Who Decides What Medicare and Medicaid Pay For

A Medicare card can sit in a kitchen drawer for years, under the takeout menus. It never looks like a rulebook. It looks like a card.

It is a rulebook. The card in your wallet decides which set of rules governs the moment somebody refuses to pay for your care. Not the illness. Not the doctor who ordered it. The card.

Go looking for one answer to a plain question. Who decides what Medicare and Medicaid pay for? Four answers come back.

The distance between them is wider than it should be. Four programs pay for the care an older adult actually uses. Each one sets a different floor for who has to sign a refusal. One of them sets none at all.

Who actually decides what Medicare and Medicaid pay for?#

Nobody sits in one room deciding this. Four separate programs pay for the care an older person uses. Each runs on its own rulebook. Each rulebook was written at a different time, by different people, for different reasons.

The four are Medicare Advantage, Original Medicare, Medicaid managed care, and Medicaid fee for service. A person can hold more than one at once. Many older adults do.

Medicare itself comes in two forms, Original Medicare and Medicare Advantage, and which one you hold changes the rules. Plenty of older adults carry a Medicaid card as well, because Medicare pays for very little long term help at home.

It works like four umpires standing behind the same plate. Each one calls a different strike zone. The batter is never told which umpire is working today.

That sounds like an administrative detail. It is not. The four rulebooks differ on the question that matters most when care is refused. Who has to be the person doing the refusing?

Hold that question. It runs through everything below.

What is prior authorization, in plain English?#

Prior authorization is permission in advance. Your doctor orders something. Before the care happens, somebody at the plan has to agree to pay.

A no at that stage means one of two things. The care does not happen. Or it happens and the bill lands on your kitchen table.

The phrase sounds like paperwork. It is a gate. Somebody stands at it, all day, with a screen and a list of criteria.

The whole argument about machines and health care runs through that gate. A gate is exactly the kind of job a computer can be handed. Sort the requests. Route them. Flag the ones that look wrong. Match the paper against the rule.

Timers differ by program, and the timers have been moving. In Medicaid managed care a standard request now gets an answer within seven days. That dropped from fourteen days on January 1, 2026. An urgent request gets seventy two hours.

Those numbers matter more than they look. A week is a long time when a wound needs a dressing. It is a very long time when a parent is waiting at home for a hospital bed to be approved.

The gate gets taken apart properly in prior authorization by machine.

Can a machine deny your claim without a person looking at it?#

The rules say no. They say it in four different ways. One of the four does not say it at all.

Three abbreviations come next, so here they are first. The Code of Federal Regulations (CFR) is the book where a federal agency’s final rules live once they are settled and in force.

The Centers for Medicare and Medicaid Services (CMS) is the agency that runs both programs. The Medicaid and Children’s Health Insurance Program Payment and Access Commission (MACPAC) advises Congress on Medicaid and cannot change any rule on its own.

I could not find these four rules written down together anywhere, so this map is assembled from the regulation text, each one checked as still in force. Here it is, shortest form first.

• Medicare Advantage: a licensed clinician.
• WISeR pilot: a licensed clinician, by promise.
• Medicaid managed care: a person with expertise.
• Medicaid fee for service: nobody named at all.

Each of those has an address. The Medicare Advantage rule is 42 CFR 422.566(d), and it requires a physician or other health care professional holding a current and unrestricted licence. The Medicaid managed care rule is 42 CFR 438.210(b)(3), and it asks only for appropriate expertise.

Two of the four need a footnote. The WISeR promise sits in a model fact sheet rather than in the regulation book, which makes it a commitment the agency can revise rather than a rule it must follow. The empty fourth line is a gap MACPAC named in June 2026 and asked the agency to fill.

Read those four rows twice. The act is identical in every one. Somebody refuses to pay for care a doctor ordered.

Under Medicare Advantage that person must hold a licence. Under Medicaid managed care they need expertise, and the rule never defines it further. In regular Medicaid there is no requirement at all.

The protection gets thinner as the people covered get poorer. Nobody wrote that down on purpose. It is what four rulebooks look like when you stack them side by side for the first time.

One honest caution, and it points both ways. Automation is already everywhere in this process. Federal advisers interviewed states and managed care plans. All of them reported using automation tools, most often rules based algorithms that apply clinical criteria to decide medical necessity.

That is not the same as a machine issuing the refusal. The rules still put a person at that step. But those advisers warned about something else. A human in the loop is not automatically a safeguard. A reviewer can be handed a request in a way that pushes them toward agreeing.

What is the WISeR pilot, and who does it touch?#

Medicare is running a live experiment with artificial intelligence inside the gate. Artificial intelligence (AI) means software trained to find patterns in large amounts of material rather than following a fixed list of instructions.

