Topics in this Section: About the Department of Health and Human Services | Performance Goals, Objective, and Results | Systems, Legal Compliance, and Internal Control | Management Assurances | Looking Ahead to 2017 | Financial Summary and Highlights
ABOUT THE DEPARTMENT OF HEALTH AND HUMAN SERVICES
Mission Statement
The mission of the United States (U.S.) Department of Health and Human Services (HHS) is to enhance the health and well-being of Americans by providing for effective health and human services and by fostering sound, sustained advances in the sciences, underlying medicine, public health, and social services.
Vision Statement
The vision of HHS is to provide the building blocks that Americans need to live healthy, successful lives.
Purpose
HHS is the U.S. government’s principal agency for protecting the health of all Americans, providing essential human services, and promoting economic and social well-being for individuals, families, and communities, including seniors and individuals with disabilities. HHS is responsible for almost a quarter of all federal outlays and administers more grant dollars than all other federal agencies combined. HHS’s Medicare program is the nation’s largest health insurer, handling more than one billion claims per year. Medicare and Medicaid together provide health care insurance for 1 in 3 Americans.
HHS works closely with state and local governments, and many HHS-funded services are provided at the local level by state or county agencies, or through private sector grantees. The HHS Office of the Secretary and its 11 Operating Divisions (OpDivs) administer more than 300 programs covering a wide spectrum of activities. In addition to the services they deliver, HHS programs provide for equitable treatment of beneficiaries nationwide and enable the collection of national health and other data. HHS, through its programs and partnerships:
- Provides health care coverage to more than 100 million people through Medicare, Medicaid, the Children’s Health Insurance Program, and the Health Insurance Marketplace;
- Promotes patient safety and health care quality in health care settings and by health care providers, by assuring the safety, effectiveness, quality, and security of foods, drugs, vaccines, and medical devices;
- Eliminates disparities in health, as well as health care access and quality, and protects vulnerable individuals and communities from poor health and human services outcomes;
- Conducts health and social science research with the largest source of funding for medical research in the world, while creating hundreds of thousands of high-quality jobs for scientists in universities and research institutions in every state across America and around the globe;
- Leverages health information technology to improve the quality of care and to use HHS data to drive innovative solutions to health, public health, and human services challenges;
- Improves maternal and infant health; promotes the safety, well-being, and healthy development of children and youth; and supports young people’s successful transition to adulthood;
- Promotes economic and social well-being for individuals, families, and communities, including seniors and individuals with disabilities;
- Supports wellness efforts across the life span, from protecting mental health, to preventing risky behaviors such as tobacco use and substance abuse, to promoting better nutrition and physical activity;
- Prevents and manages the impacts of infectious diseases and chronic diseases and conditions, including the top causes of disease, disability, and death;
- Prepares Americans for, protects Americans from, and provides comprehensive responses to health, safety, and security threats, both foreign and domestic, whether natural or man-made; and
- Serves as responsible stewards of the public’s investments.
Organizational Structure
HHS’s organizational structure is designed to accomplish its mission and provide a framework for sound business operations and management controls. The Office of the Secretary, with the Secretary, provides the overarching vision and strategic direction for the Department, and leads HHS and its 11 OpDivs to provide a wide range of services and benefits to the American people. Each OpDiv contributes to our mission and vision as follows:
Administration for Children and Families (ACF) is responsible for federal programs that promote the economic and social well-being of families, children, individuals, and communities. ACF programs aim to empower families and individuals to increase their economic independence and productivity, and encourage strong, healthy, supportive communities that have a positive impact on quality of life and the development of children. For more information, visit ACF's website.
Administration for Community Living (ACL) was created around the fundamental principle that all people, regardless of age or disability, should be able to live where they choose, with the people they choose, and fully participate in their communities. By advocating for older adults and people with disabilities, and the families and caregivers of both across the federal government; funding services and supports provided by networks of community-based organizations; and investments in research and innovation, ACL helps makes this principle a reality for millions of Americans. For more information, visit ACL's website.
Agency for Healthcare Research and Quality (AHRQ) produces evidence to make health care safer, higher quality, more accessible, equitable, and affordable, and to work within HHS and with other partners to make sure that the evidence is understood and used. This mission is supported by focusing on (1) improving health care quality, (2) making health care safer, (3) increasing accessibility, and (4) improving health care affordability, efficiency, and cost transparency. For more information, visit AHRQ's website.
Agency for Toxic Substances and Disease Registry (ATSDR) is charged with the prevention of exposure to toxic substances and the prevention of the adverse health effects and diminished quality of life associated with exposure to hazardous substances from waste sites, unplanned releases, and other sources of pollution present in the environment. For more information, visit ATSDR's website.
Centers for Disease Control and Prevention (CDC) collaborates to create the expertise, information, and tools that people and communities need to protect their health through health promotion, prevention of disease, injury and disability, and preparedness for new health threats. CDC works to protect America from health, safety, and security threats, both foreign and domestic. Whether diseases start at home or abroad, are chronic or acute, curable or preventable, human error or deliberate attack, CDC fights diseases and supports communities and citizens to do the same. For more information, visit CDC's website.
Centers for Medicare & Medicaid Services (CMS) administers public insurance programs that serve as the primary sources of health care coverage for seniors and a large population of medically vulnerable individuals. CMS acts as a catalyst for enormous changes in the availability and quality of health care for all Americans. In addition to these programs, CMS has the responsibility to ensure effective, up-to-date health care coverage, and to promote quality care for beneficiaries. CMS is also responsible for helping to implement many provisions of the Patient Protection and Affordable Care Act (Affordable Care Act), such as the establishment of the Federally Facilitated Marketplace. For more information, visit CMS's website.
Food and Drug Administration (FDA) is responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation’s food supply, cosmetics, and products that emit radiation.
FDA is also responsible for advancing the public health by helping to speed innovations that make medicines more effective, safer, and more affordable and by helping the public get the accurate, science-based information it needs to use medicines and foods to maintain and improve their health. FDA also has responsibility for regulating the manufacturing, marketing, and distribution of tobacco products to protect the public health and to reduce tobacco use by minors.
Finally, FDA plays a significant role in the nation’s counterterrorism capability. FDA fulfills this responsibility by ensuring the security of the food supply and by fostering development of medical products to respond to deliberate and naturally emerging public health threats. For more information, visit FDA's website.
Health Resources and Services Administration (HRSA) is responsible for improving access to health care by strengthening the health care workforce, building healthy communities, and achieving health equity. HRSA’s programs provide health care to people who are geographically isolated, and economically, or medically vulnerable. For more information, visit HRSA's website.
Indian Health Service (IHS) is responsible for providing federal health services to American Indians and Alaska Natives. The provision of health services to members of federally recognized tribes grew out of the special government-to-government relationship between the federal government and Indian tribes. IHS is the principal federal health care provider and health advocate for the Indian people, with the goal of raising Indian health status to the highest possible level. IHS provides a comprehensive health service delivery system for approximately 2.2 million American Indians and Alaska Natives who belong to 567 federally recognized tribes in 36 states. For more information, visit IHS's website.
National Institutes of Health (NIH) seeks fundamental knowledge about the nature and behavior of living systems and the application of that knowledge to enhance health, lengthen life, and reduce illness and disability. For more information, visit NIH's website.
Substance Abuse and Mental Health Services Administration (SAMHSA) is responsible for reducing the impact of substance abuse and mental illness on America’s communities. SAMHSA accomplishes its mission by providing leadership, developing service capacity, communicating with the public, setting standards, and improving behavioral health practice in communities, in both primary and specialty care settings. For more information, visit SAMHSA's website.
In addition, the following Staff Divisions (StaffDivs) report directly to the Secretary, managing programs and supporting the OpDivs in carrying out the Department’s mission. The primary goal of the Department’s StaffDivs is to provide leadership, direction, and policy and management guidance to the Department. The StaffDivs are:
- Immediate Office of the Secretary
- The Executive Secretariat
- Office of Health Reform
- Office of Intergovernmental and External Affairs
- Office of the Assistant Secretary for Administration
- Office of the Assistant Secretary for Financial Resources
- Office of the Assistant Secretary for Health
- Office of the Assistant Secretary for Legislation
- Office of the Assistant Secretary for Planning and Evaluation
- Office of the Assistant Secretary for Preparedness and Response
- Office of the Assistant Secretary for Public Affairs
- Office for Civil Rights
- Departmental Appeals Board
- Office of the General Counsel
- Office of Global Affairs
- Office of Inspector General
- Office of Medicare Hearings and Appeals
- Office of the National Coordinator for Health Information Technology
The HHS organizational chart, which consists of the Office of the Secretary and the noted StaffDivs and OpDivs, is available at HHS/About HHS/Organizational Chart. For further information regarding our organization, components, and programs, visit our website.
PERFORMANCE GOALS, OBJECTIVES, AND RESULTS
Every 4 years HHS updates its strategic plan, which describes its work to address complex, multifaceted, and evolving health and human services issues. An agency strategic plan is 1 of 3 main elements required by the Government Performance and Results Act of 1993 (GPRA) and the GPRA Modernization Act of 2010. The Department’s Strategic Plan (Plan) defines its mission, goals, and the means by which it will measure its progress in addressing specific national problems over a four-year period. In addition, each of the Department’s OpDivs and StaffDivs contribute to the development of the strategic plan, as reflected in the Plan’s strategic goals, objectives, strategies, and performance goals.
Strategic Goals
The HHS Strategic Plan FY 2014 – 2018 describes the Department’s efforts within the context of broad strategic goals. This Plan identifies 4 strategic goals and 21 related objectives. The four strategic goals are:
Goal 1: Strengthen Health Care
Goal 2: Advance Scientific Knowledge and Innovation
Goal 3: Advance the Health, Safety, and Well-being of the American People
Goal 4: Ensure Efficiency, Transparency, Accountability, and Effectiveness of HHS Programs
The strategic goals and associated objectives focus on the major functions of HHS. Although the strategic goals and objectives in the Plan are presented as separate sections, they are interrelated, and successful achievement of one strategic goal or objective can influence the success of others. For example, the application of a promising new scientific discovery (Strategic Goal 2) can affect the quality of health care patients receive (Strategic Goal 1) and/or the success of human service programs (Strategic Goal 3). Improving economic well-being and other social determinants of health (Strategic Goal 3) can improve health outcomes (Strategic Goal 1). Responsible management and stewardship of federal resources (Strategic Goal 4) can create efficiencies the Department can leverage to advance its health, public health, research, and human services goals. For the third consecutive year, HHS conducted an annual Strategic Review, which consisted of various senior Department leaders reviewing performance data, evidence, and other factors for the 21 objectives. The annual review allows HHS leadership to undertake a high-level look at results, challenges, and future initiatives across the Department.
Agency Priority Goals
HHS uses Agency Priority Goals (APGs) to improve performance and accountability. HHS developed APGs by collaborating across the Department to identify activities that would reflect HHS priorities and benefit from the focus of the APG process. These goals are a set of ambitious but realistic performance objectives that the Department will strive to achieve within a 24-month period. For FY 2016 – FY 2017, HHS developed a new set of APGs. Altogether, these APGs involve work from 14 OpDivs and StaffDivs, combined. HHS is currently engaged in the following APGs that support the achievement of our strategic goals:
APG 1: Shift Medicare health care payments from volume to value
APG 2: Improve the quality of early childhood programs for low-income children
APG 3: Improve the timeliness of initiation into treatment for individuals with serious mental illness
APG 4: Combating antibiotic-resistant bacteria
APG 5: Reduce opioid-related morbidity and mortality
APG 6: Reduce foodborne illness
APG 7: Reduce the annual adult combustible tobacco consumption in the U.S.
The knowledge gained through collaboration and during data-driven reviews has supported the development of our APGs. For more information on HHS’s APGs, please visit Performance.gov. HHS performance initiatives, including APGs, continue to influence plans and policies as demonstrated in the Department’s Strategic Plan, which guides our efforts into the future.
Looking Back at FY 2016 Performance and Budget
It is helpful to look at how HHS invests resources toward fulfilling the Department’s mission through its strategic goals. Below are two charts that show the proportion of financial resources that are primarily dedicated to achieving each strategic goal.
Although HHS funding is categorized here by strategic goals, many of the programs in HHS are crosscutting in nature and support a number of strategic goals. The chart on the left provides the breakdown of the HHS budget by strategic goal. The majority of the Department’s funding was primarily associated with Goal 1 because of the large amount of money invested in delivering quality care and services through Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). For FY 2016, of the four strategic goals, 89.6 percent of funding was spent on Goal 1, 2.9 percent on Goal 2, 6.2 percent on Goal 3, and 1.3 percent on Goal 4.
The chart on the right illustrates the HHS FY 2016 budget excluding the costs of Medicare, Medicaid, and CHIP. Of the four strategic goals excluding Medicare, Medicaid, and CHIP, 19.1 percent was spent on Goal 1, 22.4 percent on Goal 2, 48.5 percent on Goal 3, and 10.0 percent on Goal 4.
