Medicaid is one of the main providers of healthcare in the United States, with over 77 million people enrolled as of August 2025. While hospitals, private practices, medical billing companies, and other large organizations work with Medicaid to offer services, community-based organizations fill in the critical gaps of care to those who desperately need it.
However, Medicaid billing can be complicated for community-based nonprofit programs. These organizations have mixed funding sources, so it's hard to match the funds to the service provided. Additionally, staff who complete Medicaid billing also have lots of other work to do, making the heavy documentation requirements feel overwhelming (particularly when done manually).
The Medicaid billing experts at PlanStreet are here to help. In this step-by-step Medicaid billing for community-based organizations guide, we'll walk you through the billing lifecycle, updates in 2026, and how PlanStreet's Medicaid billing software can help you streamline the process while remaining compliant.
The Step-by-Step Medicaid Billing Lifecycle
For your community-based organization, the Medicaid billing lifecycle starts at patient onboarding and ends at final payment. This changes if Medicaid denies the claim. In those circumstances, the community-based organization can submit an appeal.
To follow Medicaid billing best practices, you need data integrity at every step, ensuring that your team can always file an appeal promptly and accurately. Follow the community health Medicaid billing workflows as outlined below.
Step 1. Enrollment, contracts, and setup
First, your community service organization must enroll as a Medicaid provider with your state. Each state has different requirements, so check your state's Medicaid website. As an example, let's look at the community-based organizations' requirements for Medi-Cal:
- A public or private non-profit organization with a 501(c)(3) status or a fiscally sponsored entity of a 501(c)(3) non-profit organization.
- Federal Employer Identification Number (FEIN) or Individual Taxpayer Identification Number (ITIN) verification
- Local Business License, Tax Certificate, and Permit
- 501(c)(3) Documentation for CBO providers with a 501(c)(3) status
- Certificate of Commercial Liability Insurance
- Certificate of Workers' Compensation Insurance
- Signed Lease Agreement
- Successor Liability with Joint and Several Liability Agreement (DHCS 6217), if applicable
- Must follow all rules outlined in California Code of Regulations (CCR), Title 22, Sections 51000.30(e) and 51000.60(c)
Once you've successfully enrolled and obtained your Medicaid billing IDs and NPIs (national provider identifiers), you'll need to set up your case management system to ensure that every technical billing field is set up correctly before you start sending claims. Double-check that the following is accurate:
- Payer IDs
- Taxonomy
- Billing Locations
- Service Codes
- Modifiers
Choose a care management software that has these codes built in to streamline the setup on your end.
Step 2. Intake, eligibility, and service authorization
Now, you're ready to intake new clients. Once you receive a referral, you need to verify their Medicaid eligibility and plan enrollment—including which managed care organization (MCO) and benefit package they have. At intake, capture:
- Identifying information: legal name, birthday, sex assigned at birth, social security number, etc.
- Race and ethnicity: Race and ethnicity using federal/state categories, preferred spoken and written language, etc.
- Coverage: Medicaid ID number, other health coverage, suspected eligibility category
- Consent: to treat, rights, responsibilities, etc.
- Required disclosures: HIPAA/42 CFR Part 2 when applicable.
After collecting the information, check if prior authorization or a treatment/service plan is required. Always obtain approvals before initiating services when needed. Prior authorization is often required to see a specialist or get out-of-network care.
Step 3. Service delivery and documentation
Now, it's time to care for your clients. Your services must match your enrolled provider type and location as a community-based organization. This typically includes services such as housing navigation, community health worker visits, HCBS (home and community-based services) personal care, and others.
When providing the service, document the required elements:
- Client ID
- Date and time
- Units
- Place of service
- Rendering provider
- Diagnosis
- Narrative supporting medical necessity or service criteria
Step 4. Internal review and charge capture
You need to review the documented encounters and transform them into billable units. Implement the correct procedure codes, modifiers, and time increments for the service provided. Most HCBS services are paid in either a 15-minute unit or an entire day rate.
Before creating any claims, run a quality check so that no critical information is missing. Common errors include:
- Missing signatures
- Incorrect billing codes
- Invalid dates
- Eligibility gaps
- Authorization limits
Set up workflows that help team members correct the issue before the claim goes out. This can be done easily in Medicaid case management software like PlanStreet.
Step 5. Claims creation and submission
Use the appropriate format when submitting a claim. For community-based services, CMS-1500 is usually the correct one. Alternatively, UB-04 is used if you're billing as a facility or for specific programs.
Submit each claim electronically via a clearinghouse or payer portal within the filing limits, which you can do with PlanStreet's Medicaid billing software. Follow each payer's rules for taxonomy, billing NPI, and coordination of benefits.
Step 6. Payer adjudication and remittance
Once the claim has been submitted, the Medicaid agency you're working with will validate the claim form and check eligibility, service limits, prior authorization, and payment policies. Depending on the results of that check, they will pay, deny, or pend the claim.