The pilot is called the Wasteful and Inappropriate Service Reduction model. WISeR, for short. It began on January 1, 2026. It runs for six performance years.

Six states are in it. New Jersey, Ohio, Oklahoma, Texas, Arizona and Washington. It covers a short list of services picked because each one has published coverage rules and a history of misuse. Skin substitutes. Electrical nerve stimulators. Knee arthroscopy for osteoarthritis.

Two things about this model are worth stating flatly. WISeR touches Original Medicare only. The agency says in plain words that it does not apply to people in Medicare Advantage.

The second is about money. The companies running the technology are paid a share of the savings their reviews produce. The fact sheet also ties part of that pay to performance measures, including how many refusals are issued and how many are overturned on appeal.

That design is worth turning over. The companies reviewing your request are paid from the spending their refusals avert, and a refusal that loses on appeal counts against them. The agency also promises that every recommendation for non payment comes from an appropriately licensed clinician.

Both of those sentences are true at the same time. That is the honest shape of this pilot in its first year.

One caution about that promise. It sits in a model fact sheet, not in the Code of Federal Regulations. A promise in a design document and a rule in the regulation book are different objects. The first can be changed by the people who wrote it.

The whole model is set out in AI is deciding Medicare coverage.

How does a state decide how many home care hours you get?#

Home care runs on a different set of rules. Medicare pays for very little long term help in the house. The hours that let an older person stay in their own home usually come through Medicaid, often under a waiver.

A waiver is a state asking federal permission to spend Medicaid money on help at home instead of a nursing facility. The state then needs some way to decide how many hours each person gets. Some states now use a scoring tool.

An assessment goes in. A number of hours comes out.

That is where the sharpest American story about algorithms and care sits. Arkansas replaced a nurse’s judgement with a scoring system. Hours fell after the switch. The people affected went to court.

That story is told properly in algorithms decide home care hours.

The part to carry away here is smaller and more useful. A cut in hours is a decision. It has to be explained to you in writing. It can be appealed. The window to do it is short, and it starts on the date printed on the notice.

What does managed care change about who decides?#

Managed care moves the decision out of the state office. Your state pays a private company a set amount for each person enrolled, on a regular schedule. That company decides what gets approved.

The federal rule covering those companies is 42 CFR 438.210(b)(3), the third line on the four line list of who must sign each refusal. It requires that a refusal be made by an individual who has appropriate expertise in the person’s medical, behavioural health, or long term services needs.

Read what it does not say. It does not say doctor. It does not say licensed. It does not mention automation anywhere.

In June 2026 the federal advisory commission on Medicaid made four recommendations about this. Two of them matter most here. The first asks the agency to issue guidance saying the existing rule already covers refusals proposed by an automated system, and that automated tools alone may not make them. The second asks that the same requirement be created for regular Medicaid, which has none.

Both are recommendations. Neither is law. A recommendation is a letter to the people who could change the rule.

It is like a fence built around one field while the gate to the next field stands open. Somebody has written to ask that the second gate be closed. The letter is on record. The gate is still open.

That gets taken apart in Medicaid managed care denials.

What should you do when a decision looks automated?#

Start with the card. Everything else follows from it. Look at what you actually hold and find it on the four line list of who must sign each program’s refusal. That tells you which rule applied and who was supposed to sign.

Then do these four things, in this order.

1. Get the refusal in writing and keep the envelope. The date starts your clock.
2. Read the reason it gives. A refusal has to state one.
3. Ask who reviewed it, by name and by role. Under Medicare Advantage that person must hold a current and unrestricted licence.
4. Appeal inside the deadline on the notice, even while you are still gathering paper.

A late appeal is the most common way a good case dies. Not a weak argument. A date.

None of that requires a lawyer. None of it requires reading the regulation end to end. It requires one page, read slowly, and a date written down.

None of this looks like policy at home. It looks like the letter that came on a Tuesday.

For the family caregiver reading a refusal at the kitchen table at night, after a long day, there are not four rulebooks. There is one. The one that applies to the card in the drawer.

Think of it as a lock on the front door and no lock on the back. Knowing which door you are standing at is most of the work. The rest is asking whether the person who signed was allowed to sign.

That is a fair question and you can ask it out loud.

Any claim in this piece can be checked against the rule itself, using check a policy claim.

The rule that puts a licensed person at that step is 42 CFR 422.566. It states its own currency date at the top of the page.

States have started writing their own rules on top of the federal floor. The map is uneven. That unevenness is the honest state of things, and it is why the card still decides so much.