Performance Management
HHS continues to engage with individuals across the federal performance management community to implement best practices and refine processes. These refinements and lessons learned have also influenced future plans and priorities. Refer to the “Looking Ahead to 2017” section for further details. HHS will actively monitor progress and work toward achieving our APGs through quarterly data-driven reviews and other mechanisms. The most recent data, accomplishments, and future actions on HHS APGs as well as information on previous APG cycles, can be found on Performance.gov. The website provides information on the measures and milestones used by HHS to track progress toward these goals.
In addition to the APGs and strategic reviews, HHS reported data on 144 performance measures in its FY 2017 HHS Annual Performance Plan and Report. These measures represent important issue areas being addressed by the health care and human services communities. The performance measures present a powerful tool to improve HHS operations and help to advance an effective, efficient, and productive government. HHS regularly collects and analyzes performance data to inform decisions. While HHS does not yet have FY 2016 data available for all measures due to the lag associated with data collection and reporting of results in the FY 2016 AFR, HHS’s OpDivs and StaffDivs constantly strive to find lower-cost ways to achieve positive impacts in addition to sustaining and fostering the replication of effective and efficient government programs. For more information on results from FY 2016 and earlier, please consult the HHS Annual Performance Plan and Report, released annually along with the President’s Budget.
Performance Results
The performance results in this section represent key measures and performance highlights demonstrating progress toward each HHS strategic goal.
The accomplishments and performance trends, including progress on HHS APGs, underscore HHS’s dedication to sustained performance improvement and emphasis on working to meet the Department’s four strategic goals. Targets presented within the tables represent performance expectations based on a number of factors and may not exceed the previous years’ results, although they may represent an improvement over previous years' targets. The status row within each performance measure table indicates whether or not targets that were met or exceeded for the applicable period. Some results were not available at the time of this report due to the lag associated with data collection requirements. The target is displayed to show planned progress. More updated information will be available in the FY 2018 Annual Performance Plan and Report.
Strategic Goal 1
Strengthen Health Care
Objectives
1.A. Make coverage more secure for those who have insurance and extend affordable coverage to the uninsured
1.B. Improve health care quality and patient safety
1.C. Emphasize primary and preventive care, linked with community prevention services
1.D. Reduce the growth of health care costs while promoting high-value, effective care
1.E. Ensure access to quality, culturally competent care, including long-term services and support, for vulnerable populations
1.F. Improve health care and population health through meaningful use of health information technology
Strategic Goal 1: Strengthen Health Care
The intent of the Affordable Care Act was to transform and modernize the American health care system. As 2016 draws to a close, HHS continues to drive the effort to strengthen and modernize health care to improve patient outcomes. Through its programs, HHS also promotes efficiency and accountability, ensures patient safety, encourages shared responsibility, and works toward high-value health care. In addition to addressing these responsibilities, HHS is improving access to culturally competent, quality health care for uninsured, underserved, and vulnerable populations.
Health Care Payment Reform. To build a health care system that delivers better care, that is smarter about how dollars are spent, and that makes people healthier, the Affordable Care Act created a number of new programs and payment models with goals of rewarding value and quality. These models include Accountable Care Organization models, medical home models focused on primary care, and new models of bundling payments for episodes of care. In these alternative payment models, health care providers are accountable for the quality and cost of the care they deliver to patients and have a financial incentive to coordinate care for their patients – who are therefore more likely to receive high quality, team-based care. In March 2016, HHS announced that we were on track to meet the 2016 target ahead of schedule. However, HHS cannot calculate the percentage of Medicare Fee-For-Service (FFS) payments tied to quality and value until reconciled claims data are available 9 months after the end of each calendar year, leading to the significant time gap between the end of the calendar year and when results are available.
APG 1 – Shift Medicare health care payments from volume to value
Performance Measure: Percent of Medicare FFS payments
tied to Quality and Value in Alternative Payment Models
Unit of Measurement: Percent
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | |
---|---|---|---|---|---|---|
Target | - | 26% | 30% | 40% | ||
Result | 22% | Nov 30, 2016 | Nov 30, 2017 | Nov 30, 2018 | ||
Status | Baseline | Pending | Pending | Pending |
Serious Mental Illness. Individuals with serious mental illness are a high-need, high-cost population. They are frequent utilizers of emergency departments and have high rates of readmission to inpatient care, especially when co-occurring substance use disorders are present. In addition, people with serious mental illness often have co-morbid physical health conditions and shorter life expectancies than people without serious mental illness, primarily due to co-occurring physical health conditions that too often go unaddressed. Individuals with serious mental illness often experience barriers to treatment, including difficulty accessing and initiating treatment. Significant delays in the identification and treatment of serious mental illness are common; for example, research has repeatedly found that individuals with psychosis in the U.S. often do not receive appropriate treatment for that condition for 1 to 3 years. HHS’s Serious Mental Illness Initiative builds on activities that are currently underway in various HHS agencies; these activities are coordinated through the HHS Behavioral Health Coordinating Council (BHCC). The BHCC subcommittee on serious mental illness is critical to the implementation of the Initiative, which is also oriented toward achievement of this APG on serious mental illness.
APG 3 – Improve the timeliness of initiation into treatment for individuals with serious mental illness
Performance Measure: Increase access to early intervention services
by increasing the number of states with early intervention programs
Unit of Measurement: States
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | - | - | 20 states | |||
Result | 13 states | 25 states | Sept 30, 2017 | |||
Status | Baseline | Baseline | Pending |
Did you know?
Antibiotics are among the most commonly prescribed drugs used in human medicine, and can often be lifesaving. However, up to 50 percent of the time antibiotics are not optimally prescribed, often done so when not needed, or with an incorrect dosage or duration.
Combating Antibiotic-Resistant Bacteria. Antibiotics have been a critical public health tool since the discovery of penicillin in 1928, saving the lives of millions of people around the world. Today, however, the emergence of drug resistance in bacteria is reversing the miracles of the past 80 years, with drug choices for the treatment of many bacterial infections becoming increasingly limited, expensive, and, in some cases, nonexistent. CDC estimates that drug-resistant bacteria cause two million illnesses and approximately 23,000 deaths each year in the U.S. alone. At least one-third of antibiotics used in inpatient settings are either unnecessary or inappropriately prescribed. Implementation of antibiotic stewardship programs in hospitals will help ensure that hospitalized patients receive the right antibiotic, at the right dose, at the right time, and for the right duration. Improved antibiotic use leads to reduced mortality, reduced risk of Clostridium difficile-associated diarrhea, shorter hospital stays, reduced overall antibiotic resistance within the hospital, and increased cost savings.
APG 4 – Combating Antibiotic-Resistant Bacteria
Performance Measure: Increasing the percent of hospitals that report implementation of antibiotic stewardship programs that comply with all of the CDC Core Elements for Hospital Antibiotic Stewardship Programs
Unit of Measurement: Percent
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | - | - | 50.0% | 59.0% | ||
Result | 39.2% | 40.9% | July 31, 2017 | July 31, 2018 | ||
Status | Baseline | Baseline | Pending | Pending |
Opioid Morbidity and Mortality. Opioid misuse and overdose present a nationwide public health challenge. Death by drug overdose is the leading cause of injury death in the U.S., with deaths from opioids in particular increasing precipitously in the twenty-first century. Overdose deaths from prescription opioids, such as oxycodone, hydrocodone, and morphine, have more than quadrupled over the period 1999 – 2013. Overdose deaths involving heroin have increased significantly in recent years, more than tripling from 2010 – 2014. Agencies across HHS recognize the urgency of halting the rise of opioid use disorder and overdose, and are working to develop and implement the most effective interventions, from prevention through treatment. By September 30, 2017, opioid-related overdose death and opioid use disorder will be addressed through the three priority areas of reforming opioid prescribing practices, increasing the use of naloxone, and expanding access to and use of medication-assisted treatment for opioid use disorders.
APG 5 – Reduce opioid-related morbidity and mortality
Performance Measure: Decrease the total morphine milligram equivalents (MMEs) dispensed
Unit of Measurement: MMEs
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | N/A | N/A | N/A | N/A | 53,237,426,263 | 50,435,456,459 |
Result | 62,835,579,985 | 60,493,554,681 | 59,352,680,649 | 55,734,326,020 | Nov 30, 2016 | Nov 30, 2017 |
Status | Historical Actual | Historical Actual | Historical Actual | Historical Actual | Pending | Pending |
Performance Measure: Increase the number of prescriptions dispensed for naloxone
Unit of Measurement: Prescriptions
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | N/A | N/A | N/A | N/A | 4,771 | 5,104 |
Result | 396 | 351 | 2,038 | 7,658 | Nov 30, 2016 | Nov 30, 2017 |
Status | Historical Actual | Historical Actual | Historical Actual | Historical Actual | Pending | Pending |
Performance Measure: Increase the number of unique patients receiving prescriptions
for buprenorphine (BUP) and naltrexone (NAL) in a retail setting
Unit of Measurement: Patients
FY 2012 | FY 2013 | FY 2014 (BUP) | FY 2014 (NAL) | FY 2015 (BUP) | FY 2015 (NAL) | FY 2016 (BUP) | FY 2016 (NAL) | FY 2017 (BUP) | FY 2017 (NAL) | |
---|---|---|---|---|---|---|---|---|---|---|
Target | N/A | N/A | N/A | N/A | 915,207 | 112,398 | 958,788 | 117,750 | ||
Result | 807,555 | 85,494 | 909,656 | 121,067 | Nov 30, 2016 | Nov 30, 2016 | Nov 30, 2017 | Nov 30, 2017 | ||
Status | Historical Actual | Historical Actual | Historical Actual | Historical Actual | Pending | Pending | Pending | Pending |
Did you know?
In 2015, nearly 2.4 million Americans had an opioid use disorder, and close to 80 percent of them did not receive treatment.
AHRQ’s Patient Safety Network (PSNet). AHRQ PSNet is a web-based resource featuring the latest news and essential information on patient safety. In 2001, AHRQ launched a web-based morbidity and mortality conference called WebM&M to facilitate the posting of anonymous cases of medical errors or near misses, accompanied by commentaries written by experts that articulated lessons learned in a thoughtful, evidence-based, and engaging way. Over the nearly 15-year existence of WebM&M, the site has received millions of visits, awarded nearly 70,000 hours of CME credit, and published over 360 cases which have been widely used in teaching.
In the first 6 months of 2016, the new AHRQ PSNet has already received almost 600,000 visits. User responses to the site’s last satisfaction survey are overwhelmingly positive: 92 percent of PSNet and 86 percent of WebM&M respondents stated they were likely to recommend these sites as resources on patient safety. Supported by a robust patient safety taxonomy and web architecture, AHRQ PSNet provides powerful searching and browsing capability, as well as the ability for diverse users to customize the site around their interests.
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Strategic Goal 2
Advance Scientific Knowledge and Innovation
Objectives
2.A Accelerate the process of scientific discovery to improve health
2.B Foster and apply innovative solutions to health, public health, and human services challenges
2.C Advance the regulatory sciences to enhance food safety, improve medical product development, and support tobacco regulation
2.D Increase our understanding of what works in public health and human services practice
2.E Improve laboratory, surveillance, and epidemiology capacity
Strategic Goal 2: Advance Scientific Knowledge and Innovation
HHS is expanding its scientific understanding of how best to advance health care, public health, human services, and biomedical research, and to ensure the availability of safe medical and food products. Chief among these efforts is the identification, implementation, and rigorous evaluation of new approaches in science, health care, public health, and human services. These efforts encourage efficiency, effectiveness, sustainability, and sharing or translating that knowledge into better products and services.
Data for evidence-based decision making. In FY 2015, CDC published over 250 Morbidity and Mortality Weekly Reports (MMWRs) and increased total electronic media reach to 23.0 million potential viewings. The MMWR series provides critical epidemiological data and recommendations to clinicians, epidemiologists, laboratorians, and other public health professionals. Fifty- two reports were published regarding Ebola, with the publications serving as critical CDC tools for disseminating scientific and public health information about the international Ebola response. CDC also published several MMWRs regarding laboratory practices and capacity, including Competency Guidelines for Public Health Laboratory Professionals. In FY 2016, in support of the international Zika response, CDC published 34 reports regarding Zika, serving as critical CDC tools for disseminating guidance and scientific and public health information. Also in FY 2016, the MMWR publication received its first Journal Impact Factor, which measures the impact of a publication based on the frequency articles are cited. It was ranked second of the 170 journals in the category of Public, Environmental and Occupational Health. Since January 2016, CDC has released 26 scientific resources and guidance documents related to transmission, control, and treatment of the Zika virus disease in the MMWR.
