What Is the Centers for Medicare and Medicaid Services (CMS)?

The Centers for Medicare and Medicaid Services (CMS) is the agency within the U.S. Department of Health and Human Services (HHS) that administers the nation’s major health care programs. The CMS oversees health care programs such as Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and the state and federal health insurance marketplaces. CMS collects and analyzes data, produces research reports, and works to eliminate instances of fraud and abuse within the health care system. 

Key Takaways

  • The Centers for Medicare and Medicaid Services is a federal agency that administers the nation’s major health care programs including Medicare, Medicaid, and CHIP.
  • It collects and analyzes data, produces research reports, and works to eliminate instances of fraud and abuse within the health care system. 
  • The agency aims to provide a health care system with better care, access to coverage, and improved health.
  • The CMS releases updated Medicare premium and deductible information each year.

How the Centers for Medicare and Medicaid Services (CMS) Works

President Lyndon B. Johnson created Medicare and Medicaid in 1965, which were initially managed by other agencies. In 1977, the federal government established the Health Care Financing Administration (HCFA), which was established as part of the Department of Health, Education, and Welfare (HEW). The HCFA was later named the Centers for Medicare and Medicaid Services. CMS now manages many important national health care programs that affect the lives of millions of Americans. 

The agency’s goal is to provide “a high-quality health care system that ensures better care, access to coverage, and improved health.” CMS is headquartered in Maryland, as well as several cities throughout the United States including Boston, Kansas City, San Francisco, and Atlanta—all strategically positioned to serve each region.

The CMS manages the Administrative Simplification Standards of the Health Insurance Portability and Accountability Act (HIPPA). The use of Administrative Simplification Standards strives to implement the adoption of national electronic health care records, guarantee patient privacy and security, and enforce HIPPA rules. CMS oversees quality in clinical laboratories, long-term care facilities, as well as providing oversight of the health insurance exchanges.  

Special Considerations

Because health care costs continue to rise, Medicare premiums also increase each year. Since Part B premiums are deducted from the Social Security benefits of Medicare recipients, it's important that people remain informed and understand how these premiums work. This is why the CMS releases information about premiums and deductibles for different parts of Medicare every year to the general public.

As of 2020, the Part B standard monthly premium for Medicare is $144.60, and the annual deductible is $198. People with higher incomes are required to pay higher premiums based on the income they report on their tax returns. Part A premiums are payable only if a Medicare recipient didn't have at least 40 quarters of Medicare-covered employment. Monthly premiums for those people range from $252 to $458 each month in 2020. Deductibles also apply for hospital stays in Part A. For 2020, inpatient hospital deductions are $1,408.

Types of CMS Programs

Through its Center for Consumer Information & Insurance Oversight, the CMS plays a role in the federal and state health insurance marketplaces by helping to implement the Affordable Care Act’s (ACA) laws about private health insurance and providing educational materials to the public.

The CMS plays a role in insurance marketplaces by helping to implement the Affordable Care Act’s laws about private health insurance.

Medicare Program

Medicare is a taxpayer-funded program for seniors of age 65 and older. Eligibility requires the senior to have worked and paid into the system through the payroll tax. Medicare also provides health coverage for people with recognized disabilities and specific end-stage diseases as confirmed by the Social Security Administration (SSA).

Medicare consists of four parts, titled A, B, C, and D. Part A covers inpatient hospital, skilled nursing, hospice, and home services. Medical coverage is provided under part B and includes physician, laboratory, outpatient, preventive care, and other services. Medicare Part C or Medicare Advantage is a combination of parts A and B. Part D, which was signed in 2003 by President George W. Bush, provides coverage for drugs and prescription medications.

Medicare enrollees share costs with taxpayers through premiums and out-of-pocket expenditures as noted above.

Medicaid

Medicaid is a government-sponsored program that provides assistance for health care coverage to people with low-incomes. The joint program, funded by the federal government and administered at the state level, varies. Patients receive assistance paying for things like doctor visits, long-term medical, custodial care costs, hospital stays, and more. 

Applicants who want to be considered for Medicaid can apply online through the Health Insurance Marketplace or directly through their state's Medicaid agency.

CHIP

The Children's Health insurance Program (CHIP) is offered to parents of children under the age of 19 who make too much to qualify for Medicaid, but can't afford regular health insurance. The income limits vary, as each state runs a variation of the program with different names and different eligibility requirements.

Many of the services provided by CHIPs are free including doctor visits and check-ups, vaccinations, hospital care, dental and vision care, lab services, X-rays, prescriptions, and emergency services. But some states may require a reasonable monthly premium, while others require a co-pay.