Centers for Medicare & Medicaid Services (CMS)
The federal agency within the Department of Health and Human Services that administers Medicare, Medicaid, CHIP, and the ACA marketplace, setting hospital payment rates, quality standards, and the data that HospitalCostData uses.
Centers for Medicare & Medicaid Services (CMS) is a term from U.S. hospital cost and quality reporting — the field that produces the CMS Hospital Compare program, the Medicare Inpatient Payment files, and the patient-facing tools built on top of them. The definition below covers what the term means in CMS files, what it does not mean, and how it interacts with the other measures CMS publishes. On the LakeQuality value rubric, Centers for Medicare & Medicaid Services (CMS) is one of the inputs (directly or indirectly) to the combined cost-and-quality grade. Understanding how the term is computed at CMS — what counts and what does not — is part of reading hospital pages defensibly.
Each hospital page on LakeQuality surfaces the specific Centers for Medicare & Medicaid Services (CMS) value for that facility (when CMS reports one), so the general definition here translates into a concrete data point on the per-hospital pages you actually use.
How It Works
CMS is the single most influential entity in U.S. hospital economics, responsible for roughly $1.7 trillion in annual health spending as of FY2024 and touching virtually every U.S. hospital. CMS is headquartered in Baltimore, Maryland with approximately 6,500 employees plus a vast contractor ecosystem (Medicare Administrative Contractors, Recovery Audit Contractors, quality improvement organizations, data aggregators). It is organized into five major centers: Center for Medicare, Center for Medicaid and CHIP Services, Center for Consumer Information and Insurance Oversight (CCIIO, handles ACA), Center for Program Integrity, and Center for Clinical Standards and Quality. CMS sets Medicare payment rates through annual rulemaking cycles: the IPPS Proposed Rule each April and Final Rule each August for inpatient hospital payment, the OPPS Proposed Rule in July and Final Rule in November for outpatient hospital and ASC payment, the Physician Fee Schedule Final Rule in November, and separate final rules for home health, skilled nursing, hospice, LTCHs, and IRFs. These rates strongly influence commercial payer negotiations. CMS administers the quality programs that determine billions in payment adjustments: Hospital Value-Based Purchasing (VBP), Hospital Readmissions Reduction Program (HRRP), Hospital-Acquired Condition Reduction Program (HACRP), and MIPS/APM programs for physicians. It operates the Care Compare website (formerly Hospital Compare), which publishes quality data on approximately 6,000 hospitals and is the primary public data source for consumer hospital quality comparison. CMS enforces conditions of participation for Medicare and Medicaid certification, surveys hospitals every 3-5 years through state survey agencies or accrediting organizations (Joint Commission, DNV, HFAP), and issues civil monetary penalties for violations. The Hospital Price Transparency Rule, HITECH EHR incentives, and the Quality Payment Program all originated from CMS rulemaking.
Related Terms
- Medicare, Federal health insurance for Americans aged 65+ and certain younger people with disabilities, covering hospital stays (Part A), outpatient care (Part B), Medicare Advantage (Part C), and prescription drugs (Part D).
- Inpatient Prospective Payment System (IPPS), Medicare's payment system for acute-care hospital inpatient stays, paying a fixed amount per MS-DRG rather than reimbursing each individual service.
- CMS Star Rating (Hospital Overall Rating), A 1-to-5 star rating assigned by CMS to each hospital based on 46+ quality measures, covering mortality, safety, readmissions, patient experience, and timely care.
- Hospital Readmission Penalty (HRRP), A Medicare payment penalty of up to 3% applied to hospitals with excess 30-day readmissions for six tracked conditions, administered through the Hospital Readmissions Reduction Program.
- Hospital Price Transparency, A federal rule (effective January 1, 2021) requiring all U.S. hospitals to publicly display their prices, including chargemaster rates, negotiated rates with each insurer, and cash-pay discounts.
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About This Definition
This definition is part of the HospitalCostData Hospital Pricing Glossary, 47 terms explaining hospital costs, quality ratings, and healthcare billing. Written for patients, journalists, researchers, and healthcare professionals.