No Tricks Here, CMS Treats States with Permanent Enhanced Funding for Medicaid Eligibility and Enrollment Systems

There could hardly be a sweeter treat for state Medicaid agencies than to learn that CMS is proposing to the make permanent the enhanced federal funding match of 90 percent for Medicaid eligibility and enrollment systems and a 3-year extension on certain cost-allocation requirements.

It was a big deal when CMS first proposed the 90/10 rule back in 2010. States were coming off the great recession but still facing fiscal constraints just as the ACA set new standards for determining eligibility that would be nearly impossible to meet with the Frankenstein IT systems in use at the time. Of course, the enhanced funding came (and still does) with certain conditions. Then CMS sweetened the deal by waiving certain cost-sharing requirements to allow other benefit programs to take advantage of the new system capabilities but only pay incremental costs.

The latest breaking news came in a letter from CMS Medicaid Director Cindy Mann to the American Public Human Services Association and the National Association of Medicaid Directors. So what does this mean for states?

First, it gives states some breathing room on building their new systems. As I noted when we looked under the hood of how kids are faring under the ACA, implementing a new high-functioning IT system is more like crafting a custom-designed racing machine than buying a new car off the lot. Doing so while re-engineering your business policies and practices is doubling challenging. And quite frankly, not all states are where they need to be this far into ACA implementation.

With the 90/10 money set to expire in December 2015, time is running out for states. And this could mean that they would be forced to cut corners or make hasty decisions that undermine the potential of technology to truly transform how Medicaid does business. And that’s a scary thought after we’ve worked so hard and are so close to achieving real-time, data driven eligibility and enrollment.

Secondly, although 45 states operated integrated eligibility systems for Medicaid and other key benefit programs like SNAP and child care subsidies in 2013, many delinked those programs as part of a phased-in approach to building their new systems. By extending the cost-allocation waiver, states will have additional time to re-integrate those benefits and pay only the add-on costs.

There’s no reason to disguise the truth here. Investing in sophisticated systems will pay off in the long run with lower administrative costs, which the federal government splits with the states. Done well, these systems will support more accurate and timely eligibility decisions, enable better communications with consumers, and have the ability to produce the data we need for program evaluation, continuous business improvement, transparency and accountability. And that’s no trick, just a wise decision and smart investment.