Why Medicare and Medicaid Are Run by the Same Federal Agency

The Centers for Medicare and Medicaid Services runs both programs from one organization

The Centers for Medicare and Medicaid Services (CMS) is the federal agency inside the Department of Health and Human Services that administers both Medicare and Medicaid. They are separate programs with different rules, funding sources, and may be able to access requirements — but they share one headquarters, one leadership structure, and overlapping operations because they serve related populations and handle similar administrative tasks.

This arrangement exists because Medicare and Medicaid, though created in the same year (1965), serve different groups. Medicare covers people 65 and older, some younger people with disabilities, and people with end-stage renal disease, regardless of income. Medicaid covers low-income individuals and families, and may be able to access varies by state. Putting both under one roof reduces duplication, allows data systems to communicate, and lets CMS coordinate when someone qualifies for both programs at once.

Key Takeaways

CMS is a single federal agency that runs Medicare and Medicaid as two separate programs with different rules, may be able to access, and funding.
Combining them under one organization reduces paperwork duplication and allows the agency to coordinate care for people who have both Medicare and Medicaid.
CMS also oversees the Children's Health Insurance Program (CHIP) and sets quality standards for hospitals, nursing homes, and other providers.
State Medicaid agencies handle day-to-day enrollment and claims in their states, but CMS sets the federal rules they must follow.
Having one agency manage both programs means a single point of contact for policy changes, fraud investigation, and provider oversight.

How CMS divides the work between Medicare and Medicaid

Although CMS runs both programs, the day-to-day operations are split. Medicare is federally administered — CMS directly handles enrollment, claims processing, and provider payments through regional offices and contractors. When you turn 65 and enroll in Medicare, you are dealing with a CMS system, even if a private insurance company processes your claim.

Medicaid is state-administered. Each state runs its own Medicaid program under federal rules set by CMS. A state Medicaid agency handles enrollment, determines who qualifies based on state income limits, processes claims, and manages the day-to-day relationship with providers. CMS oversees the states, audits their programs, and ensures they follow federal law, but does not directly enroll people or pay claims in most cases.

This split structure is why Medicaid rules differ from state to state — the federal government sets a floor (the minimum a state must cover), but states can expand beyond it. CMS enforces the floor and reviews state plans to make sure they comply.

Why one agency instead of two separate ones

Combining Medicare and Medicaid under CMS saves money and reduces confusion for people who have both programs. Someone who is 65, low-income, and qualifies for both Medicare and Medicaid (called a "dual may be able to access") would otherwise have to navigate two separate federal agencies. Instead, CMS coordinates their coverage, ensures their prescriptions and doctor visits are covered without gaps, and prevents duplicate payments.

A single agency also means one set of rules for providers. Hospitals, doctors, and nursing homes deal with one federal regulator for quality standards, billing rules, and fraud prevention, rather than two. CMS can audit a provider's Medicare billing and Medicaid billing in the same inspection, catching inconsistencies and overpayments more easily.

Additionally, CMS manages the Children's Health Insurance Program (CHIP) alongside Medicare and Medicaid. CHIP covers children in families with income too high for Medicaid but too low to afford private insurance. Grouping all three programs under one agency allows CMS to coordinate coverage for families where some members may have access to for Medicaid and others for CHIP.

What CMS actually does day-to-day

CMS headquarters in Baltimore, Maryland sets policy, writes regulations, and oversees the entire system. The agency decides what services Medicare covers, how much it pays doctors and hospitals, and what rules states must follow for Medicaid. CMS also runs the official Medicare website (Medicare.gov), operates the 1-800-MEDICARE helpline, and publishes the rules that providers must follow.

CMS has regional offices across the country that work with state Medicaid agencies, oversee Medicare contractors, and investigate fraud. The agency also accredits and inspects hospitals, nursing homes, dialysis centers, and other providers to make sure they meet federal quality standards. If a nursing home violates safety rules, CMS can fine it, limit its Medicare and Medicaid payments, or revoke its certification.

CMS also manages the data systems that track claims, payments, and enrollment. When you enroll in a Medicare plan, that information goes into CMS systems. When a doctor submits a claim, it flows through CMS or a CMS contractor. This centralized data collection allows the agency to spot patterns of fraud, overpayment, or poor quality.

The relationship between CMS and state Medicaid agencies

State Medicaid agencies are not part of CMS — they are state government agencies that operate under federal rules. CMS approves each state's Medicaid plan, which describes who qualifies, what services are covered, and how much providers are paid. If a state wants to change its Medicaid program, it must ask CMS for permission.

CMS also provides federal funding to states for Medicaid. The federal government pays a percentage of each state's Medicaid costs (the percentage varies by state and ranges from 50% to 77%). In exchange, CMS requires states to follow federal rules about may be able to access, covered services, and provider payments. States can be more generous than the federal minimum — they can cover more people or more services — but they cannot be less generous.

When you contact your state Medicaid agency with a question about your coverage, you are talking to a state employee, not CMS. But that state employee is following rules written by CMS. If you have a complaint about how your state Medicaid program treats you, you can file a grievance with your state agency, and if you are not satisfied, you can appeal to CMS.

How CMS structure affects you as a Medicare beneficiary

The fact that CMS runs Medicare means there is one federal standard for coverage, billing, and quality across the entire country. Your Medicare benefits are the same whether you live in California or Maine. CMS sets the rules for what your doctor can charge you, what your hospital must do if you have a complaint, and what happens if you think you were billed incorrectly.

If you have both Medicare and Medicaid, CMS coordinates between the two programs so that you do not fall through a gap. Your prescriptions, doctor visits, and hospital stays are covered by one program or the other, and CMS makes sure there is no confusion about who pays. This coordination is one of the main reasons CMS manages both programs together.

CMS also means there is one place to go for Medicare policy changes. When Congress passes a law that affects Medicare, CMS writes the detailed rules and publishes them. When CMS changes a coverage rule or payment policy, it applies nationwide. You do not have to worry about your state making a different decision about your Medicare coverage.

Frequently Asked Questions

Is CMS the same as Medicare?

No. CMS is the federal agency that runs Medicare. Medicare is the health insurance program for people 65 and older. CMS also runs Medicaid and CHIP. Think of CMS as the organization and Medicare as one of the programs it manages.

Can I contact CMS directly if I have a Medicare problem?

You can call 1-800-MEDICARE, which is CMS's helpline for Medicare beneficiaries. For Medicaid questions, you contact your state Medicaid agency, not CMS directly. CMS oversees the states but does not enroll people in Medicaid or handle individual Medicaid claims.

Why does my state Medicaid program have different rules than another state?

CMS sets federal minimum standards, but states can choose to be more generous. Each state decides its own income limits for Medicaid, which services to cover beyond the federal minimum, and how much to pay providers. CMS approves the state plan and makes sure it meets federal requirements, but does not force all states to have identical rules.

If I move to a different state, does my Medicare coverage change?

Your Medicare coverage stays the same because it is run by CMS federally. However, if you also have Medicaid, your Medicaid coverage will change because each state has its own program. You will need to enroll in your new state's Medicaid program and may find that your may be able to access or covered services are different.

Does CMS make decisions about what my doctor can do?

CMS sets coverage rules — what services Medicare will pay for — but your doctor makes medical decisions. CMS decides whether Medicare covers a certain drug or procedure, but your doctor decides whether you need it. If your doctor prescribes something Medicare does not cover, you can pay out of pocket or ask your doctor to appeal the coverage decision to CMS.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.