Overview:
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The Centers for Medicare and Medicaid Services (CMS) is the federal body responsible for administering Medicare and Medicaid programs. CMS also runs the State Children’s Health Insurance Program (SCHIP), which is jointly financed by the Federal and State governments and administered by individual States.
History:
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Medicare and Medicaid were enacted under the Social Security Act of 1965. Medicare was implemented the following year, extending health coverage to almost all Americans aged 65 or older - only about half of whom had insurance at the time. Medicaid provided health care for low-income children, the elderly, the blind and individuals with other disabilities.
In 1972, Medicare was extended to cover people under 65 with permanent disabilities, and Medicaid eligibility for elderly, blind and disabled residents under state care was linked to eligibility for the newly enacted Federal Supplemental Security Income program (SSI).
The following year, the HMO Act provided start-up grants and loans for private health maintenance organizations to cover many of the program services provided by the government, and gave them preferential treatment in the marketplace. And in 1982, the Tax Equity and Fiscal Responsibility Act further encouraged HMOs to contract with the Medicare programs.
Throughout the 1980s, CMS programs were expanded and improved upon, with Medicare supplemental insurance (Medigap), additional subsidization for hospitals serving low-income patients and for pregnant women and infants through Medicaid state initiatives.
The Medicare Catastrophic Coverage Act of 1988 (PDF) included the most significant changes since the enactment of Medicare, including improved hospital and skilled nursing facility benefits, mammography coverage, outpatient prescription drug benefits and limits on patient liability. The Act was repealed a year later in response to protests from higher-income elderly over new premiums, and charge-based payments were replaced with a new service fee schedule.
1996 Welfare reforms included the end of entitlement programs for families and children in need - replaced with a block grant for temporary assistance, and the severance of Medicaid from welfare. Also in 1996, the Health Insurance Portability and Accountability Act (HIPAA) (PDF) addressed federal rules regarding “portability” of coverage in various health insurance markets. It amended the Public Health Service Act, the Employee Retirement Income Security Act of 1974 (ERISA), and the Internal Revenue Code of 1986. CMS implemented HIPAA provisions affecting small-group and individual markets, and began to competitively contract for program integrity work under the new Medicare Integrity program.
The Balanced Budget Act of 1997 created the State Children’s Heath Insurance Program (SCHIP), and made significant changes to Medicare - including expansion of private managed care at the state level, a slowed spending growth rate, new payment systems and expanded services.
And in 2003 the Medicare Prescription Drug, Improvement and Modernization Act (MMA) introduced the most significant changes in the history of the program, creating a stand-alone prescription drug option - and significantly enhancing the presence and authority of private providers.
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What it Does:
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Enacted under Title XXI of the Social Security act, SCHIP is jointly financed by Federal and State governments. Individual states work within broad federal guidelines to determine program design, eligibility, benefits, payment levels - as well as administrative and operating procedures. $24 billion in federal matching funds was provided for FY 1998- FY 2007, and reportedly cover more than 5 million of the nation’s uninsured children.
Divisions
Regional Offices
CMS IT Links
Computer and Data Systems
Research
Statistics, Trends and Reports
Criticism
An AARP report raised issues with regard to the agency’s administrative functioning, including the following:
“Ambiguities with respect to the functions of CMS and its regional offices. Medicare is a national program with uniform benefits and eligibility rules, yet CMS's 10 regional offices and contractors have leeway in making decisions about coverage, contract management, and certification of facilities. Regional variations in the practice and delivery of health care mean that Medicare can vary for beneficiaries and providers. Some beneficiaries and providers complain that they often receive conflicting information from the national and regional offices.
“Questions remaining about the role of CMS itself. Some analysts question whether CMS should be an agency devoted solely to the management of Medicare or should also have other health policy and program responsibilities (e.g., Medicaid), as it does now.”
Medicare Reform - In Brief: Administrative Challenges in Managing the Medicare Program Research Report (by Craig Caplan, AARP Public Policy Institute)
Administrative Challenges in Managing the Medicare Program
(by Michael E. Gluck, Ph.D., and Richard Sorian, AARP Public Policy Institute) (PDF)
Controversies:
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Medicare Funding Cuts
New CMS Medicare Rule Undercuts Ability of SNFs to Care for Higher Acuity Patients, as Intended by Law (American Health Care Association)
Nation's Front Line Caregivers Say New CMS Rule Undermines Care Needs of America's Oldest, Sickest Seniors (Coalition to Protect Senior Care) (PDF)
Bush SCHIP Guidelines
In April 2008 the Government Accountability Office (GAO) challenged new guidelines handed down by the Bush Administration regarding the State Children’s Health Insurance Plan (SCHIP). In a letter issued directly to states, the new rules prohibit states from using federal funds to cover children in families 250% or more above the poverty line ($53,000 for a family of four) until 95% of children under 200% of poverty ($43,000) are covered. The GAO says the administration illegally bypassed Congress to issue the rules, which they claim constitute a policy change—but the Bush administration can ignore the watchdog’s opinion, and CMS has stated it intends to do just that. The conflict springs from a long-standing debate between an administration that wants to cut federal healthcare spending and push towards privatization, and a Democratic Congress seeking to increase spending in response to rising medical costs and diminishing benefits coverage.
Report: Bush SCHIP Rules Illegal. Non-Partisan Agency Blasts Restrictions on Access for Kids Health Program (by Mike Lillis, Washington Independent)
GAO: CMS Funds Spent on “Questionable Contracts”
In 2007 the Government Accountability Office (GAO) reported that 9 percent (or about $90 million) of the $1 billion Congress appropriated to the agency during implementation of the 2003 Medicare Modernization Act was spent on “numerous questionable payments,” and raised questions regarding contractor oversight, wasteful contracting practices, contract terms, internal control deficiencies and backlogs.
Centers for Medicare and Medicaid Services: Internal Control Deficiencies Resulted in Millions of Dollars of Questionable Contract Payments (GAO Report) (PDF)
DHHR Settlement
“The DHHR is being questioned by the CMS over the handling of a $10 million settlement between Attorney General Darrell McGraw and Purdue Pharma, the maker of prescription drug OxyContin. McGraw claimed the drug's addiction capabilities put a strain on the state's Medicaid budget, but never handed the money to the DHHR or Legislature, preventing the CMS from seizing its share of it.”
DHHR response coming in McGraw controversy (by John O'Brien, Legal Newsline)
CMS and HSAs: Crticism
HSAs for Medicare? Crazy but apparently true (The Health Care Blog)
Medicare Drug Plan Deadline Extension
Medicare Drug Plan Deadline Extension Not Legal, Says CMS (Senior Journal)
Nuclear Medicine
Nuclear Medicine to Become a Stark Designated Health Service (By Robert G. Homchick and Edwin Rauzi, Davis Wright Tremaine)
CMS Chief Actuary Controversy
Foster: White House Had Role In Withholding Medicare Data. HHS Actuary Feels Bush Aide Put Hold on Medicare Data (By Amy Goldstein, Washington Post)
Inquiry Confirms Top Medicare Official Threatened Actuary Over Cost of Drug Benefits (by Robert Pear, New York Times)
Medicare actuary details threats over estimates (by Emily Heil, CongressDaily)
2003 Legislation: Drug Price Negotiation
(Senior Journal)
Suggested Reforms:
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Medicare Contracting Reform: CMS’s Plan Has Gaps and Its Anticipated Savings Are Uncertain (GAO Report) (PDF)
- Table of Contents
- Overview
- History
- What it Does
- Where Does the Money Go
- Controversies
- Suggested Reforms
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Centers for Medicare & Medicaid Services (CMS)
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