Health Care Financing Administration

The Health Care Financing Administration (HCFA) manages the federal government's largest health care financing programs and exercises regulatory and evaluative authority designed to assure the quality of health care services delivered to broad populations within the United States. Created in 1977, HCFA administers the federal Medicare program that purchases medical care for 39 million elderly and disabled individuals, as well as the Medicaid program that operates jointly under federal and state authority to provide care for 33 million low-income persons. Both of these entitlement programs were created in 1965 through amendments to the federal Social Security Act, and operated under separate federal agencies until HCFA was created in 1977 to manage them jointly. More recently, HCFA was given responsibility for administering a new federal health care financing program, the State Children's Health Insurance Program (SCHIP), created in 1997 to provide health insurance coverage for many of the nation's 11 million uninsured children. In managing these three programs, HCFA is the largest single purchaser of health care services in the United States. This substantial purchasing power allows the agency to influence the quality and efficiency of care delivered not just to individuals eligible for Medicare and Medicaid, but also to the U.S. population at large. In addition to its financing responsibilities, HCFA carries out an array of activities designed to encourage improvements in quality and efficiency among health care providers that participate in public programs.

HCFA is one of the eleven federal agencies that comprise the U.S. Department of Health and Human Services. HCFA's programs are carried out through a central office in Baltimore, Maryland, and a network of ten regional offices across the country.

HCFA's budget was an estimated $342 billion in fiscal year 2000. Most of these resources were dedicated to the agency's three health care financing programs—Medicare, Medicaid, and SCHIP. Federal expenditures for Medicare and Medicaid benefits grew from $41 billion in 1977 to an estimated $311 billion in 1999. HCFA's human resources remained relatively constant at approximately four thousand full-time equivalent personnel over the same years.

Medicare is the nation's largest health care financing program covering individuals at least sixty-five years old or who have permanent disabilities or kidney failure. Operating under explicit congressional authority, HFCA establishes the coverage policies, payment mechanisms and rates for services provided by hospitals, physicians, and other providers authorized to serve Medicare beneficiaries. HCFA relies on a network of private contractors for processing claims for payment. HCFA also contracts with managed care plans to serve beneficiaries who choose to receive health care through these plans.

Unlike the Medicare program, HFCA operates both the Medicaid program and the SCHIP program in partnership with state governments. Individual states hold the authority to establish program eligibility criteria and program benefit levels that are consistent with broad federal requirements. States also participate in the financing of these programs, with the federal government covering a proportion of Medicaid program expenditures that varies between a minimum of 50 percent and a maximum of 83 percent depending on a state's per capita income level. Similar federal matching rates are used for the SCHIP program, although these rates are tied to estimates of low-income uninsured children in each state. Many states now contract with managed care plans to serve Medicaid and SCHIP recipients.

In addition to administrating health care financing programs, HCFA works to improve the quality and efficiency of health care delivery.

The health care programs and services administered by HCFA expand access to medical care for millions of Americans who would otherwise face barriers to care because of age, income, health status, or disability. These programs also provide important support for the nation's health-profession training facilities, through payments made to teaching hospitals for training physicians and nurses. HCFA faces myriad challenges in protecting the integrity and effectiveness of these vital public health insurance programs, including those posed by demographic changes, shifts in income and employment, rising health care costs, diversifying health care technologies, and changing political priorities and social values. But the agency also has opportunities to use its administrative authority over public programs in order to encourage improvements in the quality and efficiency of care provided throughout the U.S. health care system. In these ways, HCFA helps to shape the American public health system through its purchasing power, its regulatory authority, and its policy leadership.

(SEE ALSO: Economics of Health; Personal Health Services)

Bibliography

Federal Hospital Insurance Trust Fund (1999). Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund. Washington, DC: U.S. Government Printing Office.

Medicare Payment Assessment Commission (MedPAC) (1999). Report to the Congress: Medicare Payment Policy. Washington, DC: U.S. Government Printing Office.

U.S. Health Care Financing Administration (HCFA)(1998). Medicare Fact Book. Washington, DC: U.S. Government Printing Office.

— WILLIAM L. ROPER; GLEN P. MAYS

The Health Care Financing Administration (HCFA), an operating division of the Department of Health and Human Services, was established in 1977 to combine under one administration the oversight of the Medicare Program and the federal portion of the Medicaid Program (Reorg. Order of Mar. 9, 1977, 42 Fed. Reg. 13262).

Medicare provides health insurance coverage for U.S. citizens age sixty-five or older, for younger people receiving Social Security benefits, and for persons needing dialysis or kidney transplants for the treatment of end-stage renal disease (42 U.S.C.A. § 1395 et seq.). Medicare beneficiaries may receive medical care through physicians of their own choosing or through health maintenance organizations and other medical plans that have contracts with Medicare.

Medicaid is a medical assistance program jointly financed by state and federal governments for low-income individuals (42 U.S.C.A. § 1396 et seq.). Medicaid covers health care expenses for recipients of Aid to Families with Dependent Children, as well as for low-income pregnant women and other individuals whose medical bills qualify them as medically needy. Most states also cover medical expenses for older U.S. citizens who are needy, as well as for individuals who are blind and disabled who receive assistance under the Supplemental Security Income Program. Coverage is further extended to some infants and low-income pregnant women and, depending on the state, to other low-income individuals with medical bills that qualify them as medically needy.

