The Medicare program is a federally funded social health insurance program providing universal hospital coverage for Americans 65 years of age or older, as well as the long term disabled, individuals requiring renal dialysis, and others who buy into the program regardless of age.
The Medicare program arose under 1965 amendments to the Social Security Act adding Title XVIII (Medicare) and Title XIX (Medicaid) (Pub. L. No. 8987).
The Medicare program consists of four parts: Part A (hospital insurance); Part B (supplementary insurance); Part C (Medicare Advantage); and Part D (Prescription drug benefit). Federal funding for Part A services is derived solely from the Hospital Insurance (HI) Trust Fund.
Parts A, B, and D of the Medicare program are administered by the federal government through the Department of Health and Human Services (HHS), primarily under the HHS Secretary, and through the Centers for Medicare and Medicaid Services (CMS) (formerly known as the Health Care Financing Administration or HCFA).
The U.S. Congress is responsible for the development of statutes that frame all four parts of the Medicare program. HHS has overall responsibility for administration of the Medicare program and development of regulations implementing the statutes passed by Congress. CMS has the day-to-day responsibility for administering the Medicare program.
Provider/supplier enrollment and claims payment/appeals are carried out by private insurance companies under contract with CMS, including: Medicare Administrative Contractors (MACs) and Part D prescription drug plans. Prior to the development of MACs, administration of Parts A and B of the Medicare program were carried out by Fiscal Intermediaries, Medicare Carriers, the National Supplier Clearinghouse, and Durable Medical Equipment Regional Carriers.
State Agencies (usually State Health Departments under agreements with CMS) identify, survey, and inspect provider and supplier facilities or institutions wishing to participate in the Medicare program. In consultation with CMS, these agencies then certify the facilities that are qualified.
Excerpt from Barry D. Alexander and James F. Flynn, Fundamentals of Medicare : Intro, Fundamentals of Health Law (American Health Lawyers Association Nov. 2011).