HHS FY 2017 Budget in Brief - CMS - Program Management

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

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CMS Program Management Budget Overview

(Dollars in millions)

Discretionary Administration 2015 2016 2017 2017
+/- 2016
Program Operations 2,825 2,825 2,936 +111
Federal Administration 733 733 736 +3
Survey and Certification 397 397 437 +40
Research 20 20 -20
Total, Discretionary Budget Authority /1 /2 3,975 3,975 4,109 +135

Mandatory Administration 2015 2016 2017 2017
+/- 2016
Affordable Care Act 52 0 1 +1
American Recovery and Investment Act 130 61 0 -61
Medicare Improvements for Patients and Providers Act 3 3 3
Protecting Access to Medicare Act (2014) 6 6 6
Improving Access to Medicare Post-Acute Care Transformation (2014) 107 20 21 +1
Medicare Access and CHIP Reauthorization Act 205 216 211 -5
Total, Mandatory /1 502 305 242 -63

Reimbursable Administration 2015 2016 2017 2017
+/- 2016
Medicare and Medicaid Reimbursable Administration /2 697 361 423 +62
Marketplace-Related Reimbursable Administration /3 888 1,225 1,604 +379
Risk Corridor Collections 0 362 362
Subtotal, Current Law 1,585 1,948 2,389 +441
Proposed Law (Mandatory) 2015 2016 2017 2017
+/- 2016
Program Management (mandatory) 400 +400
Extend Funding for the Medicaid Adult Health Quality Measures Program 14 +14
Offsetting Collections /4 201 +201
Subtotal, Current Law 615 +615
Program Level, Proposed Law 6,062 6,228 7,355 +1,127
Full-Time Equivalents /5 5,967 6,217 6,370 +153

Table Footnotes

1/ Totals may not add due to rounding.

2/ 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.

3/ Includes user fees charged to issuers in Federally-facilitated Marketplaces and risk adjustment.

4/ Includes proposals for six new offsetting collections. Please see Legislative Proposals section for more information.

5/ 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 2015 = 1,482; FY 2016 =1,839; and FY 2017=2,258.

The FY 2017 discretionary budget request for CMS Program Management is $4.1 billion, an increase of $135 million above FY 2016 Enacted.  This request will enable CMS to continue to effectively administer Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), as well as new private health insurance reforms contained in the Affordable Care Act.

Budget Account Summaries

Program Operations

The Program Operations request is $2.9 billion, an increase of $112 million above the FY 2016 Enacted level.  The Program Operations account funds essential contractor, information technology, and outreach activities necessary to administer Medicare, Medicaid, CHIP, and private health insurance reforms and other programs instituted by the Affordable Care Act.  Top priority activities for FY 2017 include: 

  • Ongoing Medicare Contractor Operations:  Approximately 32 percent, or $951 million, of the FY 2017 Program Operations request supports ongoing contractor operations such as Medicare claims processing.
  • Medicare Appeals: The Budget includes $142 million to improve the processing of provider and beneficiary claim appeals at the second level of appeals.  This amount includes $44 million in new initiatives to improve the efficiency of the Medicare appeals process at the first two levels and limit appeals that escalate to the Office of Medicare Hearings and Appeals, including automating data for these levels of appeal in the Medicare Appeals System.
  • Marketplaces:  The Budget includes $535 million in requested budget authority for Marketplaces, $514 million of which supports Program Operations activities such as eligibility, plan management, and quality improvement.  In addition, CMS anticipates collecting approximately $1.6 billion in user fee revenues to support Marketplace activities.  See the Crosscutting Accounts section below for additional information.
  • Information Technology Systems and Support:  The Budget includes $333 million for non-Marketplace information technology systems and other support. This includes a significant investment in making essential updates to CMS’ claims processing systems. This request also funds CMS’ ongoing effort to enhance cybersecurity, allowing the agency to protect the valuable consumer health data of millions of Americans from outside threats. Additionally, CMS continues to transition to the use of shared systems, which allow for greater efficiency and reliability agency wide. This request also funds a large number of other essential information technology functions across the agency for Medicare Appeals, the Healthcare Integrated General Ledger Accounting System, Medicaid, and CHIP.
  • Medicaid and CHIP Operations:  The Budget requests $64 million to fund administrative activities to improve Medicaid and CHIP program operations and implement new responsibilities under the Affordable Care Act.  These activities include an initiative to modernize data systems.
  • ICD-10 and HIPAA Administrative Simplification: To help continue the successful transition to the International Classification of Diseases 10th Edition code set (ICD-10), $5.5 million in funding will continue to support industry‑wide training, outreach, and education that focuses on small and rural providers.  Additionally, the Budget supports implementation of the remaining HIPAA administrative simplification standards required by the Affordable Care Act, expected to save industry $8.3 billion over 10 years.

Federal Administration

For FY 2017, the Budget requests $736 million for CMS federal administrative costs, $3 million above the FY 2016 Enacted level.

Of this total, $629 million will support a direct Full-Time equivalent level of 4,112, a decrease of 266 full-time equivalents below the FY 2016 Enacted level of 4,378.  One of the primary reasons for the decrease in direct FTEs is due to a shift in the funding source used to support some Marketplace FTEs from the Federal Administration account to user fees.  Staff that is funded from the Federal Administration line is necessary to address the needs of a growing Medicare population, as well as to oversee expanded duties resulting from the Medicare Access and CHIP Reauthorization Act of 2015, Affordable Care Act, and other legislation passed in recent years. 

