Office of the Actuary (CMS)

Office of the Actuary (CMS)
Name	Office of the Actuary (CMS)
Formation	1965
Headquarters	Baltimore, Maryland
Parent agency	Centers for Medicare & Medicaid Services
Chief1 name	Chief Actuary
Employees	~200
Website	Centers for Medicare & Medicaid Services

Contents

Office of the Actuary (CMS) is the actuarial office within the Centers for Medicare & Medicaid Services charged with projecting costs, evaluating risk, and estimating financial effects of health programs administered by Medicare (United States) and Medicaid. The office supports executive decision-making for the Department of Health and Human Services, provides technical analyses for legislation debated in the United States Congress, and informs stakeholders including the Social Security Administration, Office of Management and Budget, and federal courts. Its work interfaces with major health policy events such as the Affordable Care Act, the Balanced Budget Act of 1997, and pandemic responses like the COVID-19 pandemic.

Overview

The Office of the Actuary (OACT) operates within the Centers for Medicare & Medicaid Services alongside components such as Medicare Advantage, Medicare Part D, and the Innovation Center. It delivers independent estimates for proposals from administrations led by presidents including Richard Nixon, Ronald Reagan, Bill Clinton, George W. Bush, Barack Obama, Donald Trump, and Joe Biden. The office interacts with congressional committees such as the House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation, and contributes to interagency coordination with the Treasury Department and Government Accountability Office analyses.

OACT’s primary responsibilities include estimating program costs for Medicare Trustees Report, evaluating plan bids for Medicare Advantage contractors, setting actuarial soundness criteria for Medicaid Managed Care, and estimating impacts of reforms like the Affordable Care Act. It conducts budget scoring for legislative proposals affecting programs administered by the Centers for Medicare & Medicaid Services, advises the Secretary of Health and Human Services, and provides testimony before the Congressional Budget Office and congressional subcommittees. The office produces risk adjustment models used by insurers participating in Health Insurance Marketplaces and supports regulatory rulemaking for agencies hosting demonstrations such as the Center for Medicare and Medicaid Innovation projects.

OACT is led by a Chief Actuary appointed by the Secretary of Health and Human Services and staffed by teams organized into units responsible for Medicare Part A, Medicare Part B, Medicare Part D, Medicare Advantage, Medicaid, long-term care actuarial projections, and health insurance market analysis. The office collaborates with actuarial associations such as the American Academy of Actuaries and academic institutions including Johns Hopkins University, Harvard University, Columbia University, and Stanford University for methodological development. OACT coordinates with federal offices such as the Office of Personnel Management, the Centers for Disease Control and Prevention, and the National Institutes of Health on data, and interacts with private entities like Blue Cross Blue Shield Association, Aetna, UnitedHealth Group, and Kaiser Permanente.

OACT employs demographic, epidemiologic, and econometric techniques drawing on data sources from the National Health Interview Survey, the Medical Expenditure Panel Survey, Social Security Administration records, and claims data from Medicare Administrative Contractors. Models include microsimulation, cohort-component population projections, risk adjustment algorithms such as the Hierarchical Condition Category model, and payment rate development for programs influenced by laws like the Balanced Budget Act of 1997 and the Medicare Modernization Act of 2003. Methodological peer interaction involves scholars and practitioners from RAND Corporation, Brookings Institution, Urban Institute, Kaiser Family Foundation, and professional venues like the Society of Actuaries and the International Actuarial Association.

Key OACT outputs include the annual Medicare Trustees Report, the actuarial estimates accompanying the President's Budget, score estimates for legislation, and technical white papers on topics such as payment adequacy, risk corridors, and benefit design. OACT issues actuarial memos and slides used by committees such as the House Budget Committee and the Senate Budget Committee, and contributes to analyses cited by policy research organizations including Pew Charitable Trusts, Commonwealth Fund, Economic Policy Institute, and Heritage Foundation. Reports often reference data and collaboration with institutions like the Census Bureau, the Bureau of Labor Statistics, and the Office of the Assistant Secretary for Planning and Evaluation.

OACT traces its lineage to actuarial functions developed during the formation of Medicare (United States) under the Social Security Amendments of 1965 and has evolved through major legislative milestones such as the Tax Equity and Fiscal Responsibility Act of 1982, the Omnibus Budget Reconciliation Act of 1990, and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Notable activities include modeling the financial impacts of the Affordable Care Act, projecting costs during the COVID-19 pandemic, and estimating effects of payment reform initiatives like the Bundled Payments for Care Improvement demonstration. OACT’s estimates have been referenced in litigation before courts including the Supreme Court of the United States and in oversight reviews by the Government Accountability Office.