Who Runs Medicare and How the System Works

Medicare is run by the federal government through the Centers for Medicare & Medicaid Services

Medicare is a federal health insurance program, which means it is managed by the U.S. government, not by private companies or states. The Centers for Medicare & Medicaid Services (CMS), a division of the U.S. Department of Health and Human Services, oversees the entire program. CMS sets the rules, decides what services Medicare covers, and manages the money that pays for your care.

When you turn 65 or become may be able to access through disability or end-stage renal disease, you deal with Medicare directly — not a state agency or a private insurer. However, the actual delivery of your care and the processing of your claims involve many other organizations working under Medicare's rules.

Key Takeaways

The Centers for Medicare & Medicaid Services (CMS), part of the federal Department of Health and Human Services, runs Medicare and sets all program rules.
Social Security Administration handles enrollment and determines who is may be able to access based on age, disability status, or kidney disease diagnosis.
Private insurance companies called Medicare Advantage plans and Medigap insurers operate under strict federal rules but handle claims and customer service for their own plans.
Hospitals, doctors, and other providers must follow Medicare payment rules and billing standards set by CMS.
Your state's Medicaid program may work with Medicare if you are may be able to access for both programs, but Medicare is always federal.

The Social Security Administration handles enrollment and may be able to access

Although CMS runs Medicare, the Social Security Administration (SSA) is the agency that actually enrolls you and determines whether you meet the may be able to access requirements. When you turn 65, you contact Social Security to sign up for Medicare — not CMS directly. Social Security also determines may be able to access for people under 65 who have been receiving disability benefits for 24 months or who have end-stage renal disease.

Social Security keeps your enrollment records and handles changes to your coverage. If you need to update your address, change your plan, or report a life event that affects your Medicare, you can do this through Social Security's website, by phone, or in person at a local office.

Private insurance companies run Medicare Advantage and Medigap plans

Medicare itself comes in two main forms: Original Medicare (run directly by CMS) and Medicare Advantage plans (run by private insurance companies). If you choose Original Medicare, CMS and its contractors process your claims. If you choose a Medicare Advantage plan, a private insurer — such as Humana, United Healthcare, Aetna, or Cigna — becomes your plan administrator.

These private companies collect your monthly premiums, manage your benefits, handle customer service calls, and process claims. However, they must follow all the rules that CMS sets. They cannot charge you more than the law allows, and they must cover at least the same services that Original Medicare covers. CMS audits these companies regularly to make sure they are following the rules.

Medigap insurance — the supplemental coverage that works alongside Original Medicare — is also sold by private insurance companies. These companies set their own prices within limits set by your state, but again, they must follow federal rules about what they cover and how they operate.

Medicare contractors process claims and handle day-to-day operations

CMS does not process every single claim itself. Instead, it contracts with regional companies called Medicare Administrative Contractors (MACs) to handle the paperwork. When your doctor or hospital sends a bill to Medicare, it goes to the MAC for your region, not directly to CMS headquarters. The MAC reviews the claim, decides whether Medicare should pay it, and sends the payment to the provider.

There are 12 regional MACs across the country, each covering a different set of states. If you have a question about a claim or need to appeal a decision, you may contact the MAC for your region. Your Medicare card or your doctor's office can tell you which MAC serves your area.

CMS also contracts with other specialized companies to handle specific tasks — for example, durable medical equipment (DME) suppliers are approved and monitored by CMS but operate independently. Likewise, home health agencies and hospice providers must be certified by CMS but are run as separate organizations.

Hospitals and doctors must follow Medicare rules but are not run by Medicare

Hospitals, doctors, clinics, and other healthcare providers are not employees of Medicare or CMS. They are independent organizations — some nonprofit, some for-profit — that choose to accept Medicare patients. In exchange, they must follow Medicare's rules about billing, documentation, and quality standards.

CMS sets the payment rates that Medicare pays for each service. A hospital cannot charge you more than Medicare allows, and a doctor in the Original Medicare program cannot balance-bill you (charge you the difference between their fee and what Medicare pays). Providers who break these rules can lose the right to treat Medicare patients.

State Medicaid programs work with Medicare but are separate

If you are may be able to access for both Medicare and Medicaid (a situation called "dual may be able to access"), you deal with both programs. Medicare is always federal, but Medicaid is run by your state. Your state's Medicaid program may pay some of your Medicare premiums and cost-sharing, and it may cover services that Medicare does not — such as long-term care or dental care — depending on your state's rules.

The two programs coordinate with each other, but they are not the same. Medicare is the same in every state; Medicaid varies widely. If you move to a different state, your Medicare coverage stays the same, but your Medicaid coverage may change.

How to contact the right organization for your question

Knowing who runs what can help you reach the right place when you have a question. If you need to enroll, change your plan, or update your personal information, contact Social Security or visit Medicare.gov. If you have a question about a specific claim or bill, contact the provider's billing department first, or call the Medicare Administrative Contractor for your region. If you are in a Medicare Advantage plan, call your plan's customer service number (it is on your plan card).

For general questions about what Medicare covers or how the program works, you can call 1-800-MEDICARE (1-800-633-4227). This is a federal helpline run by CMS, and it is free. You can also visit Medicare.gov, which is the official federal website for Medicare information.

Frequently Asked Questions

Is Medicare the same in every state?

Yes. Medicare is a federal program, so the coverage and rules are the same everywhere. However, the private insurance companies that offer Medicare Advantage and Medigap plans vary by state, and the plans available to you depend on where you live. Your state's Medicaid program, if you are may be able to access, may differ from other states.

Can I sue Medicare or CMS if I disagree with a decision?

You cannot sue CMS directly, but you have the right to appeal any decision Medicare makes about your coverage or payment. The appeal process is handled by CMS and its contractors. If you are in a Medicare Advantage plan, you appeal to your plan first. Your Medicare card or plan documents explain how to file an appeal.

Who decides what services Medicare covers?

CMS decides what services Medicare covers based on whether they are medically necessary and reasonable. CMS also works with an independent group called the Medicare Payment Advisory Commission (MedPAC), which makes recommendations about coverage and payment. However, Congress can also pass laws that change what Medicare covers.

What if my doctor is not accepting new Medicare patients?

Doctors can choose whether to accept Medicare, but if they do, they must accept all Medicare patients (with rare exceptions). If your doctor is not accepting new Medicare patients, you can search for other doctors in your area on Medicare.gov or call 1-800-MEDICARE for help finding a provider near you.

Who pays for Medicare?

Medicare is funded through payroll taxes (taken from your wages while you worked), monthly premiums you pay now, and general federal tax revenue. The amount you pay in premiums depends on your income and which parts of Medicare you use. CMS manages the Medicare Trust Fund, which holds this money and pays out claims.

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.