HHS FY2015 Budget in Brief

Centers for Medicare & Medicaid ServicesCenters for Medicare & Medicaid Services (CMS): Program Management

The Centers for Medicare & Medicaid Services ensures availability of effective, up-to-date health care coverage and promotes quality care for beneficiaries.

CMS Program Management Budget Overview

(Dollars in millions)

Discretionary Administration 

2013

2014

2015

2015
+/ 2014

Program Operations

2,588

2,825

2,988

+163

Federal Administration

732

733

788

+55

Survey and Certification

356

375

424

+49

Research

20

20

-20

State HighRisk Pools

42

20

-20

Total, Discretionary Budget Authority /1 /2

3,737 

3,973 

4,200 

+227 

Mandatory Administration

2013>

2014

2015

2015
+/ 2014

Affordable Care Act

582

126

56

-70

American Recovery and Investment Act

133

130

140

+10

Medicare Improvements for Patients and Providers Act

3

3

3

American Taxpayers Relief Act

17

Pathway to SGR Reform Act

4

-4

Total, Mandatory 

735

263

199 

-64 

Discretionary/Mandatory Totals 

2013

2014

2015

2015
+/ 2014

Medicare and Medicaid Reimbursable Administration /3

682

908

936

+28

Marketplace-Related Reimbursable Administration/4

200

1,180

+980

Subtotal, Discretionary and Mandatory

5,154 

5,344 

6,515

+1,174

Proposed Law (Mandatory)

2013

2014

2015

2015
+/ 2014

Program Management (mandatory)

400

+400

Offsetting Collections /5

3

+3

Extend Funding for CMS Quality Measurement Development

30

+30

Subtotal, Proposed Law

433

+433

Program Level, Proposed Law

5,154

5,344

6,948

+1,604

Risk Corridors 

2013

2014

2015

2015
+/ 2014

Risk Corridor Charges

5,450

+5,450

Program Management Program Level with Risk Corridors

5,154

5,344

12,398

+7,054

Full-time Equivalents /6

2013: 5,889

2014: 6,044

2015: 6,380

2015 +/- 2014: +336

1/ Includes $114 million from the Secretary’s one percent transfer authority in FY 2013. Totals may not add due to rounding.

2/ State High Risk Pools are classified as a mandatory activity in FY 2013 and FY 2014, but are included above. FY 2013 levels have been comparably adjusted for the State Health Insurance Assistance Program (SHIP) transfer to Administration for Community Living (ACL) as follows: Program Operations --$45 million, Federal Administration-- $1 million.

3/ Includes the following user fees: Clinical Laboratory Improvement Amendments of 1988, sale of research data, coordination of benefits for the Medicare prescription drug program, MA/prescription drug program education campaign, recovery audit contractors, and provider enrollment fees. 

4/ Includes the following user fees: Federal Marketplaces (FY 2014 and FY 2015) and risk adjustment (FY 2015).

5/ Includes proposals for three new offsetting collections: a Survey and Certification Revisit Fee, administrative fees to offset costs incurred for the Federal Payment Levy Program, and the retention of a portion of Home Health Agency (HHA) Civil Monetary Penalties for quality improvements.

6/ FTE totals include FTE from other funding sources: HCFAC, State Grants, reimbursables, and mandatory appropriations. CMS will fund the following FTE from other sources: FY 2013 = 1,200; FY 2014 =1,502; and FY 2015=1,622.

CMS Program Management Activities

The FY 2015 discretionary budget request for CMS Program Management is $4.2 billion, an increase of $227 million above FY 2014. This request will allow CMS to continue to effectively administer Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), as well as new health insurance reforms contained in the Affordable Care Act. Of the total budget authority request, $629 million will support the operation of Health Insurance Marketplace, which will receive a greater amount of user fees in FY 2015.

Budget Account Summaries

Program Operations: The Program Operations request is $3 billion, an increase of $163 million above the FY 2014 enacted level. In FY 2014, CMS received an additional appropriation of $305 million for Medicare operations. The Budget does not include a separate appropriation for these activities, but includes the funding within Program Operations. The Program Operations account funds mission-critical contractor and IT activities necessary to administer Medicare, Medicaid, and CHIP, the implementation of new private health insurance protections created by the Affordable Care Act, and additional activities required by legislation. Top priority activities for FY 2015 include:

  • Ongoing Medicare Contractor Operations: Approximately 33 percent, or $979 million, of the FY 2015 Program Operations request supports ongoing contractor operations such as Medicare claims processing.