The mission of the HCFA is to promote the timely delivery of quality health care to Medicare and Medicaid beneficiaries and to ensure that the Medicare and Medicaid Programs are administered in an efficient manner. The agency must also ensure that program beneficiaries are aware of the services for which they are eligible, that those services are accessible and of high quality, and that agency policies and actions promote efficiency and quality within the total health care delivery system. A quality assurance program administered by the HCFA is responsible for developing health and safety standards for providers of health care services authorized by Medicare and Medicaid legislation. This program helps to ensure that Medicare and Medicaid beneficiaries receive quality health care services at a reasonable cost. Through Medicare and Medicaid, the HCFA serves 68 million older, disabled, and poor U.S. citizens, nearly a quarter of all U.S. citizens.

Centers for Medicare and Medicaid Services logo

The Centers for Medicare and Medicaid Services (CMS), previously known as the Health Care Financing Administration (HCFA), is a federal agency within the United States Department of Health and Human Services (DHHS) that administers the Medicare program and works in partnership with State governments to administer Medicaid, the State Children's Health Insurance Program (SCHIP), and health insurance portability standards. In addition to these programs, CMS has other responsibilities, including the administrative simplification standards from the Health Insurance Portability and Accountability Act of 1996 (HIPAA), quality standards in long-term care facilities (more commonly referred to as nursing homes) through its survey and certification process, and clinical laboratory quality standards under the Clinical Laboratory Improvement Amendments.

History

President Lyndon B. Johnson signed the Social Security Act on July 30, 1965, establishing both Medicare and Medicaid. The Social Security Administration (SSA) became responsible for the administration of Medicare and the Social and Rehabilitation Service (SRS) became responsible for the administration of Medicaid. Both Agencies were organized under what was then known as the Department of Health, Education, and Welfare (HEW).

In 1977, the Health Care Financing Administration (HCFA) was established under HEW. HCFA became responsible for the coordination of Medicare and Medicaid. The responsibility for enrolling beneficiaries into Medicare and processing premium payments remained with SSA.

In 1980 the Department of Health and Human Services was created when HEW was divided into two agencies: the Department of Education and the Department of Health and Human Services (HHS). HCFA became an agency under the Department of Health and Human Services.

On July 1, 2001, HHS Secretary Tommy Thompson renamed HCFA the Centers for Medicare & Medicaid Services (CMS). Secretary Thompson explained that in order "to give the agency a new direction, a new spirit, it is necessary that we give it a new name - one that truly reflects the agency's vital mission to serve millions of Medicare and Medicaid beneficiaries across America."

The previous CMS Administrator, Mark McClellan, MD, PhD, was sworn in on March 25, 2004. On September 5, 2006, McClellan announced his resignation from the post. The current Acting Administrator as of September 20, 2007 is Kerry Weems.

Workforce

The CMS employs approximately 4,100 employees, of which 2,700 are located at its headquarters in Woodlawn, Maryland. The remaining employees are located in the Hubert H. Humphrey Building in Washington, D.C., the 10 regional offices listed below, and in various field offices located throughout the United States.

Regional offices

CMS has its headquarters in Woodlawn, Maryland, with 10 regional offices located throughout the United States:

• Region I - Boston

Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island and Vermont.

• Region II - New York

New Jersey, New York as well as the U.S. Virgin Islands and Puerto Rico.

• Region III - Philadelphia

Delaware, Maryland, Pennsylvania, Virginia, West Virginia and the District of Columbia.

• Region IV - Atlanta

Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina and Tennessee.

• Region V - Chicago

Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin.

• Region VI - Dallas

Arkansas, Louisiana, New Mexico, Oklahoma and Texas.

• Region VII - Kansas City

Iowa, Kansas, Missouri and Nebraska.

• Region VIII - Denver

Colorado, Montana, North Dakota, South Dakota, Utah and Wyoming.

• Region IX - San Francisco

Arizona, California, Hawaii, Nevada and the Territories of American Samoa, Guam and the Commonwealth of the Northern Mariana Islands.

• Region X - Seattle

Alaska, Idaho, Oregon and Washington.

See also

• Administration on Aging
• Medicare (Australia)
• Medicare (Canada)
• National Health Service (United Kingdom)
• Quality improvement organizations
• Stark Law
• Medical billing
• Health Insurance Portability and Accountability Act
• Emergency Medical Treatment and Active Labor Act

External links

• Official website
  • History of the CMS
  • Medicare
  • Medicaid
  • Health Care Financing Review, a quarterly journal published by CMS.
  • Research & Statistics - Find CMS publications as well as historic, current, and projected facts and figures pertaining to the U.S. Health Care System.
  • Map of CMS Regions

Agencies under the United States Department of Health and Human Services

Secretary of Health and Human Services Deputy Secretary of Health and Human Services Administration for Children and Families • Administration on Aging  • Agency for Healthcare Research and Quality  • Agency for Toxic Substances and Disease Registry  • Centers for Disease Control and Prevention  • Centers for Medicare and Medicaid Services  • Food and Drug Administration  • Health Resources and Services Administration  • Indian Health Service  • National Institutes of Health  • Substance Abuse and Mental Health Services Administration

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