CMS Allocates $3B To Help States Build, Upgrade Medicaid Systems

On Thursday, CMS released a proposed rule that would extend federal funding for state Medicaid eligibility and enrollment systems, Modern Healthcare reports.


In 2011, CMS increased the federal matching rate for state Medicaid eligibility and enrollment systems from:

  • 50% to 90% for money spent on building such systems; and
  • 50% to 75% for money spent on maintaining and operating the systems.

The higher federal matching rate was set to expire in December 2015, but CMS decided to make the funding permanent, according to Modern Healthcare (Dickson, Modern Healthcare, 4/20).

Details of Proposed Rule

In addition to extending the federal matching rate, the proposed rule would update standards for Medicaid eligibility and enrollment systems in an effort to help states improve customer services and continue to support the systems (CMS proposed rule, 4/16).

According to CMS, the net costs to the federal government for implementing the proposed rule would be $3 billion between fiscal year 2016 and FY 2025 (Modern Healthcare, 4/20). The proposed rule estimates that states’ net costs would decline by $1.1 billion (CMS proposed rule, 4/16).

As a result of the extended match rates, CMS expects:

  • 28 states to retire their legacy systems; and
  • Nine states that have updated their systems to continue to make improvements and upgrades.

CMS wrote, “We believe that most states have not had sufficient time to complete the total system replacement for… eligibility functionality.” It added, “Without ongoing enhanced federal funding, state Medicaid eligibility and enrollment systems are likely to become out of date and would not be able to coordinate with, and further the purposes of, the overall mechanized claims processing and information retrieval systems.”

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