  • Marketplace Operations: The Budget includes $307 million to support the oversight and management-related Marketplace activities in FY 2015. See the Crosscutting Accounts section below for additional information.

  • Consumer and Beneficiary Education and Outreach: The Budget includes $412 million in discretionary funding for beneficiary education and outreach activities, including $335 million for the National Medicare Education Program, $71 million for consumer support for the Marketplaces, and approximately $6 million for other outreach. Private insurance consumer support activities include funding independent review organization contractors to externally review adverse benefit decisions for consumers and updating coverage fact labels to help consumers compare potential out of pocket costs for various coverage options.

  • Insurance Oversight: The Budget requests $14.7 million for CMS contracts to ensure compliance with the private insurance provisions contained in the Affordable Care Act, notably the Medical Loss Ratio and Premium Rate Review provisions.

  • IT Systems and Support: The Budget includes $478 million for general IT systems and other support, including enterprise-wide software and hardware development and support, the Federally-facilitated Marketplace IT systems and Marketplace data services hub, and CMS’s data center and telecommunications infrastructure.  This amount includes a $37 million investment in CMS’s IT shared services initiative, which achieves efficiencies by sharing key IT services across multiple CMS programs.

  • Medicaid and CHIP Operations: The Budget requests $31.1 million to fund administrative activities to improve Medicaid and CHIP program operations and implement new responsibilities under the Affordable Care Act. Some of these activities include initiatives to improve enrollment of eligible individuals into Medicaid and CHIP and modernize data systems.

Federal Administration: For FY 2015, the Budget requests $788 million for CMS federal administrative costs, approximately $55 million higher than the FY 2014 enacted level.

Survey and Certification FrequenciesOf this total, $674 million will support a full time equivalent (FTE) level of 4,738, an increase of 196 FTEs over FY 2014. This staffing increase will enable CMS to address the needs of a growing Medicare population, as well as oversee expanded responsibilities resulting from the Affordable Care Act and other legislation passed in recent years.

Survey and Certification: The FY 2015 Survey and Certification request is $424 million, a $49 million increase over FY 2014. This increase is needed to complete surveys at frequencies consistent with statutory and policy requirements, given continued growth in the number of participating facilities, increased survey responsibility, and inflation. The budget improves survey frequencies for dialysis facilities, non-accredited hospitals, ambulatory surgical centers, and other providers, on average, compared to 2014. CMS expects states to complete over 24,434 initial surveys and re-certifications and over 51,477 visits in response to complaints in FY 2015.

Approximately 91 percent of the request will go to state survey agencies. Surveys include mandated federal inspections of long-term care facilities (i.e., nursing homes) and home health agencies, as well as federal inspections of other key facilities. All facilities participating in the Medicare and Medicaid programs must undergo inspection when entering the program and on a regular basis thereafter. CMS expects to finalize the first conditions of participation for community mental health centers by FY 2015, which will promote quality improvement by setting minimum quality and safety standards that these facilities will have to meet to remain a Medicare provider. The FY 2015 Budget is the first to include funds to support survey and certification work in these facilities. In addition, CMS is currently engaged in an effectiveness and efficiency strategy aimed at quality improvement while identifying risk-based approaches to surveying.

Research: Beginning in FY 2015, ongoing research activities will be funded from Program Operations.

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Crosscutting Summaries

Health Insurance Marketplaces (Marketplaces): The Budget includes $629 million for CMS activities and administrative expenses to support Marketplace operations in FY 2015. In addition to the Budget request, CMS will collect approximately $1.2 billion in user fees from issuers in the FFM, as well as reinsurance and risk adjustment administrative collections, for a total program level of $1.8 billion.

Health Insurance MarketplacesMarketplaces provide affordable, quality health insurance options to individuals and small businesses, and 4 million individuals have already enrolled in Marketplace plans. Enrollment is expected to increase through the initial years of implementation, and CMS operates some or all Marketplace functions in over 30 states through the Federally-facilitated Marketplace (FFM). Specifically, CMS performs eligibility and appeals work, certification and oversight of qualified health plans, payment and financial management functions, and operates the Small Business Health Options Program (SHOP). Some states in the FFM assist with plan management functions or operate their own SHOP. Additionally, CMS oversees operations of State-based Marketplaces and provides technical assistance as needed.

