CMS Offers a Sweeter Deal in Trading Up Integrated Eligibility Systems

Even if you tend to gloss over my technology blogs, please keep reading because this is really BIG news for the states. Yesterday, CMS announced that, for a limited time, it is waiving the requirement that the cost to replace or improve integrated eligibility systems be allocated across programs (at each program’s matching rate). Let’s dive into what this means for states.

Earlier this year, CMS announced the availability of enhanced federal funding for new or upgraded Medicaid eligibility systems with the federal government picking up 90% of the development cost (referred to as the 90/10 rule). The biggest drawback with this generous offer is that 44 states have integrated systems that manage eligibility for other programs like SNAP and TANF, in addition to Medicaid and CHIP. Those states face the dilemma of choosing between 1) delinking and building a new separate Medicaid eligibility system or 2) coming up with the higher state match for the proportional cost of the system represented by the other programs.

The issue for the states involves more than just money, which is not insignificant given the current fiscal environment. The prospect of operating separate systems on an ongoing basis requires rethinking how human service agencies and counties manage their eligibility work. But more importantly, it presents additional barriers to families who benefit from other programs. States and advocates alike have been concerned that delinking would mean that coordination of benefits across programs would become more complicated which is contradictory to the goals of the ACA to move toward a simplified, more coordinated system among the various health coverage options.

The latest announcement, jointly issued by the US Department of Agriculture which administers SNAP and three agencies within the Department of Health & Human Services, allows that development costs that would be incurred for the Medicaid, CHIP or Exchange portion of the system (like an on-line application) do NOT have to be cost-allocated regardless of whether other programs benefit. Only incremental costs for additional requirements to integrate the non-health programs must be charged to the specific program. Ongoing operational costs will be cost-allocated under the traditional rules. The cost-allocation between Exchange (100% federal) and Medicaid (90% federal) functionality remains in place. All systems also must meet new federal standards to ensure accessibility, functionality and performance.

The tight timeline for getting the new Medicaid, CHIP and Exchange eligibility system up and running may mean that states still may have to phase-in integration of the other public assistance programs. The temporary waiver from cost-allocation rules, which is effective immediately, will remain in effect until December 31, 2015. This gives states about 2.5 years to re-integrate other human service programs after they need to have the Medicaid/Exchange eligibility system functional. This timeline coincides with the expiration of the 90/10% enhanced federal match for Medicaid systems when system development costs revert back to a 50/50 match.

For states that are looking at major new system development, it seems logical to think about several phases in building these systems. Phase 1 implements eligibility for all coverage options that will rely on Modified Adjusted Gross Income (MAGI). Phase 2 would bring in the other Medicaid groups that will continue to rely on traditional eligibility methodology. And Phase 3 would re-integrate the human service programs such as SNAP, TANF and child-care subsidies. The current systems would continue to handle eligibility for the non-MAGI groups and human service programs in the interim. However, states that have already moved to more sophisticated technology may be able to move forward more quickly.

Overall, the temporary waiver of cost-allocation rules is icing on the 90/10 cake! This is an even sweeter deal for states to replace those clunker legacy systems and use state-of the-art technology to provide consumer-friendly, efficient and cost-effective access to health coverage and other key family supports. For more information on the temporary cost-allocation waiver, click here.

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