Medicaid vs. Medicare vs. Private Insurance: A Therapist's Guide

Here's the quick version: Medicaid is state-and-federal coverage for people with low income, Medicare is federal coverage mainly for people 65+ and some younger people with disabilities, and private (commercial) insurance is everything else — usually through an employer or the marketplace. Each one credentials providers differently, pays differently, and comes with its own rules. Understanding the differences helps you decide which payers fit your practice.

What is Medicaid?

Medicaid is a joint federal and state program that covers people with limited income, and in many states it covers a large share of mental health care. Because it's state-administered, the name, rules, and reimbursement rates vary by state (in Oregon, for example, it's delivered through the Oregon Health Plan and coordinated care organizations). Reimbursement is often lower than commercial rates, but Medicaid clients frequently have the fewest other options for care — which is exactly why access matters.

What is Medicare?

Medicare is federal insurance primarily for adults 65 and older, plus some younger people with qualifying disabilities. As of recent years, more mental health provider types can enroll and bill Medicare directly, so it's worth checking current eligibility for your license. Rules are national, which makes it more consistent than Medicaid across state lines.

What is private (commercial) insurance?

Private insurance is coverage through an employer, a spouse's employer, or the individual marketplace — names like Aetna, Cigna, Regence, or Blue Cross plans. Rates are typically higher than Medicaid or Medicare, but credentialing can be competitive and each payer has its own paperwork. Most group practices build a mix of commercial panels.

Quick comparison

•  Who it's for: Medicaid — low income; Medicare — 65+ and some disabilities; Private — employed/marketplace.

•  Who runs it: Medicaid — state + federal; Medicare — federal; Private — commercial insurers.

•  Reimbursement: generally Private > Medicare > Medicaid, though this varies by state and service.

•  Consistency: Medicare rules are national; Medicaid varies widely by state.

What this means for your practice

Your payer mix is a values decision as much as a financial one. A private-pay-only practice may be more profitable per session, but accepting Medicaid or Medicare dramatically expands who can access your care. When I built Sprout, we thought hard about balancing sustainability with access — there's no single right answer, but there is a right answer for your goals and community.

Frequently asked questions

Can I bill both Medicaid and private insurance?

Yes — many group practices credential with multiple payers, including Medicaid, Medicare, and several commercial plans. Each requires its own credentialing process.

Which pays the most?

Commercial plans usually reimburse the most, then Medicare, then Medicaid — but exact rates vary by state, license, and service code. Always verify current rates for your area.

Deciding on your payer mix as you grow? That's exactly the kind of thing I help practice owners think through — book a free consultation.