CMS provides Marketplace consumer assistance through a call center and website for the FFM, as well as in-person support through Navigator grants. Additionally, CMS will conduct an outreach campaign during the open enrollment season to inform consumers of their insurance options.

PERFORMANCE HIGHLIGHTS -- Meaningful Use of Electronic Health Records

CMS and the Office of the National Coordinator for Health IT are working together to improve quality, reduce costs, decrease paperwork, and expand access to care through increased adoption and meaningful use of electronic health records (EHRs). At the end of December 2013, 340,046 unique eligible professionals, eligible hospitals, and critical access hospitals had received incentives from the Medicare and Medicaid EHR Incentive Programs. HHS aims to increase the number of eligible providers who receive an incentive payment to 425,000 by the end of FY 2015.

Finally, CMS operates a number of IT systems to support the Marketplaces, such as the system that operates FFM functions including eligibility, plan management, and payment functions. The data services hub provides eligibility verification services to all Marketplaces through interfaces with trusted data sources in other Federal departments. Other IT costs include hosting services and data management systems.

National Medicare Education Program (NMEP): The total FY 2015 budget authority for NMEP is $335.4 million, an increase of approximately $77.2 million above FY 2014. The NMEP program level includes $71 million in funding from Program Management, Medicare Advantage/Prescription Drug Program user fees, and Quality Improvement Organizations, allocated to the call center and beneficiary materials. In order to ensure that beneficiaries have accurate and up-to-date information on their coverage options and covered benefits, beneficiary education remains a top priority for CMS.

Of the total, $250 million, or 75 percent, supports the 1800MEDICARE call center which provides beneficiaries with access to customer service representatives who are trained to answer questions regarding the Medicare program. The request will support approximately 26 million calls with an average-speed-to-answer of 5 minutes. Beneficiaries can also use 1800MEDICARE to report fraud allegations. CMS is using information from beneficiary fraud allegations in new ways to compile provider-specific complaints, flag providers who have been the subject of multiple fraud complaints, and map shifts and trends in fraud allegations over time.

The request also includes $40 million for Beneficiary Materials, the majority of which will fund the Medicare & You handbook.

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2015 Legislative Proposals

Provide Mandatory Administrative Resources for Implementation:The President’s Budget includes $400 million in mandatory Program Management funds to implement the mandatory health care proposals accompanying this submission. These health care proposals will allow the Administration to realize additional cost efficiencies and further root out waste and abuse in Medicare and Medicaid. CMS estimates the savings from these proposals to be $414.5 billion over the next ten years. [$400 million in costs over 10 years]

Allow CMS to Reinvest Civil Monetary Penalties Recovered from Home Health Agencies: This proposal allows CMS to retain and invest civil monetary penalties assessed on home health agencies for activities to improve the quality of care of patients receiving home health services. The Affordable Care Act provided this authority for Skilled Nursing Facilities. [$10 million in costs over ten years] 

Assess Administrative Costs for the Federal Payment Levy Program: This activity electronically matches Medicare provider payments between delinquent tax and non-tax debts and federal payments disbursed by the government. It allows the Treasury Department to levy up to 15 percent of a provider’s Medicare reimbursement against an outstanding debt. This proposal will allow CMS to recoup its transaction administrative costs from the provider estimated to be $2 million each year. [No budget impact]

Enact Survey and Certification Revisit User Fees:The Budget proposes a survey and certification revisit user fee which would provide CMS an increased ability to revisit poor performers, while creating an incentive for facilities to correct deficiencies and ensure quality of care. It is assumed that no savings will be realized in FY 2015, the year of implementation. [No budget impact]

Extend Funding for CMS Quality Measurement Development:The Budget proposes to extend funding for a consensus-based entity focused on performance measurement through 2017.  The duties for a consensus-based entity are divided between those originally authorized by the Medicare Improvements for Patients and Providers Act of 2008 and those that were added by the Affordable Care Act and amended by the American Taxpayer Relief Act of 2012. Under current law, no additional funding will be provided after 2014. The Budget includes $30 million each year for both activities, which is available until expended. Continued funding for endorsing and maintaining performance measures and other performance measurement review functions are essential as CMS continues to implement valued-based purchasing initiatives and other models which focus on performance-based payments. [$90 million in costs over 10 years]


 

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