Hidden Bureaucrats: How Regional Medicare Contractors Quietly Shape Dermatology Care Across America

When a dermatologist bills Medicare for a skin cancer surgery, the claim does not vanish into a single federal bureaucracy. Instead, it lands with one of a handful of private companies, hired by the Centers for Medicare & Medicaid Services, whose policy decisions can determine whether that procedure gets paid at all. A new review published in the Archives of Dermatological Research argues that these organizations, known as Medicare Administrative Contractors, exert a far greater influence on dermatologic care than most physicians and patients realize, and that the regional policies they write create a patchwork of coverage that varies dramatically depending on where a patient happens to live.

Medicare Administrative Contractors, or MACs, sit at the operational heart of the Medicare fee-for-service system. Under Section 911 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, they became the sole contractors responsible for processing Medicare Part A and B claims, along with claims for durable medical equipment. Their portfolio is vast: they issue payments, enroll providers into the program, audit cost reports, handle redetermination requests, review medical records, respond to provider inquiries, and educate clinicians on billing requirements. The scale is staggering. In 2023 alone, MACs processed more than 1.2 billion Medicare claims, generating roughly 430 billion dollars in payments, out of approximately ten billion total claims submitted across all payers in the United States that year.

The growing importance of this infrastructure tracks with the expansion of Medicare itself. The program, which serves adults aged 65 and older, people with disabilities, and patients with conditions such as end-stage renal disease, is projected to grow from 61.2 million beneficiaries in 2020 to about 80 million by 2030. As that population expands, so does the use of dermatologic services, making the mechanics of Medicare reimbursement an increasingly consequential subject for clinical practice. Yet most dermatologists receive little formal education in how the system actually works, a gap the review’s authors describe as a serious blind spot in the specialty.

The most consequential power MACs hold is the ability to write regional coverage policy. Medicare’s National Coverage Determinations, issued centrally by CMS, provide standardized guidelines meant to ensure uniform care across the country, but they cover only a fraction of medical services. Where the national guidance ends, MACs fill the void with Local Coverage Determinations, or LCDs: jurisdiction-specific policies that define which services are reimbursed, specify eligibility criteria, and establish the parameters within which clinicians are expected to make decisions. Because these policies are drafted at each contractor’s discretion, significant regional variations arise, meaning the same procedure may be covered readily in one state and subjected to strict documentation requirements in another.

The structure of the system is a legacy of contract geography rather than coherent health planning. Twelve Part A/B jurisdictions and four durable medical equipment jurisdictions are currently divided among seven contractors, many of which group together states with little regional or demographic similarity. Noridian Healthcare Solutions covers much of the western United States, National Government Services handles the Northeast and Midwest, WPS Health Solutions and CGS Administrators split parts of the Midwest and Ohio Valley, Novitas Solutions serves the mid-Atlantic and South, Palmetto GBA the Southeast, and First Coast Service Options covers Florida and the U.S. territories. Although the jurisdictions have remained relatively stable, periodic contract rebidding can shift oversight from one company to another, potentially reshuffling policy priorities over time.

Making sense of LCDs requires understanding their lifecycle, which is lengthy and, unusually for healthcare bureaucracy, partially open to public participation. The process begins with informal meetings between the MAC and interested parties. Healthcare professionals, Medicare beneficiaries, medical vendors, manufacturers, and advocacy groups operating within a contractor’s jurisdiction can all submit requests for new coverage policies, provided they identify the applicable benefit category, supply a supporting rationale, and back their case with peer-reviewed evidence on clinical relevance and health outcomes. There is no fixed deadline for the MAC’s response, so months can pass before an official decision to proceed.

If the contractor moves forward, it conducts a comprehensive review of the medical literature, including clinical trials, systematic reviews, and existing guidelines, then drafts a proposed LCD and posts it on the Medicare Coverage Database for public comment. Draft policies are identified by a leading letter D before the standard identifier, which begins with L followed by a five-digit code. The comment period lasts at least 45 calendar days, during which the MAC must host open meetings, announced in advance on its website, where stakeholders can comment and present evidence. In some cases, a Contractor Advisory Committee, an official panel of healthcare professionals, beneficiary representatives, and medical organizations, reviews the quality of the evidence to ensure an unbiased assessment. The entire journey from initial request to implemented policy can take from several months to years, and even then, LCDs are periodically revisited as new clinical evidence, stakeholder requests, or new national determinations emerge.

The review highlights Mohs micrographic surgery, the tissue-sparing gold standard for high-risk non-melanoma skin cancers, as a case study in how far regional policies can diverge. Utilization of the technique in Medicare populations rose 25 percent between 2009 and 2013, yet the criteria for reimbursement differ sharply by jurisdiction. Some contractors, including WPS and Noridian, have written LCDs that closely mirror the specialty’s Appropriate Use Criteria, breaking down eligibility by tumor size measured in centimeters, histology, anatomic location, and patient comorbidities, leaving little room for clinical judgment. Others, such as First Coast Service Options in LCD L33689, apply the same criteria more flexibly, emphasizing documented clinical reasoning for why Mohs surgery is preferable to standard excision. Palmetto GBA’s policy takes a similarly documentation-driven approach without explicitly citing the national criteria at all.

Those differences are not academic. A patient with a particular skin cancer on a particular part of the body may sail through coverage in one jurisdiction and face claim denials or audits in another, simply because the neighboring contractor wrote a stricter policy. Denials and audits translate into treatment delays, heavier administrative workloads, and physician burnout, ultimately compromising the quality and timeliness of care. The authors caution that less common or more specialized dermatologic services may face even greater inconsistencies than Mohs surgery, and they acknowledge that their review, being descriptive and policy-focused, cannot establish causal links between coverage rules and clinical outcomes.

The central prescription of the review is engagement. Dermatologists can identify which MAC governs their region, monitor existing and draft LCDs through the Medicare Coverage Database, submit evidence-based comments during public comment periods, attend and present at contractor-hosted open meetings, and use the formal reconsideration process to request revisions to active policies supported by new clinical evidence. Professional societies such as the American Academy of Dermatology offer advocacy training and policy education, while state societies and Contractor Advisory Committee panels provide additional channels. In a system where private insurers often make coverage decisions with minimal transparency and little opportunity for provider input, the MAC framework, for all its complexity, is at least navigable. The authors’ message is blunt: physicians who understand and participate in this process can help shape the rules, while those who do not remain subject to them.

Subject of Research: The role of Medicare Administrative Contractors and Local Coverage Determinations in regional dermatology reimbursement policy in the United States

Article Title: The Role of Medicare Administrative Contractors and Local Coverage Determinations in Dermatology Policy

Article References: The Role of Medicare Administrative Contractors and Local Coverage Determinations in Dermatology Policy. (n.d.). https://doi.org/10.1007/s00403-026-04698-1

Image Credits: AI Generated

DOI: 10.1007/s00403-026-04698-1

Keywords: Medicare, Medicare Administrative Contractors, Local Coverage Determinations, dermatology, health policy, reimbursement, Mohs micrographic surgery, Centers for Medicare and Medicaid Services, health insurance, coverage policy, physician advocacy, skin cancer