New imaging methods for post-stroke care. The blood-brain barrier is a layer of cells that protects the brain from harmful molecules passing through the bloodstream. After stroke, the barrier is disrupted, becoming permeable and losing control over what gets into the brain. In a study of stroke patients, NIH investigators confirmed through magnetic resonance imaging (MRI) brain scans that there was an association between the extent of disruption to the blood-brain barrier and the severity of bleeding following invasive stroke therapy. These findings are part of the Diffusion and Perfusion Imaging Evaluation for Understanding Stroke Evolution (DEFUSE)-2 Study, which was designed to see how MRIs can help determine which patients undergo endovascular therapy (removing a blood clot or breaking it up with a stent) following ischemic stroke. Ischemic stroke patients are increasingly receiving combination therapy, endovascular treatment along with an intravenous drug known as tissue plasminogen activator (t-PA), to effectively break up clots in the brain. However, bleeding into the damaged brain tissue is a serious complication of both acute stroke therapies. This research has led to a large phase III clinical trial, currently being conducted in the NIH Stroke Network, to evaluate the role of these imaging techniques in identifying patients likely to benefit from new approaches to endovascular therapy.
International Field Epidemiology Training Programs. Since 1980, CDC has developed international Field Epidemiology Training Programs (FETPs) serving over 70 countries that have graduated over 3,600 epidemiologists. Through FETPs, CDC helps establish a network of disease detectives around the globe that are the first line of defense in detecting and responding to outbreaks in their respective countries as well as neighboring countries. In FY 2015, CDC exceeded its target for new residents by more than 20 percent over FY 2014, a nearly 75 percent increase since FY 2012. On average, over 80 percent of FETP graduates work within their Ministry of Health after graduation and many assume key leadership positions, such as the National Director of Tuberculosis program and National Director of Chronic Disease program in the Dominican Republic. The total number of new FETP residents increased in FY 2015 to 483, strengthening global health ministries’ ability to detect and respond to outbreaks. Their presence enhances sustainable public health capacity in these countries, which is critical in transitioning U.S.-led global health investments to long-term host-country ownership. CDC is planning for a level number of new residents in FY 2017 based on current participation and funding considerations. FETP activities are supported by funding from CDC appropriations and inter-agency agreements with the Department of Defense, Department of State, and the U.S. Agency for International Development. Policy changes within those agencies may affect the future number of FETPs supported, which may require adjustments to targets.
Performance Measure: Increase epidemiology and laboratory capacity within
global health ministries through the FETP New Residents
Unit of Measurement: New Residents
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | 179 | 255 | 430 | 430 | 430 | 430 |
Result | 280 | 300 | 402 | 483 | June 30, 2017 | June 30, 2018 |
Status | Target Exceeded | Target Exceeded | Target Not Met but Improved | Target Exceeded | Pending | Pending |
Strategic Goal 3
Advance the Health, Safety and Well-being of the American People
Objectives
3.A Promote the safety, well-being, resilience, and healthy development of children and youth
3.B Promote economic and social well-being for individuals, families, and communities
3.C Improve the accessibility and quality of supportive services for people with disabilities and older adults
3.D Promote prevention and wellness across the life span
3.E Reduce the occurrence of infectious diseases
3.F Protect Americans’ health and safety during emergencies, and foster resilience to withstand and respond to emergencies
Strategic Goal 3: Advance the Health, Safety, and Well-Being of the American People
HHS strives to promote the health, economic, and social well-being of children, people with disabilities, and older adults while improving wellness for all. To meet this goal, the Department is employing evidence-based strategies to strengthen families and to improve outcomes for children, adults, and communities. A focus on prevention underlies each objective and strategy associated with this goal.
Quality Rating and Improvement Systems with High-Quality Benchmarks. The “Improve the quality of early childhood programs for low-income children” APG calls for actions to improve the quality of programs for children of low-income families, namely Head Start and Child Care. For the Child Care program, the aim is to increase the number of states with Quality Rating and Improvement Systems (QRIS) that meet the seven high quality benchmarks for child care and other early childhood programs developed by HHS. QRIS is a mechanism used to improve the quality of child care available in communities and to increase parents’ knowledge and understanding of available child care options. Through FY 2015, 32 states had a QRIS that met high-quality benchmarks, meeting the APG target. States expanded from pilot programs to state-wide systems, added financial incentives for child care providers, and increased availability of quality information, leading them to meet more components of the QRIS measure.
APG 2 - Improve the quality of early childhood programs for low-income children
Performance Measure: Increase the number of states with QRIS that meet high quality benchmarks
for child care and other early childhood programs developed by HHS
Unit of Measurement: States
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | 20 states | 25 states | 29 states | 32 states | 35 states | 37 states |
Result | 19 states | 27 states | 29 states | 32 states | June 30, 2017 | June 30, 2018 |
Status | Target Not Met but Improved | Target Exceeded | Target Met | Target Met | Pending | Pending |
Reduction in Head Start Grantees Receiving a Low Score on the Classroom Assessment Scoring System (CLASS: Pre-K). In support of this APG, ACF is striving to increase the percentage of Head Start children in high quality classrooms. Progress is measured by reducing the proportion of Head Start grantees that score in the low range on any of the three domains of the CLASS: Pre-K, a research-based tool that measures teacher-child interaction on a seven-point scale in three broad domains: Emotional Support, Classroom Organization, and Instructional Support. An analysis of CLASS scores for FY 2016 indicates that 24 percent of grantees scored in the low range, exceeding the target of 25 percent. All grantees scoring in the low range did so on the Instructional Support domain.
ACF continues to invest in building its CLASS related resources and making those resources available to grantees. In response to the data from the FY 2013 CLASS reviews, ACF provides more intentional targeted assistance to those grantees that score in the low range on CLASS. ACF continues to conduct more analysis on the specific dimensions that are particularly challenging for those grantees, such as concept development and language modeling, and tailor the technical assistance for grantees based on their specific needs.
A recent analysis of data from the Family and Child Experience Survey (FACES), a federally funded nationally representative survey of Head Start programs, provides some evidence that grantee scores on domains of the CLASS have improved over time. This analysis demonstrates that over time fewer classrooms scored in the “low” range and more classrooms scored in the “mid” to “high” range on Instructional Support. FACES data also shows a statistically significant increase in the average score and the percentage of Head Start classrooms scoring 3 or higher on Instructional Support between 2006 and 2014. Overall, Head Start classrooms regularly score above a 5 in Emotional Support and Classroom Organization. The FACES data analysis showed that over time fewer classrooms scored in the “mid” range and more classrooms scored in the “high” range on Emotional Support.
APG 2 - Improve the quality of early childhood programs for low-income children
Performance Measure: Reduce the proportion of Head Start grantees
receiving a score in the low range on the basis of CLASS: Pre-K
Unit of Measurement: Percent
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | - | 23% | 27% | 26% | 25% | 24% |
Result | 25% | 31% | 23% | 22% | 24% | Jan 31, 2018 |
Status | Baseline | Target Not Met | Target Exceeded | Target Exceeded | Target Exceeded | Pending |
Did you know?
Antibiotics are among the most commonly prescribed drugs used in human medicine, and can often be lifesaving. However, up to 50 percent of the time antibiotics are not optimally prescribed, often done so when not needed, or with an incorrect dosage or duration.
Head Start Teachers with Degrees in Early Childhood Education.In addition to looking at classroom quality through the CLASS measure, the ACF Office of Head Start (OHS) is also emphasizing the credentials of classroom teachers by striving to increase the percentage of Head Start and Early Head Start teachers with a Bachelor’s Degree (BA) degree. In doing so, OHS is prioritizing a distinct but complementary goal in boosting the quality of Head Start programs. This measure is distinct in that it looks at credentials for both Head Start and Early Head Start teachers, rather than focusing on the credentials of Head Start pre-school teachers. The most recent results for this performance measure indicate that in FY 2016, 55 percent of Head Start and Early Head Start teachers have a BA or higher, missing the target of 62 percent.
Analysis of the data indicates that a key reason for the decrease relative to the prior year is that a lower percentage of teachers in Early Head Start-Child Care partnership (EHS-CCP) programs have BA degrees. This year is the first year the Program Information Report, the annual survey of Head Start grantees, collects data on these teachers, which has an effect on our national average. The purpose of the EHS-CCP grants is to improve the care of infants and toddlers through partnerships with Early Head Start programs and child care programs that agree to meet the Head Start Program Performance Standards, which includes requirements for teacher qualifications. We anticipate qualifications will increase through these continued partnerships.
To continue the trend of increasing the number of teachers with a BA or higher, ACF is investing in an initiative called Early EdU, which is a higher education alliance working to advance early childhood teaching by providing online courses for early childhood educators so they can pursue a BA. ACF is also working within states to strengthen early care and education professional development systems and promote articulation agreements within and across institutions of higher education. Articulation agreements allow students to apply credits earned in one program toward another program, which facilitates them moving along their educational pathway toward a BA.
APG 2 - Improve the quality of early childhood programs for low-income children
Performance Measure: Increase the percentage of teachers in Head Start
and Early Head Start that have a BA or higher
Unit of Measurement: Percent
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | N/A | N/A | N/A | N/A | 62% | 57% |
Result | 52% | 55% | 58% | 60% | 55% | Jan 31, 2018 |
Status | Historical Actual | Historical Actual | Historical Actual | Historical Actual | Target Not Met | Pending |
Reduce Foodborne Illness. Listeria monocytogenes (L.m.) infections are one of the leading causes of death from foodborne illness in the U.S., resulting in an estimated 1,600 illnesses and 260 deaths each year. Outbreak investigations determine which foods are responsible for illness and can lead to important food safety improvements. For example, recent investigations identified previously unknown sources of L.m. illnesses—cantaloupe, ice cream, and caramel apples—and focused attention on preventing contamination of these products. However, finding the source of clusters of L.m. illnesses is difficult. Determining if the same strain of L.m. is making people sick, meaning the illnesses likely came from the same food source, requires intensive investigation. Clusters of illnesses caused by L.m. strains with the same genetic fingerprint are often small. Figuring out what ill persons ate in common is often very difficult; especially when some are too sick for interviews or have died and the long incubation period makes it more difficult for patients to remember what and where they ate. More complete information from patient interviews, information about isolations of L.m. from food and the environment, and whole genome sequencing of strains can all help to identify the source of outbreaks. When food sources and the cause of contamination are identified, food safety changes can be implemented throughout an industry and prevent future outbreaks.
APG 6 – Reduce Foodborne Illness
Performance Measure: Reduce the incidence rate of Listeria
Unit of Measurement: Reported Cases per 100,000 population per year
CY 2012 | CY 2013 | CY 2014 | CY 2015 | CY 2016 | CY 2017 | |
---|---|---|---|---|---|---|
Target | - | - | - | - | - | .22 cases/100,000 |
Result | .26 cases/100,000 | .25 cases/100,000 | .24 cases/100,000 | .24 cases/100,000 | March 31, 2017 | March 31, 2018 |
Status | Baseline | Baseline | Baseline | Baseline | Pending | Pending |
Combustible Tobacco Consumption (Cigarette Equivalents). Smoking and secondhand smoke kill an estimated 480,000 people in the U.S. each year. For every smoker who dies from a smoking-attributable disease, another 30 live with a serious smoking-related disease. Smoking costs the U.S. $170 billion in medical costs and $156 billion in lost productivity each year. An estimated 58 million nonsmoking Americans are exposed to secondhand smoke, which causes more than 41,000 deaths in non-smoking adults each year. While smoking among adults in the U.S. has decreased significantly from a decade ago, the decline in adult smoking rates has slowed, concurrent with reductions in state investments in tobacco control programs. In addition, the coordinated efforts of the APG to reduce tobacco use have resulted in reductions in adult cigarette consumption, based on FY 2013 results (reported in June 2014). For FY 2015, the annual per capita adult cigarette consumption fell to 1,211 cigarettes, but missed the FY 2015 target of 1,174 (37 cigarette equivalents). However, the FY 2014 results (the most recent available data) of other combustible tobacco use indicators are tracking lower usage across both adults and youth:
- Percentage of adult smokers – 16.8 percent; exceeding the FY 2014 target of 18 percent (National Health Interview Survey)
- Percentage of adult smokers who last smoked 6 months to 1 year ago – 7.6 percent; exceeding the FY 2014 target of 7.2 percent (National Health Interview Survey)
- Percentage of children/adolescents initiation – 3.8 percent; exceeding the FY 2014 target of 4.7 percent (National Survey on Drug Use and Health)
- Percentage of young adults initiation – 7.2 percent; exceeding the FY 2014 target of 7.5 percent (National Survey on Drug Use and Health)
CDC plans to continue conducting applied research on the health effects and patterns of use of emerging tobacco products to inform the American public as well as decision makers. CDC is also modifying its surveillance systems to ensure it is able to capture relevant data on new products and shifting patterns of use. CDC will continue to communicate about these evolving issues to the American public, through media, such as the Tips from Former Smokers national education campaign.
APG 7 - Reduce the annual adult combustible tobacco consumption in the United States
Performance Measure: Annual Per Capita Combustible Tobacco Consumption by Adults in the U.S.
