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Centers for Medicare & Medicaid Services (CMS) Definition

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

Key Takeaways

  • The Centers for Medicare & Medicaid Services is a federal agency that administers the nation’s major healthcare 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 healthcare system. 
  • The agency aims to provide a healthcare 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

On July 30, 1965, President Lyndon B. Johnson signed into law a bill that established the Medicare and Medicaid programs. In 1977, the federal government established the Health Care Financing Administration (HCFA) as part of the Department of Health, Education, and Welfare (HEW). The HCFA was later named the Centers for Medicare & 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 and has 10 regional offices throughout the U.S. located in Boston, New York, Philadelphia, Atlanta, Dallas, Kansas City, Chicago, Denver, San Francisco, and Seattle.

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 and long-term care facilities, as well as provides 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, the inpatient hospital deductible is $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 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 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 and 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.


The Children’s Health insurance Program (CHIP) is offered to parents of children under age 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 CHIP 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 monthly premium, while others require a co-pay.

The CARES Act of 2020

On March 27, 2020, President Trump signed a $2 trillion coronavirus emergency stimulus package, called the CARES (Coronavirus Aid, Relief, and Economic Security) Act, into law. It expands Medicare’s ability to cover treatment and services for those affected by COVID-19. The CARES Act also:

  • Increases flexibility for Medicare to cover telehealth services.
  • Authorizes Medicare certification for home health services by physician assistants, nurse practitioners, and certified nurse specialists.
  • Increases Medicare payments for COVID-19-related hospital stays and durable medical equipment.

For Medicaid, the CARES Act clarifies that non-expansion states can use the Medicaid program to cover COVID-19-related services for uninsured adults who would have qualified for Medicaid if the state had chosen to expand. Other populations with limited Medicaid coverage are also eligible for coverage under this state option.

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