Objective To analyze variation in medical care use attributable to Medicare's decentralized claims adjudication process as exemplified in home hemodialysis (HHD) therapy. Data Sources/Study Setting Secondary data analysis using 2009–2012 paid Medicare claims for HHD and in‐center hemodialysis (IHD). Study Design We compared variation across Medicare administrative contractors (MACs) in predicted paid treatments per standardized patient‐month for HHD and IHD patients. We used ordinary least‐squares regression to determine whether higher paid HHD treatment counts expanded HHD programs’ presence among dialysis facilities. Data Collection We identified HHD and IHD treatments using procedure, revenue center, and claim condition codes on type 72x claims. Principal Findings MACs varied persistently in predicted HHD treatments per patient‐month, ranging from 14.3 to 21.9 treatments versus 10.9 to 12.4 IHD treatments. The presence of facilities’ HHD programs was uncorrelated with average HHD payment counts. Conclusions Medicare's claims adjudication process promotes variation in medical care use, as we observe among HHD patients. MACs’ discretionary decision making, while potentially facilitating innovation, may admit inefficiency in care practice as well as inequitable access to health care services. Regulators should weigh the benefits of flexibility in local coverage decisions against those of national standards for medical necessity.