Unit of Measurement: Cigarette Equivalents per Capita
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | - | 1,259 per capita | 1,212 per capita | 1,174 per capita | 1,145 per capita | 1,127 per capita |
Result | N/A | 1,277 per capita | 1,216 per capita | 1,211 per capita | July 31, 2017 | July 31, 2018 |
Status | Set Baseline | Target Not Met | Target Not Met but Improved | Target Not Met but Improved | Pending | Pending |
National Family Caregiver Support Program. Families are the nation’s primary provider of long-term care, but a number of factors including financial constraints, work and family demands, and the many challenges of providing care places great pressure on family caregivers. Better support for informal caregivers is critical because often it is their availability that determines whether an older person can remain in his or her home. In 2013, approximately 34.2 million adult caregivers provided uncompensated care to those 50 years and older. The economic cost of replacing unpaid caregiving of elderly adults is estimated to be between $470 billion and $522 billion annually. ACL’s Administration on Aging Family Caregiver Support Program provides services and supports that lessen the strain and make caregiving easier for family caregivers, such as information, counseling and training, respite care and supplemental services. Since 2008, program participants have rated services good to excellent consistently above the target level of 90 percent. Nearly 75 percent of program participants reported that services enabled them to provide care longer than otherwise would have been possible and the same percent report feeling less stressed due to services. It should also be noted that results of an ACL evaluation of the National Family Caregiver Support Program (NFCSP) show that states reported being able to serve greater numbers of family caregivers as a result of the NFCSP. This includes a 260 percent increase, from before the NFCSP was implemented, in support group services (an increase from 15 to 54 states) and a 227 percent increase in training and education services for caregivers (an increase from 15 to 49 states). Of 53 reporting states, about half (45 percent) answered that the NFCSP is the only state-administered caregiver program.
Performance Measure: Maintain at 90% or higher the percentage of NFCSP
clients who rate services good to excellent
Unit of Measurement: Percent
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | 90% | 90% | 90% | 90% | 90% | 90% |
Result | 93.8% | 94.6% | 93.6% | Dec 31, 2016 | Dec 31, 2017 | Dec 31, 2018 |
Status | Target Exceeded | Target Exceeded | Target Exceeded | Pending | Pending | Pending |
Strategic Goal 4
Ensure Efficiency, Transparency, Accountability, and Effectiveness of HHS Programs
Objectives
4.A Strengthen program integrity and responsible stewardship by reducing improper payments, fighting fraud, and integrating financial, performance, and risk management
4.B Enhance access to and use of data to improve HHS programs and to support improvements in the health and well-being of the American people
4.C Invest in the HHS workforce to help meet America’s health and human services needs
4.D Improve HHS environmental, energy, and economic performance to promote sustainability
Strategic Goal 4: Ensure Efficiency, Transparency, and Accountability of HHS Programs
As the largest grant-awarding agency in the federal government and the nation’s largest health insurer, HHS places a high priority on ensuring the integrity of its expenditures. HHS manages hundreds of programs in basic and applied science, public health, income support, child development, and health and social services, which award over 75,000 grants annually. The Department has robust processes in place to manage the resources and information employed to support programs and activities.
Medicare, Medicaid, and CHIP Improper Payment Rates. One of CMS’s key goals is to pay Medicare claims properly the first time. This means paying the right amount, to legitimate providers, for covered, reasonable, and necessary services provided to eligible beneficiaries. Paying correctly the first time saves resources required to recover improper payments and ensures the proper expenditure of valuable dollars. The primary cause of improper payments is Documentation and Administrative Errors, in large part due to insufficient documentation. Other notable causes include Authentication and Medical Necessity Errors, caused by medically unnecessary services, and to a lesser extent, incorrect diagnosis coding. Between FY 2009 and FY 2012, the improper payment rate for Medicare FFS consistently improved. Data from FY 2013 and FY 2014 indicate an increase in this improper payment rate and efforts are currently in progress to investigate and resolve the drivers causing this increase. However, the improper payment rate for Medicare FFS decreased from FY 2014 through FY 2016.
Since roughly one third of the states are measured each year to calculate the Medicaid and CHIP error rates, these measures are calculated as a rolling rate that includes the reporting year and the previous two. In an attempt to reduce the national Medicaid error rates, states are required to develop and submit corrective action plans. The FY 2016 Medicaid error rate is 10.48 percent, and the FY 2016 CHIP error rate is 7.99 percent. Similar to recent years, the increase was due to state difficulties bringing systems into compliance with new requirements for: (1) all referring or ordering providers to be enrolled in Medicaid, (2) states to screen providers under a risk-based screening process prior to enrollment, and (3) the inclusion of the attending provider National Provider Identifier (NPI) on all electronically filed institutional claims. While these requirements will ultimately strengthen the integrity of the program, they require systems changes and, therefore, many states had not fully implemented these new requirements. CMS is working with states to improve compliance with the additional state requirements that contributed to the increase in error rates.
Performance Measure: Estimate of the Improper Payment Rate in the Medicaid Program
Unit of Measure: Percent
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | 7.4% | 6.4% | 5.6% | 6.70% | 11.53% | 9.57% |
Result | 7.1% | 5.8% | 6.7% | 9.78% | 10.48% | Nov 15, 2017 |
Status | Target Exceeded | Target Exceeded | Target Not Met | Target Not Met | Target Exceeded | Pending |
Performance Measure: Reduce the Percentage of Improper Payments
Made Under the Medicare FFS Program
Unit of Measurement: Percent
FY 2012 |
FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | 5.4% | 8.3% | 9.9% | 12.50% | 11.50% | 10.40% |
Result | 8.5% | 10.1% | 12.7% | 12.09% | 11.00% | Nov 15, 2017 |
Status | Target Not Met but Improved | Target Not Met | Target Not Met | Target Exceeded | Target Exceeded | Pending |
Performance Measure: Estimate the Percentage of Improper Payments in the CHIP Program
Unit of Measurement: Percent
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | 6.50% | 6.81% | 7.38% | |||
Result | 6.80% | 7.99% | Nov 15, 2017 | |||
Status | Target Not Met | Target Not Met | Pending |
Clients Served by Home and Community-Based Services. A foundation of ACL’s program success is access to Home and Community-based Services. In FY 2014, the Aging Services Network served 8,930 clients per million dollars of Older Americans Act funding, exceeding the target of 8,600 clients per million dollars. Performance has largely trended upward and performance targets have been consistently achieved. This reflects strong partnerships with state and local governments, philanthropic organizations, and private donors that contribute funding (leveraging resources of two to three dollars for every federal dollar) and the success of ongoing initiatives to improve program management and expand options for home and community-based care. Aging and Disability Resource Centers, along with increased commitments and partnerships at the state and local levels, have all had positive impacts on program efficiency. Between FY 2008 and FY 2013 performance has improved by 18.3 percent, without benefit of adjustment for inflation. The FY 2014 results showed a decline while still exceeding the target. This variation between FY 2014 and FY 2017 is anticipated as delayed effects of sequestration may occur.
Performance Measure: For Home and Community-based Services including Nutrition and Caregiver services increase the number of clients served per million dollars of Title III Older Americans Act funding
Unit of Measurement: Number of Clients
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | 8,600 clients | 8,700 clients | 8,600 clients | 9,250 clients | 8,700 clients | 9,000 clients |
Result | 9,206 clients | 9,753 clients | 8,930 clients | Dec 31, 2016 | Dec 31, 2017 | Dec 31, 2018 |
Status | Target Exceeded | Target Exceeded | Target Exceeded | Pending | Pending | Pending |
Head Start Enrollment Rate. ACF’s Head Start program works to ensure that the maximum number of children are served and that federal funds are used appropriately and efficiently by measuring under-enrollment across programs. Since Head Start grantees range in size from super-grantees with multiple delegate agencies serving up to 20,000 children to individual centers that serve as few as 15 children, a national under-enrollment rate better captures the under-enrollment than the proportion of grantees that meet under-enrollment targets. An un-enrolled space or vacancy in Head Start is defined as a funded space that is vacant for over 30 days.
ACF continues to focus on improvements to reduce Head Start under-enrollment. Though each Head Start program is required to keep a wait list to fill vacancies as they occur, there are a number of reasons that it may be difficult to fill vacancies quickly. Low-income families are often mobile and eligible families on the waiting list may have moved out of the service area. In addition, as state pre-kindergarten programs have grown, parents may choose to send their children to those programs. The most recent data available indicate that, during the 2014 – 2015 program year, Head Start grantees had, on average, not enrolled 1.84 percent of the children they were funded to serve. This represents approximately 16,700 children who could have been served using the Head Start funds appropriated and awarded to grantees.
There are three factors that contributed to the increased rate of under-enrollment in Head Start in FY 2015: (1) a period of under-enrollment as more programs become Birth-to-Five through competition and renovate facilities, train staff and recruit infants and toddlers; (2) competitive transitions which can result in a period of under-enrollment as programs become fully operational; and (3) under-enrollment within some very large grantees. The ACF OHS is following up and providing technical assistance to ensure these grantees become fully enrolled as soon as possible. Per the 2007 reauthorization of the Head Start Act, ACF now collects online enrollment data on a monthly basis from all Head Start grantees through the Head Start Enterprise System. The Head Start Enterprise System provides a system-generated alert when grantees are under-enrolled, and Regional Offices have procedures in place, consistent with the Head Start Act, to begin technical assistance and to establish improvement plans with clear timetables if the under-enrollment persists.
Performance Measure: Decrease under-enrollment in Head Start programs,
thereby increasing the number of children served per dollar
Unit of Measurement: Percent
FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | |
---|---|---|---|---|---|---|
Target | 0.7% | 0.7% | 0.6% | 0.8% | 1.2% | 1.1% |
Result | 0.8% | 0.7% | 0.9% | 1.84% | Jan 31, 2017 | Jan 31, 2018 |
Status | Target Not Met | Target Met | Target Not Met | Target Not Met | Pending | Pending |
Cross-Agency Priority Goals
Cross-Agency Priority goals address the longstanding challenge of tackling horizontal problems across vertical organizational silos. In the 2015 President’s Budget, 15 Cross-Agency Priority Goals were announced – 7 mission-oriented and 8 management-focused goals with a 4-year time horizon. Established by the GPRA Modernization Act of 2010, these Cross-Agency Priority Goals are a tool used by federal leadership to accelerate progress on a limited number of Presidential priority areas where implementation requires active collaboration between multiple agencies. HHS contributes to Cross-Agency Priority Goals with other federal agencies in the mission-oriented goals of Science, Technology, Engineering and Mathematics Education; and Service Members and Veterans Mental Health. We are also maximizing federal spending through participation in the management-focused goals of Shared Services; Benchmark and Improve Mission-Support Operations; and Customer Service. For more information on HHS’s contributions to Cross-Agency Priority Goals and progress, refer to Performance.gov.
SYSTEMS, LEGAL COMPLIANCE, AND INTERNAL CONTROL
Systems
Financial Systems Environment
HHS’s Chief Financial Officer (CFO) Community strives to provide effective stewardship of taxpayer funds through transparency and accountability in support of the Department’s mission and programs. The HHS financial systems environment forms the financial and accounting foundation for managing the $1.7 trillion in budgetary resources entrusted to the Department in FY 2016. These resources represent about a quarter of all federal outlays and encompass more grant dollars than all other federal agencies combined.
The robust financial systems environment supports HHS’s diverse portfolio of mission-oriented programs, as well as business operations. Its purpose is to: efficiently process financial transactions in support of program activities and HHS’s mission; provide complete and accurate financial information for decision-making; improve data integrity; strengthen internal controls; and mitigate risk.
The HHS financial systems environment consists of a core financial system (with three instances) and two Department-wide reporting systems used for financial and managerial reporting that – taken together – satisfy the Department’s financial accounting and reporting needs.
Core Financial System
The core financial system operates on a commercial off-the-shelf (COTS) platform to support data standardization and facilitate Department-wide reporting. Each of the instances operates the same COTS solution.
- The Healthcare Integrated General Ledger Accounting System (HIGLAS) supports CMS. HIGLAS serves CMS’s Medicare Administrative Contractor organizations, Administrative Program Accounting, and the Center for Consumer Information and Insurance Oversight. It processes an average of five million transactions daily.
- The NIH Business System (NBS) serves NIH’s 27 research institutes and supports grant funding to more than 300,000 researchers at more than 2,500 universities, medical schools, and other research institutions in every state and around the world.
- The Unified Financial Management System (UFMS) serves 10 OpDivs (including the OS) and 18 StaffDivs across the Department. The following accounting centers utilize UFMS: CDC, FDA, IHS, and PSC. PSC provides shared service accounting support for the rest of the Department.
Reporting Systems
Reporting components within the HHS financial systems environment consist of two Department-wide applications: the Consolidated Financial Reporting System (CFRS) and the Financial Business Intelligence System (FBIS). These reporting systems facilitate data reconciliation, financial and managerial reporting, and data analysis.
- CFRS systematically consolidates information from all three instances of the core financial system. It generates Departmental quarterly and year-end consolidated financial statements on a consistent and timely basis, while supporting HHS in meeting regulatory reporting requirements.