Survey and Certification

Program Highlight: Survey and Certification Frequencies
The FY 2017 Survey and Certification request is $437 million, a $40 million increase over the FY 2016 Enacted level.  The increased funding level is needed to maintain survey frequency levels due to growing numbers of participating facilities and improved quality and safety standards.  CMS expects states to complete over 25,800 initial surveys and re‑certifications and over 55,600 visits in response to complaints in FY 2017.

The Improving Medicare Post-Acute Care Transformation Act of 2014 increases hospice survey frequencies to no less than once every three years, which the FY 2017 Budget request also supports. 

Over 87 percent of the request will go to state survey agencies.  Surveys include mandated federal inspections of long‑term care facilities (i.e., nursing homes) home health agencies, hospices, 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.  In addition, CMS is currently engaged in an effectiveness and efficiency strategy aimed at quality improvement while identifying risk‑based approaches to surveying.

The Budget proposes a discretionary survey and certification revisit user fee which would, if enacted, provide CMS an increased ability to revisit poor performers, while creating an incentive for facilities to correct deficiencies and ensure quality of care. The Budget assumes that no revenue will be realized in FY 2017, the year of establishment.

Performance Highlight

Reducing Unnecessary Antipsychotic Drug Use in Nursing Homes

The CMS survey and certification budget aims to improve dementia care in nursing homes by decreasing the percentage of long-stay nursing home residents receiving an antipsychotic medication. Antipsychotic medications have common and dangerous side effects when misused to treat the behavioral and psychological symptoms of dementia. In calendar year 2011, 23.9 percent of long-stay nursing home residents received an antipsychotic medication. In calendar year 2014, CMS met its target and that rate fell to 19.1 percent. CMS set the calendar year 2017 target rate at 16.0 percent.


Beginning in FY 2017, ongoing research activities will be funded from Program Operations.

Crosscutting Summaries

Health Insurance Marketplaces

The discretionary budget request is $535 million for CMS activities and administrative expenses to support Marketplace operations in FY 2017, including $21 million in Federal Administration. In addition to the Budget request, CMS will collect an estimated $1.6 billion in user fees from Marketplace issuers and reinsurance and risk adjustment eligible plans, for a total estimated program level of $2.1 billion.

Health Reform - Health Insurance Marketplaces: FY 2017 Program Level Request (dollars in millions)
Marketplaces provide affordable, quality health insurance options to individuals and small businesses, and CMS operates some or all Marketplace functions in 38 states.  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 Federally-facilitated Marketplace states assist with plan management functions or operate their own SHOP.  Additionally, CMS oversees operations of State‑based Marketplaces and provides technical assistance as needed.

In FY 2017, CMS will continue to provide Marketplace consumer assistance through a call center and website, as well as in-person support through Navigator grants. CMS will focus outreach efforts on hard-to-reach populations that may not yet know about their opportunities to enroll in affordable health coverage.   

In addition, CMS will concentrate IT work on system enhancements that improve capacity to perform core Marketplace functions such as eligibility, plan management, and payment functions in more efficient and consumer-friendly ways.  CMS will also increase its focus on Marketplace program integrity efforts in FY 2017, including testing improper payment methodologies and investigating potential fraud, waste, and abuse.

National Medicare Education Program

Total FY 2017 budget authority for the National Medicare Education Program is $347 million.  The program level includes an additional $89 million in funding from Program Management, Medicare Advantage/Prescription Drug Program user fees 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 budget authority, $306 million, or 88 percent, supports the 1‑800‑MEDICARE 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 27 million calls with an average‑speed‑to‑answer of less than 5 minutes.  Beneficiaries can also use 1‑800‑MEDICARE 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 $76 million for beneficiary materials, the majority of which will fund the Medicare & You handbook.  It will also provide $21 million for CMS to mail notices of minimum essential coverage to Medicare enrollees who are new, disabled, and/or under age 65.

2017 Legislative Proposals

Provide Mandatory Administrative Resources for Implementation

The President’s Budget includes $400 million in no-year 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 and save as much as $357.3 billion over the next 10 years.  [$400 million in costs over 10 years]

Extend Funding for the Medicaid Adult Health Quality Measures Program

The Affordable Care Act established the Medicaid Adult Health Quality Measures Program, which requires CMS to develop and annually revise a set of Adult Health Quality Measures and encourages states to voluntarily report information regarding the quality of health care for Medicaid-eligible adults.  Additionally, there are standardized reporting requirements, including an annual Secretary’s report for quality of care for adults enrolled in Medicaid and a report to Congress every three years.  The Affordable Care Act provided funding for this program from 2010-2014. This proposal provides an additional five years of funding for the Adult Health Quality Measure Program.  [$70 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]

Allow CMS to Assess a Fee on Medicare Providers for Payments Subject to the Federal Levy Program

This initiative 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 100 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]

Other User Fee Proposals

The Budget also includes several mandatory proposals that establish new user fees for: resolving Medicare appeals, registering clearinghouses and billing agents that act on behalf of Medicare providers and suppliers, and submitting provider applications for individual providers to participate in Medicare.


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