CMS Offers a Sweeter Deal in Trading Up Integrated Eligibility Systems – Say Ahhh! A Children’s Health Policy Blog

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

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

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

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.

Scroll to Top