- FBIS is the financial business intelligence application that supports the information needs of HHS stakeholders at all levels by retrieving, combining, and consolidating data from the core financial system. It contains a set of techniques and tools for analyzing data and presenting actionable information including metrics and key performance indicators, dashboards with graphical displays, interactive reports, and ad-hoc reporting. FBIS allows executives, managers, and operational end users, to make informed business decisions to support their organization’s mission.
The illustration below depicts the current financial systems environment.
The HHS financial systems environment is required to comply with all relevant federal laws, regulations, and authoritative guidance. In addition, HHS must conform to federal financial management and systems requirements including:
- Federal Managers’ Financial Integrity Act of 1982 (FMFIA)
- Chief Financial Officers Act of 1990 (CFO Act)
- Government Management Reform Act of 1994
- Federal Financial Management Improvement Act of 1996 (FFMIA)
- Clinger-Cohen Act of 1996
- Federal Information Security Management Act of 2002, as amended by the Federal Information Security Modernization Act of 2014 (FISMA)
- Digital Accountability and Transparency Act of 2014 (DATA Act)
- Federal Information Technology Acquisition Reform Act of 2014 (FITARA)
- Office of Management and Budget (OMB) directives and U.S. Department of the Treasury (Treasury) guidance related to these laws
Financial Systems Environment Improvement Strategy
HHS continues to implement a Department-wide strategy to advance its financial systems environment through the Financial Systems Improvement Program (FSIP) and Financial Business Intelligence Program (FBIP). The portfolio of projects within these programs addresses immediate business needs and positions the Department to take advantage of state-of-the-art tools and technology. The goals of the strategy are to improve the effectiveness and efficiency of the Department’s financial management capabilities, mature the overall financial systems environment, and strengthen accountability and financial stewardship. This is a multi-year initiative, and the Department is making significant progress in each of the following key strategic areas.
Financial Systems Modernization
- Strategy: A critical component of the multi-year FSIP initiative is upgrading the core financial system to the most current version of the COTS software to maintain a secure and reliable financial systems environment. Concurrently, HHS also plans to transition key financial systems to a cloud service provider for hosting and application management. Benefits of the upgrade and cloud transition include: safeguarding system security and privacy; enhancing information access; complying with and implementing evolving federal requirements; achieving efficiencies and promoting standardization; eliminating security and control vulnerabilities; and maximizing the return on existing system investments. Following the upgrade, additional modernization projects and enhancements to further mature the HHS financial systems environment will be pursued incrementally.
- Progress: HHS completed the major upgrade of its core financial system in December 2015 – on-time, on-budget, fully functional, and in-line with the federal government’s broader financial management and information technology (IT) priorities. The upgrade represents one of the largest successful financial systems modernization efforts across the entire federal government. UFMS, FBIS, and CFRS were transitioned to a FedRAMP-certified cloud service provider as part of the upgrade, with plans to transition additional systems in future years, supporting both the Federal Cloud Computing Strategy and the Federal Information Technology Shared Services Strategy. The upgrade and cloud transition increase system security, scalability, reliability, and availability, and establish a shared platform configured to HHS’s business needs. Further, as part of the upgrade, HHS implemented a Department-wide Accounting Treatment Manual (ATM) to improve financial reporting and fiscal accountability. With the upgrade complete, HHS is progressing on its financial systems modernization roadmap, having initiated projects to develop a Department-wide electronic invoicing solution and an automated, sustainable solution for implementing DATA Act reporting requirements.
Business Intelligence and Analytics
- Strategy: Leveraging the FBIS platform, HHS is expanding the use of business intelligence and analytics across the Department to establish an information-driven financial management environment in which stakeholders at all levels have access to timely and accurate information required for measuring performance, increasing transparency, and enhancing decision-making. This will allow the Department to more effectively and efficiently meet evolving information demands for fiscal accountability, performance improvement, and external compliance requirements in a sustainable manner.
- Progress: Since it was first deployed in FY 2012, FBIS has been providing operational and business intelligence to users across the HHS finance, budget, grants, and acquisition communities. FBIS includes accurate, consistent, near real-time data from UFMS, and summary data from HIGLAS and NBS. FBIS now supports over 2,000 users across the Department. In FY 2016, HHS successfully consolidated several legacy managerial reporting solutions into FBIS, allowing the Department to retire three systems as reports and users were brought onto the FBIS platform. The transition to the cloud environment will facilitate further system growth, enabling FBIS to incorporate data from additional systems and business domains and generate actionable insights.
Systems Policy, Security, and Controls
- Strategy: The reliability, availability, and security of HHS’s financial systems are of paramount importance. As such, HHS has placed a high-priority on maturing and enhancing its financial systems control environment, strengthening policy, proactively monitoring emerging issues, and ensuring progress toward remediating the Department’s IT Material Weakness. HHS is implementing a policy management program to standardize development, implementation, and monitoring of financial systems policies.
- Progress: HHS is addressing the Department’s IT material weakness by analyzing audit findings, identifying root causes, and implementing solutions collaboratively. The Financial Management Governance Board (FGB) chartered an IT Material Weakness Working Group (MWWG), with members from OpDiv CFO, Chief Information Officer (CIO), and Chief Information Security Officer (CISO) communities. The IT MWWG meets monthly and has developed a roadmap to address pervasive issues, recommend comprehensive remediation approaches, and monitor implementation progress. Working on two fronts – coordinating responsive efforts to address current audit findings, as well as proactive efforts to mature the security and controls environment going forward – HHS initiated projects to address and minimize vulnerabilities and risks related to data and system security, access management, configuration management, and segregation of duties. Supporting these efforts, HHS developed a Financial Systems Policy Development framework, outlining an updated approach to reviewing, refining, and creating financial systems policies and monitoring compliance.
Governance
- Strategy: In November 2013, the Department established the FGB to address enterprise-wide issues, including those related to financial policies and procedures, financial data, and technology. The FGB’s goals include establishing HHS financial management governance; providing people, processes, and technology to support governance; engaging stakeholders through effective communication and management strategies; and supporting project alignment with federal mandates and priorities.
- Progress: Since its inception, the FGB has met monthly and facilitated executive-level oversight of financial management related areas. It promotes collaboration among stakeholders from the different disciplines within the financial management community by engaging senior leadership from HHS OpDivs and StaffDivs, and across functions such as finance, budget, grants, and The FGB has effectively transformed the way in which financial management initiatives and activities are accomplished in HHS, moving from a Division-specific, vertical focus to a more enterprise-wide approach to solving problems and implementing standards for financial management excellence. This has improved collaboration and strengthened oversight across HHS’s financial management and systems environment.
Program Management
- Strategy: To support FSIP and FBIP, HHS established a Department-wide program management framework to facilitate effective implementation of projects and to enhance collaboration across project teams. This includes the Financial Systems Consortium: a body of contractors, federal project managers, and federal contracting officers representing NBS, UFMS, and HIGLAS, that fosters communication and implementation of best practices.
- Progress: Department-wide program management and the Financial Systems Consortium played critical roles in coordinating the successful upgrade of the HHS core financial system. Within this framework, project teams were able to share industry best practices, lessons learned, and risks identified during the upgrade while minimizing overall costs. This included sharing solutions across system upgrade teams to streamline implementation, as well as coordinating vendor support to resolve software issues. Effective program management also reduced duplication of effort and costs by identifying potential sharing opportunities and improvements. Though developed initially to facilitate the major financial systems upgrade, both the Enterprise Program Management Office and the Financial Systems Consortium are continuing post-upgrade as forums to support on-going collaboration and coordination across the financial systems environment and modernization initiatives.
Sharing Opportunities
- Strategy: As a key FSIP component, HHS is actively pursuing multiple initiatives to generate efficiencies and improve effectiveness through implementing shared solutions. The Department has also established a framework for continuously identifying sharing opportunities in its financial systems environment.
- Progress: Examples of sharing opportunities pursued to date include transitioning key financial systems to a cloud service provider; the use of shared acquisition contracts and streamlining of system operations and maintenance contracts; the development and implementation of a Department-wide ATM; consolidation of three legacy managerial reporting systems into FBIS; and sharing solutions across the HHS financial community. Currently, the HHS finance, acquisition, and IT communities are collaboratively pursuing a Department-wide solution for electronic invoicing, supporting both compliance with OMB direction as well as specific business needs identified across HHS. The FGB continues to assess future sharing opportunities across the enterprise to further align with financial management and system policies, business processes and operations, and the overall financial system vision and architecture.
Legal Compliance
Anti-Deficiency Act
The Anti-Deficiency Act (ADA) prohibits federal employees from obligating in excess of an appropriation, or before funds are available, or from accepting voluntary services. As required by the ADA, HHS notifies all appropriate authorities of any ADA violations. ADA reports can be found at GAO's website.
HHS management is taking necessary steps to prevent future violations. On August 1, 2016, the Director of OMB approved HHS’s updated Administrative Control of Funds policy, as required by United States Code, Title 31, Money and Finance, Section 1514, “Administrative Division of Apportionments.” This policy provides HHS’s guidelines to follow in budget execution and to specify basic fund control principles and concepts, including the administrative control of all funds for HHS and its OpDivs, StaffDivs, and Accounting Centers. With respect to two possible issues, we are working through investigations and further assessment where necessary. We remain fully committed to resolving these matters appropriately and complying with all aspects of the law.
Digital Accountability and Transparency Act of 2014
The Digital Accountability and Transparency Act of 2014 (DATA Act) expands the Federal Funding Accountability and Transparency Act of 2006 to increase accountability and transparency in federal spending, making federal expenditure information more accessible to the public. It directs the federal government to use governmentwide data standards for developing and publishing reports, and to make more information, including award-related data, available on USAspending.gov. Among other goals, the DATA Act aims to improve the quality of the information on USAspending.gov, as verified through regular reviews of the posted data, and to streamline and simplify reporting requirements through clear data standards. Additionally, the DATA Act accelerated the referral of delinquent debt owed to the federal government to the Treasury’s Offset Program after 120 days of delinquency.
HHS has played an integral role in the iterative development of data requirements and policy, utilizing internal and governmentwide working groups to analyze and provide feedback to the Treasury. HHS provided feedback on policy guidance through formal OMB policy review periods and by actively participating in various forums such as OMB Office Hours and Open Beta design studios to help shape the evolution of the governmentwide DATA Act implementation and enhance compliance. HHS also collaborated extensively within the Interagency Advisory Committee, which represents the federal communities impacted by the DATA Act, to provide substantive community-specific and cross-cutting feedback to OMB and Treasury in support of governmentwide standardization and related policy considerations.
HHS has revised its DATA Act implementation plan to account for updated requirements from Treasury and additional policy guidance from OMB, as well as the current state of operations and known technical and schedule constraints. HHS implementation is concentrating on reporting mechanisms for May 2017 that minimize changes to existing systems or reporting tools.
To support the initial DATA Act reporting requirements for May 2017, HHS has established file solution teams aligned with the Financial Management, Financial Assistance and Acquisition business lines that will be operationally responsible for generating and validating submissions to ensure transparency, consistency, and compliance. HHS has also established and continued targeted working groups to address specific challenges such as Award ID linkage, Aggregated Data, and Activity Address Code. The DATA Act Program Management Office (DAP) works closely with these file solution teams and working groups to coordinate overall activities and track progress towards meeting key HHS milestone dates. These efforts have enabled HHS to begin compiling data consistent with submission requirements and to iteratively test this data using the most current version of the Treasury broker available on its new DATA Act USAspending.gov site to support initial compliance with the DATA Act. Finally, HHS is developing a strategy to leverage existing processes for data validation, error handling, and internal controls in order to effectively identify and address data discrepancies in a timely manner and build the certification process for DATA Act reporting in May 2017.
The DATA Act aims to standardize data and make it more transparent to the public by requiring the federal government to establish governmentwide data standards and publish all federal spending data so that it is accessible, searchable, and reliable. To help meet this goal, the legislation contains Section 5, which calls for a grants Pilot to help inform recommendations to Congress on methods for (1) standardized reporting; (2) elimination of duplication; and (3) reduction of compliance costs.
Since May 2015, HHS has been working in partnership with OMB, as its executing agent for the Grants Section 5 Pilot, to develop and execute pilot test models that focus on finding ways to promote government efficiency and improve the public’s experience throughout the grants lifecycle. Test Models include the Common Data Element Repository Library, Consolidated Federal Financial Reporting, Single Audit, Notice of Award – Proof of Concept, and Learn Grants. DAP is using these existing tools, forms, and/or processes to collaborate with stakeholders and ascertain if recipient burden may be reduced.
HHS will continue to engage the public in this area through May 2017. The test model results collected by HHS between May 2016 and May 2017 will be reported to OMB for inclusion in the statutorily required report to Congress for legislative action including, but not limited to, consolidating/automating aspects of the federal financial reporting process, simplifying reporting requirements for federal awards, and improving financial transparency.
