospitals.
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About This Definition
This definition is part of the HospitalCostData Hospital Pricing Glossary, 47 terms explaining hospital costs, quality ratings, and healthcare billing. Written for patients, journalists, researchers, and healthcare professionals.