What Is CMS and What Does it Do?

CMS is a pretty common term in the healthcare sector, specifically in the world of medical billing, for several reasons. But what does CMS really mean? And what does it do? We have answers for all these questions and more, so keep reading to find out what they are.


CMS stands for the Centers for Medicare and Medicaid Services. This is an agency under the U.S. Department of Health and Human Services (HHS) that hosts two of the country’s biggest healthcare programs, Medicare and Medicaid.

Along with those, the CMS also oversees other healthcare programs such as the Children’s Health Insurance Program (CHIP) and federal and state health insurance marketplaces. Originally, Medicare and Medicaid were overseen by the former Health Care Financing Administration (HCFA), which became the CMS in the early 2000s.


As with all things in the world, the CMS has also gone through a lot of evolution. Initially, Medicare was only meant for providing healthcare services to the elderly aged 65 years and above. Over the years, the program was changed to include others in its coverage, too, such as children, people with disabilities, and those suffering from chronic illnesses. Today, Medicare covers a wide variety of healthcare services and provides medical coverage to millions of Americans all over the country.

The main goal of CMS is to provide high-quality healthcare services through an efficient system for better care for patients, more access to medical coverage, and overall improved health of the people. It plays a big role within the healthcare sector as it is constantly working to collect and analyze all sorts of information and data, produce medical research reports and prevent fraud and cases of abuse within the system. It is responsible for managing the Administrative Simplification Standards under the Health Insurance Portability and Accountability Act (HIPAA).

This allows them to implement and encourage the adoption and use of national electronic healthcare records, ensure the protection and safety of patients’ sensitive information and data, and enforce other HIPPA rules and regulations. The agency also overlooks the operations of clinical laboratories and long-term care facilities to ensure CMS guidelines and rules are being followed.


The three main CMS programs are Medicare, Medicaid, and the Children’s Health Insurance Programs (CHIP).


This is a healthcare program that is funded through tax payments from the people. As mentioned earlier, it started off as a program solely for the elderly who had worked and contributed to the program beforehand through their income taxes. The program also extends other medical coverage to other people with healthcare needs as defined by the Social Security Administration (SSA). The program consists of four parts, A, B, C, and D. Each part covers some healthcare services.


This is a government-sponsored program that is meant to facilitate and provide healthcare services to individuals with low-incomes or those who can’t afford it. It is funded by the federal government and carried out at the state level. Since the administration is carried out at the state level, the precise rules and policies for Medicaid can vary from state to state.


This program is meant for parents of children aged 19 or under who don’t necessarily qualify for the Medicaid program but can’t afford the average healthcare insurance either. Similar to Medicaid, the precise policies for CHIP can also vary from state to state. The program covers basic healthcare services such as dental and vision care, doctor visits, lab services, vaccinations, X-rays, hospital care, emergency services, and so on.


Along with the policies and regulations varying from state to state, CMS programs also go through changes. Healthcare providers are usually too busy looking after patients to manage anything else. Therefore, often it is the responsibility of medical billing companies to let the medical practices and hospitals know of any changes in the CMS guidelines and procedures so that they can inform and deal with their patients accordingly.

The billing for these CMS programs is somewhat similar to billing for third-party insurance companies, but it can also be complicated at times, which is what makes medical billing services so important for healthcare providers. For instance, as mentioned earlier, Medicare consists of four parts. When billing for parts A and B, the medical billing company has to pretty much follow the same process as when billing for third-party insurance companies. This includes getting the patients’ information, procedure codes, doctor’s diagnosis, costs, and everything else that a medical coder sends.

If the company is doing so electronically, it’s all the same. However, if they are using manual forms, some complications start to arise. For instance, when the company is billing for Medicare Part A, they need to fill the UB-04 form, a.k.a., CMS-1450. On the other hand, if they are billing for Medicare Part B coverage, they will need another form, the CMS-1500.

Similarly, when you bring in parts C and D, things can get even more complex and hard to follow. Billing for Medicaid programs can be even more difficult as medical billing companies have to follow the guidelines set by each state.


CMS plays a big role in the healthcare industry, and CMS guidelines govern a large part of the medical billing and coding process. This is yet another reason why healthcare providers need to enlist the services of medical billing companies to help them manage their finances properly, avoid any insurance frauds, follow the healthcare laws, and most importantly, provide the best healthcare services to the people. If you want to learn more about the CMS programs or guidelines, you should contact a good medical billing company so they can guide you properly.

The healthcare system is more complex than most people think it is; it goes beyond the doctor and their patient. If we try and narrow down the main parties and processes involved in medical billing, the list would include the healthcare provider, the patient, and the bill payer, which is usually an insurance company. PCS Revenue Cycle Management is here for all your medical billing needs. Please call or email us if you’d like a free consultation and/or quote for our outsourced billing services in all 50 states!

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