Improper Payments Information Act of 2002, Improper Payments Elimination and Recovery Act of 2010, and Improper Payments Elimination and Recovery Improvement Act of 2012
An improper payment occurs when a payment should not have been made, federal funds go to the wrong recipient, the recipient receives an incorrect amount of funds, the recipient uses the funds in an improper manner, or documentation is not available to verify the appropriateness of the payment. The Improper Payments Information Act of 2002 (IPIA), as amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA) and the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA), requires federal agencies to review their programs and activities to identify programs that may be susceptible to significant improper payments, test high risk programs, and develop and implement corrective action plans for high risk programs. HHS is striving to better detect and prevent improper payments through close review of our programs and activities using sound risk models, statistical estimates, and internal controls.
HHS has shown tremendous leadership in the improper payments arena. HHS has a robust improper payments estimation and reporting process that has been in place for many years, and developed and implemented many corrective actions to prevent and reduce improper payments in our programs. In compliance with the IPIA as amended, HHS completed 35 improper payment risk assessments in FY 2016 (representing risk assessments of programs, employee pay, charge cards, and Affordable Care Act Marketplace and related programs), and determined that two programs are high risk and must develop improper payment estimation methodologies. In addition, HHS is publishing improper payment estimates and associated information for 12 high risk programs in this year’s AFR, of which six programs reported lower improper payment rates in FY 2016 compared to FY 2015. Lastly, HHS also utilizes the Do Not Pay portal to check payments and awardees to identify potential improper payments or ineligible recipients. In FY 2016, HHS screened more than $385 billion in Treasury-disbursed payments through the Do Not Pay portal; HHS identified no improper payments. A detailed report of HHS’s improper payment activities and performance is presented in the “Other Information” section of this AFR, under “Improper Payments Information Act Report.”
Patient Protection and Affordable Care Act
The Affordable Care Act implements comprehensive health care reform to make quality health care more affordable and accessible. The Affordable Care Act includes provisions for a patient’s bill of rights, a Health Insurance Marketplace, financial assistance for low and moderate-income Americans to purchase health insurance coverage, incentives for high-quality care from physicians, and expansion of the Medicaid program, helping to provide access to affordable health insurance options for all Americans.
The Affordable Care Act also aims to reduce health care fraud, waste and abuse by toughening the sentences for perpetrators of fraud, employing enhanced screening procedures, improving the monitoring of providers, and using predictive modeling technology to target suspect behaviors. These efforts have enabled the government to recover billions of dollars related to improper payments over the last 5 years. For detailed information on improper payment recovery efforts, see the “Program-Specific Reporting Information” section of the “Improper Payments Information Act Report.”
A key aspect of the Affordable Care Act allows eligible Americans to receive a premium tax credit when purchasing their health insurance coverage through the Health Insurance Marketplace. The amount of the credit can be paid in advance directly to the consumer’s health insurer. Consumers then claim the premium tax credit on their federal tax returns, reconciling the credit allowed with any advance payments made throughout the tax year. HHS coordinates closely with the Internal Revenue Service (IRS) on this process.
HHS has implemented many provisions of the Affordable Care Act. For more information about implementation of the many Affordable Care Act provisions, visit the "Key Features" page.
Did you know?
As of September 2016, 20 million individuals have gained coverage thanks to the Affordable Care Act. Today, the uninsured rate is the lowest it has been in history.
Federal Information Technology Acquisition Reform Act
The Federal Information Technology Acquisition Reform Act (FITARA) established an enterprise-wide approach to federal IT investments and provides the Chief Information Officer (CIO) of CFO Act agencies with greater authority over IT investments, including authoritative oversight of IT budgets and budget execution, and IT-related personnel practices and decisions.
Since OMB approved the HHS FITARA Implementation Plan in March 2016, the Agency completed 18 of 39 elements and actions from HHS FITARA Implementation Plan. The CIO reviewed the IT governance policies and procedures for all the OpDivs, published an updated Capital Planning and Investment Control Policy and an addendum to the Enterprise Performance Life Cycle policy, and with the CFO, conducted annual reviews of all IT budgets. In addition, the CIO made progress on the Data Center Optimization Initiative Strategic Plan. FITARA implementation has strengthened relationships with the OpDivs as well as the CFO, Chief Human Capital Officer, and the Chief Acquisition Officer. These are just a few of the FITARA highlights for FY 2016. Over the next year, the CIO will continue to advance the FITARA goals in HHS.
Federal Managers’ Financial Integrity Act of 1982 and Federal Financial Management Improvement Act of 1996
The Federal Managers’ Financial Integrity Act of 1982 (FMFIA) requires federal agencies to annually evaluate and assert on the effectiveness and efficiency of their internal control and financial management systems. Agency heads must annually provide a statement on whether there is reasonable assurance that the agency’s internal controls are achieving their intended objectives and the agency's financial management systems conform to governmentwide requirements. Section 2 of FMFIA outlines compliance with internal control requirements, while Section 4 dictates conformance with systems requirements. Additionally, agencies must report on any identified material weaknesses and provide a plan and schedule for correcting the weaknesses.
In September 2014, the U.S. Government Accountability Office (GAO) released an updated edition of its Standards of Internal Control in the Federal Government, effective FY 2016. The document takes a principles-based approach to internal control, with a balanced focus over operations, reporting, and compliance. In July 2016, OMB released revised Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control. The new Circular complements GAO’s Standards, and it implements requirements of the FMFIA with the intent to improve accountability in federal programs and increase federal agencies’ consideration of ERM. The Department with its OpDiv and StaffDiv stakeholders are working together to implement the new requirements.
The Federal Financial Management Improvement Act of 1996 (FFMIA) requires federal agency heads to assess the conformance of their financial management information systems to mandated requirements. FFMIA expanded upon FMFIA by requiring that agencies implement and maintain financial management systems that substantially comply with federal financial management systems requirements, applicable federal accounting standards, and the U.S. Standard General Ledger at the transaction level. Guidance for determining compliance with FFMIA is provided in OMB Circular A-123, Appendix D, Compliance with the FFMIA of 1996.
HHS is fully focused on the requirements of FMFIA and FFMIA through its internal control program and a Department-wide approach to risk management. Based on thorough ongoing internal assessments and FY 2016 audit findings, HHS provides reasonable assurance that controls are operating effectively. For further information, see the “Management Assurances” section. We are actively engaged with our OpDivs to correct the identified material weaknesses through a corrective action process focused on addressing the true root cause of deficiencies, and supported by active management oversight. More information on the Department’s internal control efforts and the HHS Statement of Assurance follows.
Internal Control
FMFIA requires agency heads to annually evaluate and report on the internal control and financial systems that protect the integrity of federal programs. This evaluation aims to provide reasonable assurance that internal controls are achieving the objectives of effective and efficient operations, reliable financial reporting, and compliance with applicable laws and regulations. The safeguarding of assets is a subset of these objectives. HHS performs rigorous, risk-based evaluations of its internal controls in compliance with OMB Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control.
HHS management is directly responsible for establishing and maintaining effective internal controls in their respective areas of responsibility. As part of this responsibility, management regularly evaluates internal control and HHS executive leadership provides annual assurance statements reporting on the effectiveness of controls at meeting objectives. The HHS Risk Management and Financial Oversight Board (RMFOB) evaluates the OpDivs’ management assurances and recommends a Department assurance for the Secretary’s consideration and approval, resulting in the Secretary’s annual Statement of Assurance.
HHS aims to strengthen its internal control assessment and reporting process to more effectively identify key risks, develop effective risk responses, and implement timely corrective actions. The HHS FY 2016 OMB Circular A-123 assessment and the financial statement audit reported one material weakness in Information System Controls and Security. Additionally, HHS recognizes one material noncompliance with IPIA regarding Error Rate Measurement and one material noncompliance with the Social Security Act related to the Medicare appeals process.
Maintaining integrity and accountability in all programs and operations is critical to HHS’s mission and demonstrates responsible stewardship over assets and resources. It also promotes responsible leadership, ensures the effective delivery of high quality services to the American people, and maximizes desired program outcomes.
MANAGEMENT ASSURANCES
Statement of Assurance
The Department of Health and Human Services’ (HHS or the Department) management is responsible for managing risks and maintaining effective internal control to meet the objectives of Sections 2 and 4 of the Federal Managers’ Financial Integrity Act of 1982 (FMFIA). These objectives are to ensure (1) effective and efficient operations; (2) reliable financial reporting; and (3) compliance with applicable laws and regulations. The safeguarding of assets is a subset of these objectives.
HHS conducted its assessment of risk and internal control in accordance with OMB Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control. Based on the results of the assessment, the Department provides reasonable assurance that internal controls over operations, reporting, and compliance were operating effectively as of September 30, 2016, with the exception of one material weakness related to Information System Controls and Security, and two material noncompliances: one involving noncompliance with the Improper Payments Information Act (IPIA) related to Error Rate Measurement, and the second involving noncompliance with the Social Security Act related to the Medicare appeals process.
HHS is taking steps to address the material weakness related to Information System Controls and Security and the material noncompliance related to the Medicare appeals process, as described in the “Corrective Action Plans for Material Weaknesses” section. Remediation for the material noncompliance related to Error Rate Measurement relies on a modification to legislation to require states to participate in an improper payment rate measurement.
The Federal Financial Management Improvement Act of 1996 (FFMIA) requires agencies to implement and maintain financial management systems that substantially comply with federal financial management system requirements, federal accounting standards, and the United States Standard General Ledger (USSGL) at the transaction level. HHS conducted its evaluation of financial management systems for compliance with FFMIA in accordance with OMB Circular A-123, Appendix D. Based on the results of this assessment, HHS provides reasonable assurance that its overall financial management systems substantially comply with the FFMIA and substantially conform to the objectives of FMFIA, Section 4.
HHS will continue to ensure accountability and transparency over the management of taxpayer dollars, and strive for the continuing progress and enhancement of its internal control and financial management programs.
/Sylvia M. Burwell/
Sylvia M. Burwell
Secretary
November 14, 2016
Summary of Material Weaknesses
- Information System Controls and Security
HHS acknowledges a material weakness related to Information System Controls and Security. This material weakness includes general and application controls weaknesses specifically related to segregation of duties, access controls, and configuration management, as well as other information system security weaknesses that were identified through the annual Chief Financial Officer (CFO) Audit (Federal Information Systems Control Audit Manual), annual Federal Information Security Management Act (FISMA) assessment, and other internal management reviews. While no single financial management system had a material weakness, the nature of the deficiencies throughout the Department leads management to conclude that these aggregate deficiencies warrant classification as a material weakness under Section 2 of FMFIA.
- Error Rate Measurement
HHS reports a statutory limitation relating to the Temporary Assistance for Needy Families (TANF) program that results in a material noncompliance with IPIA. The TANF program is not reporting an error rate for FY 2016, as required by IPIA, because statutory limitations currently prohibit HHS from requiring states to provide information needed for determining a TANF improper payment measurement.
- Medicare Appeals Process
Several factors, including the growth in Medicare claims and HHS’s continued investment and focus on ensuring program integrity, have led to more appeals than Levels 3 and 4 of the Medicare appeals process can adjudicate within the timeframes required by the Social Security Act.
From FY 2010 through FY 2015, the HHS Office of Medicare Hearings and Appeals (OMHA) experienced an overall 442 percent increase in the number of Level 3 appeals received annually. During the same timeframe, the HHS Departmental Appeals Board (DAB) experienced an overall 267 percent increase in the number of Level 4 appeals it received annually. However, while the volume of appeals has increased dramatically, funding has remained comparatively stagnant for the relevant OMHA and DAB operations. As a result, at the end of FY 2016, 658,307 appeals were waiting to be adjudicated by OMHA and 22,707 appeals were waiting to be reviewed at the DAB Medicare Appeals Council. This has led to the inability to meet statutory decisional timeframes of 90 days at Levels 3 and 4 of the Medicare appeals process.
Under current resources (and without any additional appeals), it would take several years for both OMHA and the DAB Medicare Appeals Council to process their respective backlogs.
Corrective Action Plans for Material Weaknesses
- Information System Controls and Security
HHS has placed a high priority on maturing its financial systems controls environment and remediating the Information System Controls and Security material weakness through strengthening policy management, proactively monitoring emerging issues, and ensuring progress toward correcting deficiencies contributing to the material weakness. A Department-wide IT Material Weakness Working Group (MWWG) was established in FY 2015 with members from the CFO, Chief Information Officer, and Chief Information Security Officer Communities to collaboratively identify challenges, conduct root cause analyses, and jointly implement comprehensive solutions. The IT MWWG developed a roadmap to proactively improve the financial systems in the areas of segregation of duties, access controls, configuration management, and FISMA weaknesses that contribute to the Information System Controls and Security material weakness. In FY 2016, HHS has:
- Analyzed FY 2014 and FY 2015 IT audit results to understand the factors contributing to the Information System Controls and Security material weakness;
- Evaluated Federal Information System Controls Audit Manual (FISCAM) system controls gaps based on evaluation criteria derived from National Institute of Standards and Technology (NIST) standards and HHS policies;
- Identified cross-cutting issues and developed preliminary recommendations to address Department-wide and system level challenges; and
- Developed a Financial Systems Policy Management framework, outlining an updated approach to creating, implementing, and monitoring financial systems policies. Further, a pilot program to monitor policy compliance for a core accounting system was established with plans to roll out the program more broadly across the financial systems environment.
