Rules Propose Permanent 90% Federal Match for Medicaid Eligibility Systems: Tell HHS You Like It!

A year or so ago in a room of Ohio legislative staffers, I asked everyone under 30 to raise their hands. It was about 90% of the audience. I then said, “Your state’s Medicaid eligibility system is older than you.” And it was true, not only for Ohio, but also for many states across the country. For decades, states put patches on their eligibility systems to the point where few computer programmers even knew the outdated code needed to make changes or fix problems.

Hopefully, with permanent 90% federal match for Medicaid eligibility and enrollments systems (E&E), those days are past. Recognizing that sophisticated, high-performing technology would be a prerequisite to achieving the ACA’s goal of paperless, real-time eligibility and enrollment, former CMS Medicaid Director and CCF founder, Cindy Mann, found a path to put eligibility and enrollment systems on par with claims payment systems known as Medicaid Management Information Systems (MMIS). For some time, MMIS systems had received 90% federal match for system development and implementation and 75% federal match for ongoing operating costs.

Initially, the 90% funding for Medicaid eligibility systems was limited to 3 years, through 2015, based on the idea that the limited time frame would incentivize states to jump at the chance to replace their legacy-based systems. Quick action was needed to ensure that state Medicaid and CHIP agencies were ready for January 1, 2014, when new MAGI-based eligibility rules and expanded coverage options became effective.

At the time 45 states operated integrated systems that managed eligibility for Medicaid and other public benefits programs, such as SNAP and childcare subsidies. Such integrated systems help ensure that low-income families receive the supports they need to work and take care of their families. But federal rules require programs to share the cost of developing integrated systems, so where would the money come from to add the functionality to process eligibility for other programs? Would states have to manage separate eligibility systems? And most importantly, what would delinking eligibility mean for families? Thankfully, we didn’t have to ponder these questions very long since shortly after the rule was finalized, CMS sweetened the deal by temporarily waiving the typical cost-allocation requirements. Under the temporary waiver, other programs are charged only incremental costs to be integrated into the Medicaid system.

At the time, three years seemed like a long time but it didn’t take long for everyone to realize what a heavy lift the deployment of these new systems would be. To ensure that states didn’t shortchange system development, CMS announced its intent last fall to extend the 90% federal match permanently. It also extended the cost-allocation waiver for other program integration through 2018.

The proposed rule implementing the permanent 90% funding was published on April 16, 2015, in the federal register, and CMS released this FAQ. In addition to codifying the enhanced match, the proposed regulations also update the conditions that states and their systems must meet in order to receive the enhanced funding. Tomorrow, I’ll post a follow-up blog that gets into the nitty gritty of the proposed rule. So check back on Say Ahhh! for details that may be helpful to those of you would want to support the rule by submitting comments to CMS.