In this process, you will receive an electronic remittance advice (ERA/EOB) that lists paid, denied, and adjusted lines with reason codes and any member cost-sharing or third‑party liability applied. Medicaid billing software like PlanStreet helps you generate and manage EDI 837 (claims) and EDI 835 (remittance).
Step 7. Payment posting, reconciliation, follow-up, and appeals
Now, you'll have to manage payments. Post payments and denials in the case management system. There, you can reconcile bank deposits and match back to original encounters to identify underpayments or write-offs. You'll need to correct and resubmit denials that are easier to fix, such as coding errors or missing documentation.
Sometimes, your team will have to file an appeal for medical-necessity denials or rate determinations. Depending on the state and insurer, the in-network denial rate can range from 1% to 54%.
To appeal properly, follow the specific denial notice instructions from the state Medicaid or MCO. However, you can expect the process to go like this:
- Double-check the appeal: See if the issue is a claims/payment denial or a service/authorization denial.
- Prepare the appeal and submit: Draft a brief appeal letter (on agency letterhead) that identifies the member, dates of service, claim number, denial reason, and a statement of what you want the payer to do.
- Track timelines and request expedited review if needed: Log each appeal with date submitted, level (plan-level vs. state-level), and due date for payer response so staff can follow up if the decision is late or incomplete.
- Escalate if the first appeal is denied: If the plan upholds its denial, check if you can submit a second‑level appeal and/or a state fair hearing.
Step 8. Ongoing compliance and optimization
Revising processes to decrease denial rates is a crucial part of remaining compliant. Your team should:
- Conduct periodic internal audits of documentation vs. claims
- Monitor denial trends
- Update workflows as payer policies, waivers, and community support benefits (e.g., housing-related services) evolve.
Case management software analytics can help you track revenue cycle metrics, including clean claim rate, days in A/R, denial rate by reason, and authorization utilization. These metrics can help you improve eligibility processes, scheduling, and documentation training.
Required Medicaid Documentation
Community-based Medicaid providers must keep documentation that proves member eligibility, supports medical necessity, shows person-centered goals, and highlights how billed services were delivered as claimed. Exact requirements vary by state, waiver, and MCO, but the core documentation elements are consistent nationwide.
- Administrative records: Medicaid ID, plan/MCO, and eligibility verification records with the service date.
- Provider records: Enrollment credentials, licenses, NPI, service agreements, and compliance policies.
- Assessments: Describing functional, psychosocial, and medical needs, used to determine HCBS or community-based services.
- Care plans: Showing goals, strengths, risks, selected services, frequency, and provider type, updated at required intervals.
- Prior authorizations: Approvals for services that require them, with start/end dates, units/limits, and diagnoses or criteria used.
- Encounter notes for each billed service: date, start/end time or units, location, staff name/credentials, service type/code, and a narrative describing interventions and member response, linked to care plan goals.
- Attendance: Schedules and logs showing staff assigned, actual attendance/participation for group, day, or community integration activities, and backup staffing plans where required, showing the activities meet HCBS requirements.
- Claim records: Documentation that links each billed line to the specific encounter.
Updated Medicaid Billing Guide: 2026 Regulatory Changes
Most 2026 Medicaid billing requirements are still in flux and vary by state, but several federal trends and statutory provisions are in place. Community-based providers should plan for:
- Federal work requirements: New work-related conditions and verification rules will be implemented by December 31, 2026. For example, some people will be required to work 80 hours per month at an approved activity.
- HCBS community engagement: States must partner with community-based organizations to educate members on federal work requirements, help document hours, and figure out barriers stopping them from completion. Community-based organizations will see more demand for navigation, employment, and documentation support tied to Medicaid coverage.
- Requirement verification changes: States must verify that current enrollees meet requirements for at least one month within each six-month eligibility review period (used to be a year-long eligibility review period).
- Retroactive coverage: A federal change reduces Medicaid retroactive coverage starting in 2027 for certain non‑expansion adults (such as nursing facility residents) from 90 to 60 days and to 30 days for expansion adults.
- State changes for community-based organizations: States are peppering in their own changes to Medicaid reforms, such as managed care oversight, eligibility, and enrollment. Be sure to track your state's Medicaid bulletins and MCO contract amendments for 2026.
Prep for 2026 Medicaid Billing With PlanStreet
Community-based organizations run on tight budgets. Make the most of every minute with PlanStreet's Medicaid billing software. Our case management platform automates every major step of the process, helping your billing remain accurate to avoid excessive appeals and denials.
PlanStreet offers:
- Baked-in compliance for 2026 requirements
- Real-time eligibility checks, authorization tracking, and code validations
- Simplified reporting for payers
- Billing by increments based on your program's reimbursement model
- Batch claim submission
- Claims lifecycle reporting to iterate and improve processes
Learn how you can improve Medicaid billing cycles at your community-based organization and schedule a live demo with PlanStreet today.