What the Centers for Medicare & Medicaid Services Actually Does

The Centers for Medicare & Medicaid Services runs Medicare, Medicaid, and the Children's Health Insurance Program

The Centers for Medicare & Medicaid Services (CMS) is the federal agency inside the U.S. Department of Health and Human Services that operates Medicare, Medicaid, and the Children's Health Insurance Program (CHIP). If you receive a Medicare card, pay Medicare taxes, or have questions about how Medicare works, you are dealing with an agency that CMS oversees or a rule that CMS wrote. CMS does not deliver care itself — it pays for it, sets the rules for how it is paid for, and monitors whether those rules are being followed.

CMS is headquartered in Baltimore, Maryland, and employs roughly 6,000 people. The agency's budget runs into the hundreds of billions of dollars annually because it is responsible for paying claims on behalf of tens of millions of beneficiaries. Understanding what CMS does — and what it does not do — helps you know where to direct questions and complaints when something goes wrong with your Medicare coverage or payment.

Key Takeaways

CMS is a federal agency that pays Medicare claims, sets coverage rules, and monitors whether doctors and hospitals follow those rules.
CMS does not process your individual Medicare claims or handle customer service calls — it contracts with private companies called Medicare Administrative Contractors to do that work.
If you have a problem with a Medicare claim or coverage decision, you contact your Medicare Administrative Contractor first, not CMS directly.
CMS publishes the rules that determine what Medicare covers, how much it pays, and which doctors and hospitals can participate in the program.
CMS also runs quality inspections of hospitals, nursing homes, and other facilities that receive Medicare payment.

How CMS pays for Medicare claims

CMS does not directly process your Medicare claims. Instead, it contracts with private insurance companies called Medicare Administrative Contractors (MACs) to handle the paperwork. When your doctor or hospital submits a claim for a service you received, it goes to the MAC for your region, not to CMS. The MAC decides whether the claim meets Medicare's rules, calculates how much Medicare will pay, and sends the payment to the provider. The MAC also sends you an explanation of benefits (EOB) that shows what was paid and why.

There are 12 regional MACs across the country, each responsible for a different geographic area. Your state belongs to one MAC region. If you have a question about why a specific claim was denied or paid at a certain amount, your MAC is the first place to contact — not CMS. CMS sets the rules the MAC must follow, but the MAC is the one doing the day-to-day work.

CMS sets the coverage rules and payment rates

One of CMS's core jobs is deciding what Medicare covers and how much it will pay for each service. CMS publishes a Medicare Benefit Policy Manual and a National Coverage information (NCD) list that spell out which treatments, tests, and equipment are covered. For example, CMS decides whether Medicare covers a particular drug, whether it covers a new type of scan, or whether it covers physical therapy after surgery.

CMS also sets the payment rates that doctors, hospitals, and other providers receive for each service. These rates are published in the Medicare Physician Fee Schedule and the Hospital Outpatient Prospective Payment System (OPPS), among other documents. Rates change each year and vary by location. A doctor in rural Montana receives a different payment rate than a doctor in New York City for the same service. CMS publishes these rates publicly so providers and patients can see them.

If you want to know whether Medicare covers something specific — a medication, a device, a procedure — you can search CMS's coverage database on its website. You can also call your MAC to ask about coverage for your particular situation.

CMS monitors quality and compliance

CMS inspects hospitals, nursing homes, dialysis centers, home health agencies, and other facilities that receive Medicare payment. These inspections check whether the facility meets safety standards, keeps proper records, and provides the quality of care that Medicare requires. If a facility fails an inspection, CMS can impose fines, require a corrective action plan, or remove the facility from the Medicare program entirely.

CMS also tracks data on hospital readmissions, infection rates, patient safety incidents, and other quality measures. This information is published on the CMS website and on Care Compare (formerly Nursing Home Compare), which allows you to look up quality ratings for specific facilities in your area. If you are choosing between nursing homes or hospitals, these CMS-published ratings are a starting point for comparison.

CMS handles appeals and coverage disputes

If your Medicare claim is denied or you disagree with a coverage decision, you have the right to appeal. The appeal process has multiple levels, and CMS oversees how those levels work. Your first appeal goes to your MAC. If you disagree with the MAC's decision, you can request a hearing before an independent contractor called a Administrative Law Judge (ALJ). If you disagree with the ALJ's decision, you can appeal to the Medicare Appeals Council, which is part of CMS.

CMS does not make the individual appeal decisions — the MAC and the ALJ do — but CMS sets the rules for how appeals must be handled, how long each step can take, and what evidence must be considered. If you believe an appeal was handled unfairly, you can file a complaint with CMS's Office of Inspector General.

CMS works with state Medicaid programs

CMS does not run Medicaid directly. Instead, each state runs its own Medicaid program under federal rules that CMS writes. CMS provides federal funding to states, sets may be able to access standards and coverage requirements, and monitors whether states are following those rules. Some states are more generous with coverage than others, which is why Medicaid benefits vary by state.

If you have a Medicaid question, you contact your state's Medicaid agency, not CMS. However, if you believe your state is not following federal Medicaid rules, you can file a complaint with CMS's regional office for your state.

How to contact CMS or report a problem

You cannot call CMS directly for help with a Medicare claim or coverage question. Instead, you call your Medicare Administrative Contractor, which handles your region. You can find your MAC's phone number by entering your state on the CMS website.

If you want to report fraud, file a complaint about a provider, or report a problem with how CMS is operating, you can contact CMS's Office of Inspector General. You can also file a complaint with your state's insurance commissioner or your state's Long-Term Care Ombudsman if the problem involves a nursing home.

For general information about Medicare coverage, payment, or how the program works, you can visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227).

Frequently Asked Questions

Can I call CMS directly if I have a problem with my Medicare claim?

No. CMS does not handle individual claims or customer service calls. You contact your Medicare Administrative Contractor, which processes claims for your region. Your MAC's phone number is on your Medicare card and on the CMS website.

Does CMS decide whether my doctor can treat me?

CMS sets the rules about which doctors can participate in Medicare, but your doctor decides whether to accept Medicare patients. CMS also sets coverage rules about which treatments are covered, but your doctor decides which treatment is medically appropriate for you. If your doctor recommends something Medicare does not cover, your doctor should tell you that before providing the service.

How often does CMS update its coverage rules?

CMS updates coverage rules throughout the year as new evidence about treatments becomes available. Some updates are major and affect many people; others are narrow and affect specific drugs or devices. You can sign up for email notifications on the CMS website to learn when coverage rules change for topics that matter to you.

What is the difference between CMS and Medicare?

Medicare is the health insurance program. CMS is the federal agency that runs it. When people say "Medicare," they usually mean the program itself. When they say "CMS," they mean the agency that oversees the program, sets the rules, and pays the bills.

Can CMS help me if I think I was overcharged by a doctor?

CMS does not handle individual billing disputes, but it can investigate if you believe a provider is systematically overcharging Medicare. You can file a complaint with CMS's Office of Inspector General or with your state's insurance commissioner. Your MAC can also help you understand why you received a bill and whether it is correct.

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.