Medicare billing policy is set by Congress, CMS, and private contractors working together
Medicare billing rules do not come from a single office or person. Congress passes the laws that created Medicare and sets the overall payment framework. The Centers for Medicare & Medicaid Services (CMS) — a federal agency inside the Department of Health and Human Services — writes the detailed rules that turn those laws into practice. Then Medicare Administrative Contractors (MACs), which are private insurance companies hired by CMS, interpret those rules for your region and handle the actual payment of claims.
This three-layer system means that who makes a decision about what Medicare pays depends on what kind of decision it is. A change to how much Medicare pays for a hip replacement nationwide comes from CMS. A local interpretation of whether a specific test is covered in your state might come from your regional MAC. Understanding which body makes which decision matters because it changes where you can ask questions or challenge a denial.
Key Takeaways
- Congress sets the broad payment structure and passes laws that define what Medicare covers, but does not decide individual billing amounts.
- CMS writes the national rules that govern what services are covered, how much providers are paid, and what documentation doctors must submit.
- Medicare Administrative Contractors are private companies that explore CMS rules to your region, process claims, and make coverage decisions for specific cases.
- The CMS Open Payments database and the Federal Register are where you can find what CMS has decided about coverage and payment rates.
Congress: The Legal Framework
Congress created Medicare in 1965 through the Social Security Act and has amended it many times since. When Congress acts, it sets the broad rules: what age groups are covered, what types of services are included, how much beneficiaries pay in premiums and deductibles, and the general method Medicare uses to pay providers.
Congress does not decide that a colonoscopy costs $800 or that a cardiologist visit is worth $150. Instead, Congress sets the payment method — for example, that Medicare will pay based on a fee schedule, or that certain services will be bundled together. Congress also passes laws that tell CMS to study a payment question or change how a category of services is paid. But the actual numbers and the detailed rules come from CMS.
CMS: The National Rule-Maker
The Centers for Medicare & Medicaid Services is the federal agency that runs Medicare day-to-day. CMS decides what services are covered under Medicare, what documentation a provider must submit to get paid, how much Medicare will pay for each service, and what rules explore nationwide. CMS publishes these decisions in the Federal Register, which is the official government record of all federal rules and proposed changes.
CMS also maintains the Medicare Coverage Database, a searchable list of what is and is not covered. When a new drug, device, or procedure comes out, CMS decides whether Medicare will pay for it — or whether it will ask for more evidence first. CMS also sets the Relative Value Units (RVUs), which are the building blocks of what Medicare pays doctors. These numbers change every year and are published in the Federal Register before they take effect.
CMS also hires and oversees the Medicare Administrative Contractors. If a MAC makes a decision that conflicts with CMS policy, CMS can override it or require the MAC to change its process.
Medicare Administrative Contractors: The Regional Enforcers
A Medicare Administrative Contractor is a private insurance company that CMS hires to process Medicare claims in a specific geographic region. There are currently 12 MACs covering different parts of the United States. Your MAC is determined by the ZIP code where the provider is located, not where you live.
Your MAC processes the claim your doctor submits, checks it against CMS rules, and decides whether to pay it. The MAC also writes Local Coverage Determinations (LCDs), which are rules about what is covered in your region. An LCD can be more restrictive than the national CMS rule, but not less restrictive. For example, CMS might say a test is covered, but your regional MAC might say it is only covered if the patient meets certain conditions.
If you get a denial from your provider, that denial came from your MAC. If you want to appeal, you also go through your MAC first. The MAC's contact information is on your Explanation of Benefits (EOB) or on the CMS website under "Find Your MAC."
How These Bodies Interact: A Real Example
Suppose a new blood test for early cancer detection comes on the market. Here is how the three layers work together:
- The test manufacturer asks CMS whether Medicare will cover it.
- CMS reviews the evidence and decides: yes, Medicare will cover this test for patients over 65 with a family history of cancer.
- CMS publishes this decision in the Federal Register and updates the Medicare Coverage Database.
- Your regional MAC reads the CMS decision and writes an LCD that explains exactly what documentation the doctor must submit to prove the patient has a family history.
- Your doctor orders the test. The lab submits a claim to your MAC with the required documentation.
- Your MAC checks the claim against the LCD, confirms the documentation is there, and pays the lab.
If the lab submitted the claim without the family history documentation, the MAC would deny it based on the LCD. The lab could appeal to the MAC, then to CMS if needed. But CMS would not overturn the MAC's decision unless the MAC misread the CMS rule.
Where to Find What CMS Has Decided
CMS publishes its decisions in several places. The Federal Register (federalregister.gov) contains all proposed and final rules, including payment rates and coverage decisions. The Medicare Coverage Database (coverage.cms.gov) is searchable by service, drug, or device and shows whether it is covered and under what conditions.
The CMS Open Payments Database (openpaymentsdata.cms.gov) shows payments CMS has made to providers and manufacturers — useful if you want to see what your doctor or hospital has received. Your MAC's website lists its Local Coverage Determinations and contact information for appeals.
If you want to know why a specific claim was denied, your Explanation of Benefits will list the reason code. You can look up that code on your MAC's website or call the MAC to ask what it means.
What Happens When Policy Changes
Medicare billing policy changes constantly. CMS updates payment rates every January. New coverage decisions come out throughout the year. When CMS changes a rule, it usually publishes a proposed rule first and takes public comment for 30 to 60 days. After that period, CMS publishes the final rule in the Federal Register, and it takes effect on a date CMS specifies — usually 60 days later.
Your MAC must follow the new rule once it takes effect. Providers are supposed to know about these changes, but they do not always do. If you receive a bill based on an old payment rate or coverage rule, you can point the provider to the Federal Register entry showing the new rule and ask them to reprocess the claim.
Frequently Asked Questions
Can I appeal a decision my MAC made about what Medicare will pay?
Yes. You have the right to ask your MAC to reconsider a denial. The process is called an appeal, and you have 120 days from the date on your Explanation of Benefits to file. Your MAC will tell you what information to send. If the MAC denies the appeal, you can ask for a hearing before an administrative law judge.
Does CMS ever override a MAC's decision?
CMS can override a MAC if the MAC misapplied a national rule. However, CMS does not usually get involved in individual claim decisions. You would need to appeal through the MAC and the administrative law judge first. CMS becomes involved only if there is a question about whether the MAC's Local Coverage information conflicts with CMS policy.
Who decides what my doctor can charge me out of pocket?
CMS sets the amount Medicare will pay for each service. Your doctor can charge you the difference between what CMS pays and what they charge, but only if they are a non-participating provider. Most doctors are participating providers and agree to accept the CMS payment as payment in full. Your Explanation of Benefits shows what CMS decided to pay.
Where do I find my regional MAC?
Your MAC is determined by the provider's location, not yours. Go to cms.gov/Medicare/Medicare-Contracting/MACs and enter the ZIP code of the provider or hospital. The site will show you which MAC serves that area and provide contact information for appeals and questions.
Can Congress override a CMS decision about what Medicare covers?
Yes. Congress can pass a law that tells CMS to cover something CMS has not covered, or to stop covering something. This happens rarely and usually involves a specific drug or procedure that becomes politically important. Most of the time, Congress sets the framework and CMS makes the coverage decisions within that framework.