Challenges Remain for Medicaid Eligibility IT Systems

While the Centers for Medicare and Medicaid Services has expanded the availability of federal funds to states for costs associated with changes to Medicaid eligibility IT systems, implementation challenges remain.

Through September 30, 2014, so-called Medicaid 90/10 funds for eligibility IT system changes—consisting of 90 percent federal match and 10 percent state share—totaled more than $1.8 billion, with the federal government contributing more than $1.6 billion and states contributing about $200 million. The Government Accountability Office reports that 34 states used 90/10 funds to implement full system replacements of their eligibility systems, while 17 states used these funds to implement modifications to their existing systems, according to data from CMS.

Government auditors interviewed state Medicaid officials from six states, which were selected from among those reporting the most expenditures of 90/10 funding. With these funds, CMS required states to implement certain requirements—known as critical success factors—by October 1, 2013. Officials from the states selected for the GAO review indicated that they were largely able to implement three critical success factors that applied to all states. But, auditors said states’ use of this funding to implement critical success factors has been historically lacking.

“The requirement that states transfer—send and receive—applications with the federally facilitated exchange (FFE) was the most challenging factor for states to implement, and none of the 36 states using the FFE was able to do so by October 1, 2013,” states the GAO report. “One year later, 4 states remained unable to transfer applications one or both ways, but CMS continues to work with them to ensure implementation as soon as possible.”

Some of the states that GAO reviewed cited evolving technical requirements from CMS as a challenge to their initial efforts to implement this critical success factor. For example, they indicated that CMS issued the initial technical requirements for application transfers in April 2013 and then final requirements two months later—about three months before the open enrollment period.

CMS oversees states’ use of 90/10 funding as well as the implementation of Medicaid eligibility IT system changes. To access the funds, states must first submit advanced planning documents to CMS, which reviews them to ensure that certain technical and operational criteria are met.

Medicaid eligibility IT systems “play a key role in states' efforts to coordinate eligibility and enrollment processes for Medicaid, the Children's Health Insurance Program, and health insurance exchanges,” note auditors. As a result of Affordable Care Act requirements, the Congressional Budget Office estimates that 12 million additional people could be enrolled in Medicaid and the Children’s Health Insurance Program by 2016.

However, many states' eligibility IT systems were outdated and lacked the technical capacity to support that enrollment level. Among the six states GAO reviewed, the prior Medicaid eligibility IT systems in five of the states were 20 to 30 years old.