What Is CMS?
CMS is the federal agency within the U.S. Department of Health and Human Services that administers Medicare, jointly administers Medicaid and CHIP with the states, and oversees the Health Insurance Marketplaces and HIPAA administrative simplification.
- Billing teams should track CMS's annual rulemaking, because rate and policy changes flow through to Medicare Advantage plans and to any commercial contract written against Medicare RBRVS.
- The Inpatient Prospective Payment System runs on the federal fiscal year, with its final rule issued in the summer and rates effective 1 October.
- Diary the proposed rules as well as the final ones; the comment window is the only point at which a change is still negotiable.
CMS
Also known as: Centers for Medicare & Medicaid Services; Health Care Financing Administration (former name)
CMS is the federal agency within the U.S. Department of Health and Human Services that administers Medicare, jointly administers Medicaid and CHIP with the states, and oversees the Health Insurance Marketplaces and HIPAA administrative simplification.
Definition
The Centers for Medicare & Medicaid Services, headquartered in Baltimore, administers Medicare, jointly administers Medicaid and CHIP with the states, and oversees the Health Insurance Marketplaces. Its scale is easier to state as spending than as a single coverage headcount, because program enrollments overlap: CMS's own National Health Expenditure data put Medicare spending at $1,118.0 billion in 2024, 21 percent of national health expenditure, and Medicaid spending at $931.7 billion, 18 percent. CY2024 is the most recent year in that series; fact sheet read 17 September 2026. CMS publishes the Medicare Physician Fee Schedule, the Hospital Outpatient Prospective Payment System APC rates, the MS-DRG inpatient rates, and the HCPCS Level II code set. It contracts with Medicare Administrative Contractors to process Part A and Part B claims and maintains the National Correct Coding Initiative.
Example
When a physician submits a claim for CPT 99213 to Medicare Part B, the claim routes to the regional MAC — Noridian for Jurisdiction E (American Samoa, California, Guam, Hawaii, Nevada and the Northern Mariana Islands) or Novitas for Jurisdiction H (Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma and Texas), as CMS listed them in September 2026 — and is adjudicated against Physician Fee Schedule rates and NCCI edits. The remittance advice that comes back carries CARCs and RARCs, and the two are maintained by different bodies: Medicare Claims Processing Manual, Chapter 22 §60.4 states that CMS has national responsibility for maintaining the remark codes, while the claim adjustment reason codes are maintained by the Claim Adjustment Status Code Maintenance Committee and published by X12. Calling a CARC “CMS-approved” gets that backwards.
Common Misconceptions
CMS is not the same as Medicare — Medicare is one program CMS administers. CMS also does not process commercial-payer claims. Commercial plans commonly build on artifacts CMS publishes — the HCPCS Level II code set, the place-of-service code list, NCCI edits, RBRVS-based fee schedules — but whether a given plan adopts one, and in which version, is set by your contract with that plan and its own published policy, not by CMS. Read the contract before assuming a Medicare rule governs a commercial claim.
Practical Application
Billing teams should track CMS's annual rulemaking, because rate and policy changes flow through to Medicare Advantage plans and to any commercial contract written against Medicare RBRVS. Two cycles matter. The Physician Fee Schedule and the Hospital Outpatient Prospective Payment System run on the calendar year: proposed rules in the summer, final rules in the autumn, rates effective 1 January — the CY 2026 OPPS and ASC final rule, for instance, was issued on 21 November 2025. The Inpatient Prospective Payment System runs on the federal fiscal year, with its final rule issued in the summer and rates effective 1 October. Diary the proposed rules as well as the final ones; the comment window is the only point at which a change is still negotiable.
Related Terms
Medicare Part A/B/C/D
Medicare is divided into four parts: Part A (hospital insurance) covers inpatient hospital, inpatient SNF, hospice and some home health services; Part B (medical insurance) covers physician services, outpatient care, durable medical equipment, lab and X-ray and many preventive services, and home health services as well; Part C (Medicare Advantage) is private plans that provide all Part A and Part B services; Part D covers outpatient prescription drugs.
Read definitionMedicaid
Medicaid is a joint federal-state program established under Title XIX of the Social Security Act that provides health coverage to eligible low-income individuals, with each state administering its own program under federal minimum requirements.
Read definitionMAC (Medicare Administrative Contractor)
A Medicare Administrative Contractor is a private organization that contracts with CMS to process Medicare Part A and Part B claims (or DME claims) within a defined geographic jurisdiction, applying CMS coverage rules and publishing local coverage determinations.
Read definitionMedicare Advantage
Medicare Advantage (Part C) is coverage offered by private insurers under contract with CMS, through which a beneficiary receives their Medicare Part A and Part B benefits instead of through Original Medicare — most often as an HMO or PPO product with a provider network and prior-authorization requirements, paid for by a risk-adjusted capitation from CMS.
Read definitionLCD / NCD (Local & National Coverage Determinations)
An NCD is a nationwide CMS coverage policy specifying whether Medicare will cover a service; an LCD is a coverage policy issued by a Medicare Administrative Contractor (MAC) for its jurisdiction when no NCD applies, defining medical necessity criteria and covered diagnosis codes.
Read definitionWhere This Applies on MedPrecision
Need help with billing?
If this term is showing up in your denials, EOBs, or A/R aging, we can help. Get a free billing audit and we will trace the issue to its root cause.
- No contract
- No setup fees
- Reply within 1 business day