In addition to proactive efforts, HHS has made significant progress in remediating audit findings as part of the responsive efforts to address the Information System Controls and Security material weakness.
In the first quarter of FY 2016, HHS completed its major financial management systems upgrade and transitioned the hosting services for key financial systems to a Cloud Service Environment certified by the Federal Risk and Authorization Management Program (FedRAMP), enhancing systems security, scalability, reliability, and availability.
In FY 2017, HHS will continue its collaborative efforts to identify high risk areas within the HHS financial systems environment, develop and implement comprehensive solutions to address department-wide and system level controls gaps in the areas of policy, business application and infrastructure, and monitor corrective action implementation to meet the Department’s objectives. HHS will continue to report remediation progress to the Risk Management and Financial Oversight Board and maintain accountability and commitment to strengthen the HHS financial systems environment.
- Error Rate Measurement
Current statutory limitations restrict corrective actions HHS can take to develop an error rate for TANF. HHS plans to encourage Congress to consider statutory modifications that would allow for greater accountability, including a reliable error rate measurement if appropriate when legislation is considered to reauthorize TANF.
- Medicare Appeals Process
HHS has a three-pronged strategy to improve the Medicare appeals process:
- Invest new resources at all levels of appeal to increase adjudication capacity and implement new strategies to alleviate the current backlog;
- Take administrative actions to reduce the number of pending appeals and encourage resolution of cases earlier in the process; and
- Propose legislative reforms that provide additional funding and new authorities to address the appeals volume.
The FY 2017 President’s Budget request includes a comprehensive legislative package aimed at both helping the Department process a greater number of appeals and reducing the number of appeals that reach OMHA. Accounting for current administrative actions and the enactment of proposed funding increases and legislative actions outlined in the FY 2017 President’s Budget, HHS projects that the backlog could potentially be reduced to 240,810 appeals by the end of FY 2018 and may be eliminated by FY 2019.
LOOKING AHEAD TO 2017
HHS is the U.S. government’s principal agency for protecting the health of all Americans, providing essential human services, and promoting economic and social well-being for individuals, families, and communities, including vulnerable populations. Our OpDivs and StaffDivs strive each day to help more Americans acquire affordable health care, to protect and enhance the health of the people of this country and the world, and to assist those who are least able to help themselves. These daily achievements support the Department’s existing strategic goals and objectives. In 2017, HHS will update its Strategic Plan to align with the priorities of the next Presidential Administration.
Strengthen Health Care
HHS is responsible for implementing many of the provisions of the Affordable Care Act, which makes health insurance coverage more secure and reliable for Americans, makes coverage more affordable and accessible for families and small business owners, and helps bring down health care costs. The Affordable Care Act also expands consumer choice, supports informed decision making and increases health insurance coverage for low-income populations, partly through the expansion of Medicaid eligibility and the advent of the Health Insurance Marketplace.
Advance Scientific Knowledge and Innovation
HHS is working to advance scientific knowledge and innovation to prevent, diagnose, and treat diseases and disorders, as well as address emerging health threats, and sustain a vital and cutting edge workforce and scientific infrastructure. Medical breakthroughs, fueled by scientific discovery, have made the difference between life and death for countless Americans. Nevertheless, the need for better health interventions remains. Continuing to improve the health and well-being of Americans requires ongoing investments, with goals that range from improving our understanding of fundamental biological processes to identifying the best modes of prevention and treatment. HHS investments have improved the health of many Americans, but the path from basic discovery into safe, effective patient care can be long.
Advance the Health, Safety, and Well-Being of the American People
HHS focuses on creating environments that promote healthy behaviors to prevent chronic disease and health conditions, including those related to tobacco use and substance abuse, being overweight or obese, and mental disorders. These conditions result in the most deaths, disability, and substantial human and fiscal costs for Americans. HHS works to promote prevention and wellness across its programs and with a variety of partner stakeholders.
HHS partners with state, local, tribal, urban Indian, and other service providers to sustain an essential safety net of services that protect children and youth, promote their resilience in the face of adversity, and ensure their healthy development from birth through the transition to adulthood. Health and early intervention services ensure children get off to a good start from infancy. Early childhood programs, including Head Start, enhance the school readiness of preschool children. Child welfare programs, including child abuse prevention, foster care, and adoption assistance, target those families in which there are safety or neglect concerns. Services for children exposed to trauma or challenged with mental or substance use disorders provide support for those with behavioral health care needs. Several HHS programs also promote positive youth development and seek to prevent risky behaviors in youth.
Promoting economic and social well-being requires attention to a complex set of factors, through the collaborative efforts of agencies, policymakers, researchers, community members, and providers. HHS OpDivs work together and collaborate across departments to maximize the potential benefits of various programs, services, and policies designed to improve the well-being of individuals, families, and communities.
Over the past decade, our nation has renewed its efforts to address large-scale incidents that have threatened human health, such as natural disasters, disease outbreaks, and terrorism. Working with its federal, state, local, tribal, and international partners, as well as industry in public-private partnerships, HHS has improved and exercised response capabilities and developed medical countermeasures.
Did you know?
Injuries are the leading cause of death among American Indians and Alaska Natives ages 1 to 44. The IHS Injury Prevention Program aims to decrease the incidence of injuries and increase the ability of tribes to prevent injuries within their communities.
Ensure Efficiency, Transparency, Accountability, and Effectiveness of HHS Programs
Stewardship of federal funds involves more than ensuring that resources are allocated and expended responsibly. Managing federal health care related investments with integrity and vigilance will safeguard taxpayer dollars as well as benefit the public through improved health and enhanced well-being. Responsible stewardship involves allocating these resources effectively—and for activities that generate the highest benefits. HHS has placed a strong emphasis on protecting program integrity and the well-being of program beneficiaries by identifying opportunities to improve program efficiency and effectiveness. HHS is making every effort to ensure that the right recipient is receiving the right payment for the right reason at the right time.
HHS is strongly committed to data security and the protection of personal privacy and confidentiality as a fundamental principle governing the collection and use of data. HHS protects the confidentiality of individually identifiable information in all public data releases, including publication of datasets on the Web. By employing state-of-the-art processes for data prioritization, release, and monitoring, HHS increases the value derived from information in several ways. Consumers are able to access information and benefit directly from using it personally. Public administrators can use these information resources to enhance service delivery and improve customer satisfaction.
As we near the end of this Administration, HHS leadership is committed to leaving the Department in a strong position to continue its vital work. To do this, HHS will stay committed to developing effective systems, workforce, and infrastructure that can address complicated and emerging challenges. These efforts will allow HHS to continue toward its goal of improved health and well-being among Americans.
FINANCIAL SUMMARY AND HIGHLIGHTS
Once again, HHS received an unmodified audit opinion on its financial statements and notes[1] for the year ending September 30, 2016. We present these in the “Financial Section” of this report. At HHS, we take pride in the preparation of our financial statements, yet it can sometimes be difficult to draw the relationships between the information in the statements and the overall performance of an agency. This section is presented as an interpretation of the financial statements, which include the Consolidated Balance Sheets, Consolidated Statement of Net Cost, Consolidated Statement of Changes in Net Position, Combined Statement of Budgetary Resources, Statement of Social Insurance, and the Statement of Changes in Social Insurance Amounts, as well as selected Notes to the Principal Financial Statements. Included in this analysis is a year-over-year summary of key financial balances, nature of significant changes, and highlights of key financial events to assist our readers in establishing the relevance of the financial statements to the operations of HHS.
As a federal entity, HHS’s financial position and activities are significant to the governmentwide statements. Based on the FY 2015 Financial Report of the United States Government, our net operating cost was larger than any single agency across the entire federal government[2]. A similar relationship exists within HHS, where the Department is significantly represented by one OpDiv. CMS alone consistently stewards the largest share of our resources. Therefore, noteworthy changes in HHS balances are primarily related to fluctuations in CMS program activity.
Balance Sheets
To communicate performance for HHS at fiscal year-end, the Consolidated Balance Sheets show the resources available to HHS (Assets) and claims against those assets (Liabilities). The remainder represents the equity retained by the government (Net Position). The table below summarizes the major components of the FY 2016 and FY 2015 year-end balances of HHS’s assets available for use, the liabilities owed by HHS, and the equity retained by HHS as represented by the Net Position.
Assets
The total Assets for HHS were $562.7 billion at year-end, representing the value of what we own and manage. This is an increase of 6 percent or approximately $33.9 billion over September 30, 2015.
The Other Assets line contains the largest net change between FY 2016 and FY 2015 at $20.9 billion. This is primarily represented by a $21.5 billion increase in advances, including a $14.6 billion increase for the Supplemental Medical Insurance (SMI) Prescription Drug and Medicare Advantage Benefits advances and a $6.9 billion increase in Medicare Hospital Insurance (HI) advances.
Net Investments and the Fund Balance with Treasury (FBwT) together comprise 89 percent of our total assets, which is a 4 percent decrease from 93 percent in FY 2015. Of the $18.3 billion FBwT increase, 63 percent was within CMS. The CMS increase includes FBwT increases for SMI of $8.3 billion and for the Children’s Health Insurance Program (CHIP) of $5.6 billion, offset by FBwT decreases in other CMS programs.
The chart to the right, “Assets by OpDiv,” demonstrates asset distribution within the Department. The OpDiv asset balances ranged from $323.0 million at AHRQ to $445.7 billion at CMS. ACF had one of the largest percentile and dollar value asset increases (at 8 percent and $1.8 billion) over FY 2015 due to an expansion of the Temporary Assistance for Needy Families (TANF) program of $1.1 billion and additional resources provided to Head Start of $0.5 billion.
Liabilities
Our Liabilities, or amounts that we owe from past transactions or events, were $161.3 billion on September 30, 2016. This represents an increase of $9.9 billion, or 7 percent more than the FY 2015 liabilities. The driving factor behind this increase can be found in the Other Liabilities line, which increased 53 percent ($8.5 billion) over FY 2015. A major contributor to this change is the result of the Bipartisan Budget Act of 2015 (Section 601) which authorized a transfer from the General Fund to SMI. The mandatory repayment of the General Fund transfer created the increased liability. Section 601 also created an additional premium, which will be charged together with the regular Medicare Part B monthly premiums and will be used to pay back the General Fund without interest.
The OpDivs with the largest and smallest asset balances are also the OpDivs with the largest and smallest liabilities. With the majority share, CMS reports $136.9 billion and 85 percent of the HHS liabilities, while AHRQ (shown in All Other OpDivs on the chart to the left) has liabilities around $25.0 million. Other than CMS, PSC had the largest OpDiv dollar value increase in liabilities over FY 2015 of $959.2 million. Of this PSC increase, $819.0 million is an increase to the Pension Liability to capture updated estimates based on mid-year and year-end reviews of their Pension Liability.
Statement of Changes in Net Position
The Consolidated Statement of Changes in Net Position displays the activities affecting the difference between the beginning net position and ending net position, as shown on our Consolidated Balance Sheets. This is also represented as the difference between assets and liabilities.
Changes in assets are shown by breaking out where HHS gets the money from, known as our financing sources. Total financing sources includes both the Total Financing Sources and Total Budgetary Sources lines from the Statement of Changes in Net Position.
We receive the majority of our funding through Congressional appropriations and reimbursement for the provision of goods or services to other federal agencies. HHS’s largest financing source, our General Funds and Other, increased over FY 2015 by 5 percent ($39.0 billion) from $797.4 billion to $836.4 billion. Fluctuations in tax revenue collected are due to legislative changes. The increase in tax revenue of 5 percent is comparable to the prior year 4 percent increase in tax revenue.
Statement of Net Cost
The Consolidated Statement of Net Cost represents how we spent the money. This can also be stated as the difference between the costs incurred by our programs less associated revenues. Our Net Cost of Operations for the year ended September 30, 2016, totaled approximately $1.1 trillion. The chart on the left shows consolidating HHS costs by Major Budget Function[3], which are the categories displayed in the federal budget. Most agencies have one or two budget functions, where HHS has many.
The table below presents our FY 2016 Consolidated Net Cost of Operations, which we break out into Responsibility Segments between CMS and the remaining OpDivs (Other Segments). Net cost for CMS increased by $39.4 billion between FY 2016 and FY 2015. The majority of this increase relates to benefit expenses reflecting an expansion of Medicaid (with increases of costs approximately totaling $13.9 billion), as well as benefit expense increases for the Medicare SMI of $12.2 billion, and increases of $7.4 billion for Medicare Part D. There was a nominal increase in total Net Cost of Operations for the remaining HHS segments at around $5.4 billion.
As stated previously, HHS classifies costs by Major Budget Function such as Medicare, Health, Income Security, and Education. This is shown on the Consolidating Statement of Net Cost by Budget Function in the “Other Information” section of this report. Below are the three-year cost trends for these Major Budget Functions[4]. Total net costs for Medicare $566.1 billion and Health $455.3 billion Budget Functions account for 95 percent of our annual net costs.
