CMS guidance clarifies fed matching rates for state Medicaid IT systems

The Centers for Medicare & Medicaid Services has released guidance on federal matching rates for activities related to state Medicaid IT systems.

The guidance letter, from Vikki Wachino, director for the Center for Medicaid and CHIP Services, is in response to a final rule published by CMS in December that went into effect Jan. 1 that "extended enhanced federal funding for Medicaid eligibility and enrollment systems and revised the conditions and standards state Medicaid IT systems must meet to qualify for enhanced federal funding to better support Medicaid eligibility, enrollment, and delivery systems."

The guidance in Wachino's letter comprises input from state partners and other stakeholders. It includes, among other things, examples to clarify activities that would qualify for enhanced matching rates, which are 90 percent for design, development and installation (DDI) and 70 percent for maintenance and operations.

Examples of what would qualify for 90 percent enhanced rate of federal financial participation (FFP) include: Planning activities such as impact assessments, gap analyses and proof of concepts; interfaces and establishing connectivity; integration activities to interact with software solutions or apps; and configuration of COTS software, among others.

As for what would qualify for the 70 percent FFP rate, activities such as system maintenance, online portal maintenance and on-going software leasing or licensing apply.

In addition, CMS says it "promotes consideration of COTS products and [software as a service] solutions as options for states pursuing development of Medicaid IT systems leading to more efficient, economical, and effective State Medicaid Plan administration."

The letter also explains the guidelines for configuration and customization of COTS software, what the advanced planning document for incorporating COTS software should include and ownership and licensing rights surrounding COTS products.

CMS early last month updated guidance on the 90 percent matching rate for state expenditures related to promotion of health information exchange. Subject to CMS prior approval, states may be able to claim 90 percent HITECH match for expenditures related to connecting eligible providers to other Medicaid providers.

To learn more:
- here's the letter (.pdf)
- here's the final rule (.pdf)