Definition

Centers for Medicare & Medicaid Services (CMS)

This definition is part of our Essential Guide: Guide to healthcare compliance resources and agencies
Contributor(s): Shaun Sutner

The Centers for Medicare & Medicaid Services (CMS) is part of the U.S. Department of Health and Human Services. CMS oversees many federal healthcare programs, including those that involve health information technology such as the meaningful use incentive program for electronic health records (EHR).

Reimbursement and regulatory functions

In addition to Medicare (the federal health insurance program for the elderly) and Medicaid (the federal needs-based program that helps with medical costs), CMS administers the Children's Health Insurance Program (CHIP), the Health Insurance Portability and Accountability Act (HIPAA) and key portions of the 2015 Medicare Access and CHIP Reauthorization Act (MACRA) law.

MACRA includes programs such as Merit-Based Incentive Payment System (MIPS) in which physicians and healthcare organizations are reimbursed based on their scores on healthcare quality and patient satisfaction measures. The approach is also known as value-based reimbursement. CMS also administers alternative payment models (APMs) for healthcare providers such as bundled payments for groups of healthcare organizations, and accountable care organizations, which are reimbursed based on positive medical outcomes.

Since passage of the Health Information Technology for Economic and Clinical Health Act in 2009, CMS has been charged with running the meaningful use program, which is in its final phase with nearly $30 billion of incentive funds having been paid out to healthcare providers.

Under meaningful use, and now the MIPS part of MACRA, CMS determines whether healthcare providers have successfully used health IT systems, and sets Medicare and Medicaid reimbursement rates for healthcare providers that use federally certified health IT systems.

ONC-affiliated agency

The Office of the National Coordinator for Health Information Technology (ONC), another Health and Human Services agency that works closely with CMS, is responsible for approving certified health IT systems and updating health information privacy and security regulations under HIPAA.

Meaningful use has been credited for driving the widespread adoption of EHRs among hospitals and physicians. As of 2015, ONC reported that 96% of nonfederal acute care hospitals were using certified EHR systems. At the end of 2015, 56% of office-based physicians were using certified EHRs.

History of CMS

After Medicare and Medicaid were established in 1965, the Social Security Administration -- through the then Department of Health, Education and Welfare -- administered federal health programs.

In 1977, the former Health Care Financing Administration (HCFA) took over administration of Medicare and Medicaid. In 2001, HCFA became CMS.

This was last updated in August 2016

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