Statement of Budgetary Resources
The Combined Statement of Budgetary Resources displays the budgetary resources available to HHS throughout 2016 and 2015, and the status of those resources at the fiscal year-end. The primary components of our resources, totaling approximately $1.7 trillion for FY 2016, are appropriations from Congress, resources not yet used from previous years (unobligated balances brought forward), spending authority from offsetting collections, and other budgetary resources. This represents an increase of $125.2 billion, or 8 percent, over FY 2015. The following chart highlights trends in these balances over the past three fiscal years.
The increase in appropriations are primarily related to increases in the Payments to Trust Funds of $44.6 billion, Medicare SMI of $43.6 billion, Medicare HI of $11.8 billion, Medicaid of $11.2 billion, and CHIP of $1.7 billion. For further details, see the Combining Statement of Budgetary Resources in the “Financial Section” of this report.
Schedule of Spending
HHS has elected to present our trends in spending in the audited Notes to the Principal Financial Statements titled, Combined Schedule of Spending. The chart below illustrates this spending as of September 30, 2016 and 2015 for the top four Treasury Account Symbols (TAS). The remaining TAS are presented in Other Agency Budgetary Accounts.
The New Obligations and Upward Adjustments line on the Combined Statement of Budgetary Resources is the same as Total Amounts Agreed to be Spent line on the Combined Schedule of Spending. Total obligations for FY 2016 were approximately $1.6 trillion, a 9 percent increase over the approximately $1.5 trillion in obligations for FY 2015.
The Department’s total spending is once again significantly represented by four of CMS’s TAS; Medicaid, Medicare HI, Medicare SMI, and Payments to Trust Funds; at 82 percent of HHS total obligations.
As the American public will soon be able to see more clearly on the new USAspending.gov website[5], the majority (47 percent) of all HHS spending was made through Grants, Subsidies, and Contributions at $749.2 billion. We are the largest grant-making agency in the federal government. Additionally, HHS has incurred obligations for Federal Assistance Direct Payments (44 percent) totaling $704.0 billion. We classify obligations by items or services provided into categories known as object classes. For more information on object classes, see the Combined Schedule of Spending by Object Class in the “Other Information” section of this report.
Statement of Social Insurance
The Statement of Social Insurance presents the 75-year actuarial present value of the income and expenditures of the HI and SMI Trust Funds. Future expenditures are expected to arise for current and future program participants. This projection is considered to be important information regarding the potential future cost of the program. These projected potential future obligations are not included in the Consolidated Balance Sheets, Statements of Net Cost and Changes in Net Position, or Combined Statement of Budgetary Resources.
Actuarial present values are computed under the intermediate set of assumptions specified in the 2016 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.
The Statement of Social Insurance presents the following estimates:
- The present value of future income (income excluding interest) to be received from or on behalf of current participants who have attained eligibility age and the future cost of providing benefits to those same individuals;
- The present value of future income to be received from or on behalf of current participants who have not yet attained eligibility age and the future cost of providing benefits to those same individuals;
- The present value of future income less future cost for the closed group, which represents all current participants who attain age 15 or older in the first year of the projection period, plus the assets in the combined HI and SMI Trust Funds as of the beginning of the valuation period;
- The present value of income to be received from or on behalf of future participants and the cost of providing benefits to those same individuals;
- The present value of future income less future cost for the open group, which represents all current and future participants (including those born during the projection period) who are now participating or are expected to eventually participate in the Medicare program, plus the assets in the combined HI and SMI Trust Funds as of the beginning of the valuation period; and
- The present value of future cash flows for all current and future participants over the next 75 years (open group measure) increased from $(3.2) trillion, determined as of January 1, 2015, to $(3.8) trillion, determined as of January 1, 2016.
Including the combined HI and SMI Trust Fund assets increases the present value, as of January 1, 2016, of future cash flow for all current and future participants to $(3.6) trillion for the 75-year valuation period. The comparable closed group of participants, including the combined HI and SMI Trust Fund assets, is $(10.2) trillion.
HI TRUST FUND SOLVENCY
Pay-as-you-go Financing
The HI Trust Fund is deemed to be solvent as long as assets are sufficient to finance program obligations. Such solvency is indicated, for any point in time, by the maintenance of positive trust fund assets. In recent years, current expenditures have exceeded program income for the HI program, and thus, the HI Trust Fund assets have been declining. The following table shows that HI Trust Fund assets[6], expressed as a ratio of the assets at the beginning of the fiscal year to the expenditures for the year. This ratio has steadily dropped from 95 percent at the beginning of FY 2012 to 67 percent at the beginning of FY 2016.
Short-Term Financing
The HI Trust Fund is deemed adequately financed for the short term when actuarial estimates of trust fund assets for the beginning of each calendar year are at least as large as program obligations for the year. Estimates in the 2016 Trustees Report indicate that the HI Trust Fund is not adequately financed over the next 10 years. Under the intermediate assumptions of the 2016 Trustees Report, the HI Trust Fund ratio is estimated to continue decreasing through 2025 and remain at approximately 70 percent through 2022. From the end of 2015 to the end of 2020, assets are expected to increase, from $193.8 billion to $216.6 billion, but then decrease to $137.7 billion by the end of 2025.
Long-Term Financing
Did you know?
Only four federal benefit programs meet the criteria to report a Statement of Social Insurance. They are the Medicare, Social Security, Railroad Retirement, and Black Lung programs.
![A group of people giving high five to each other.](https://public3.pagefreezer.com:443/content/HHS.gov/04-05-2021T06:42/https://www.hhs.gov/sites/default/files/fy2016-high-five.jpg)
The short-range outlook for the HI Trust Fund has worsened as compared to what was projected last year. After 2020, the trust fund ratio starts to decline quickly until the fund is depleted in 2028, two years earlier than projected last year. HI financing is not projected to be sustainable over the long term with the tax rates and expenditure levels projected. Program cost is expected to exceed total income in all years. When the HI Trust Fund is exhausted, full benefits cannot be paid on a timely basis. The percentage of expenditures covered by tax revenues is projected to decrease from 87 percent in 2028 to 79 percent in 2040 and then to increase to about 86 percent by the end of the projection period.
The primary reasons for the projected long-term inadequacy of financing under current law relate to the fact that the ratio of the number of workers paying taxes relative to the number of beneficiaries eligible for benefits drops from 3.1 in 2015 to about 2.1 by 2090. In addition, health care costs continue to rise faster than the taxable wages used to support the program. In present value terms, the 75-year shortfall is $3.6 trillion, which is 0.7 percent of taxable payroll and 0.3 percent of Gross Domestic Product (GDP) over the same period.
Significant uncertainty surrounds the estimates for the Statement of Social Insurance. In particular, the actual future values of demographic, economic, and programmatic factors are likely to be different from the near-term and ultimate assumptions used in the projections. For more information, please refer to the Required Supplementary Information: Social Insurance disclosures required by the Federal Accounting Standards Advisory Board.
Did you know?
Based on the latest 2016 projections, Medicare and Medicaid (including state funding) represent 38 cents of every dollar spent on health care in the U.S.—or looking at it from three other perspectives: 54 cents of every dollar spent on nursing homes, 44 cents of every dollar received by U.S. hospitals, and 34 cents of every dollar spent on physician services.
![Senior couple.](https://public3.pagefreezer.com:443/content/HHS.gov/04-05-2021T06:42/https://www.hhs.gov/sites/default/files/fy2016-senior-couple.jpg)
SMI TRUST FUND SOLVENCY
The SMI Trust Fund consists of two accounts – Part B and Part D. In order to evaluate the financial status of the SMI Trust Fund, each account needs to be assessed individually, since financing rates for each part are established separately, and their program benefits are quite different in nature.
While differences between the two accounts exist, the financing mechanism for each part is similar in that the financing is determined on a yearly basis. The Part B account is generally financed by premiums and general revenue matching appropriations determined annually to cover projected program expenditures and to provide a contingency for unexpected program variation. The Part D account is financed by premiums, general revenues, and transfers from state governments. Unlike the Part B account, the appropriation for Part D general revenues has generally been set such that amounts can be transferred to the Part D account on an as‑needed basis; under this process, there is no need to maintain a contingency reserve. In September 2015, a new policy was implemented to transfer amounts from the Treasury into the account five business days before the benefit payments to the plans. This transfer occurred again in February 2016 and is expected to occur consistently thereafter. As a result, the Trustees expect the Part D account to include a more substantial balance at the end of most months to reflect the new policy.
Since both the Part B and Part D programs are financed on a yearly basis, from a program perspective, there is no unfunded liability in the short or long-range. Therefore, in this financial statement the present value of estimated future excess of income over expenditures for current and future participants over the next 75 years is $0. However, from a government wide perspective, general fund transfers as well as interest payments to the Medicare Trust Funds and asset redemption, represent a draw on other federal resources for which there is no earmarked source of revenue from the public. Hence, from a government wide perspective, the corresponding estimate of future income less expenditures for the 75-year projection period is $(28.6) trillion.
Even though from a program perspective, the unfunded liability is $0, there is concern over the rapid increase in cost of the SMI program as a percent of GDP. In 2015, SMI expenditures were 2.1 percent of GDP. By 2090, SMI expenditures are projected to grow to 3.8 percent of the GDP.
The following table[7] presents key amounts from our basic financial statements for fiscal year 2014 through 2016.
Table of Key Measures
Statement of Changes in Social Insurance Amounts
The Statement of Changes in Social Insurance Amounts reconciles the change (between the current valuation period and the prior valuation period) in the present value of future tax income less future cost for current and future participants (the open group measure) over the next 75 years. This reconciliation identifies those components of the change that are significant and provides reasons for the changes. In general, an increase in the present value of net cash flow represents a positive change (improving financing), while a decrease in the present value of net cash flow represents a negative change (worsening financing).
The present value as of January 1, 2016, decreased by $168.6 billion due to advancing the valuation date by one year and including the additional year 2090, by $288.7 billion due to changes in the projection base, and by $366.1 billion due to the changes in economic and health care assumptions. However, changes in demographic assumptions and legislation changes increased the present value of future cash flows by $182.4 billion and $6.4 billion, respectively.
Required Supplementary Information
As required by Statement of Federal Financial Accounting Standards (SFFAS) Number 17, Accounting for Social Insurance (as amended by SFFAS Number 37, Social Insurance: Additional Requirements for Management Discussion and Analysis and Basic Financial Statements), HHS has included information about the Medicare trust funds – HI and SMI. The Required Supplementary Information (RSI) presents required long-range cash-flow projections, the long-range projections of the ratio of contributors to beneficiaries (dependency ratio), and the sensitivity analysis illustrating the effect of the changes in the most significant assumptions on the actuarial projections and present values. The SFFAS 37 does not eliminate or otherwise affect the SFFAS 17 requirements for the supplementary information, except that actuarial projections of annual cash flow in nominal dollars are no longer required; as such, it will not be reported in the RSI. The RSI assesses the sufficiency of future budgetary resources to sustain program services and meet program obligations as they come due. The information is drawn from the 2016 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, which represents the official government evaluation of the financial and actuarial status of the Medicare Trust Funds.
Limitation of the Principal Financial Statements
The principal financial statements in the “Financial Section” have been prepared to report our financial position and results of operations, pursuant to the requirements of 31 U.S.C. §3515(b). Although the statements have been prepared from our books and records in accordance with generally accepted accounting principles for federal entities and the formats prescribed by the OMB, the statements are in addition to the financial reports used to monitor and control budgetary resources, which are prepared from the same books and records.
The statements should be read with the realization that they are for a component of the U.S. Government, a sovereign entity. One implication of this is that liabilities cannot be liquidated without legislation providing HHS with resources and budget authority.
Also see these sections of the Agency Financial Report:
- Section I: Management, Discussion and Analysis
- Section II: Financial Section
- Section III: Other Information
- Appendices
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[1] Due to the uncertainty of the long-range assumptions used in the Statement of Social Insurance model, our auditors were not able to express an opinion on the Statement of Social Insurance and the Statement of Social Insurance Amounts and associated footnotes.
[2] HHS’s net costs are 27 percent of the federal government’s total costs; the Social Security Administration costs are 24 percent, Department of Defense are 15 percent, Treasury’s Interest on Treasury Security Held by the Public are 6 percent, and the Department of Veterans Affairs are 4 percent. All remaining agencies combined only represent 24 percent.
Source: FY 2015 Financial Report of the United States Government
[3] Totals in the chart are exclusive of Intra-HHS Eliminations from the Consolidating Statement of Net Cost by Budget Function.
[4] Totals in the chart are exclusive of Intra-HHS Eliminations from the Consolidating Statement of Net Cost by Budget Function.
[5] The goal date for go-live DATA Act reporting is May 2017.
[6] Assets at the beginning of the year to expenditures during the year.
[7] The table or other singular presentation showing the measures described above. Although, the closed group measure is not required to be presented in the table or other singular presentation, the CMS presents the closed group measure and open group measure.