Strategies for Supporting and Strengthening Medicaid IT During the COVID-19 Crisis

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Editor’s Note: As states face the challenges of the COVID-19 crisis, information technology (IT) is an essential tool to support access to health coverage and the safe and effective evaluation, testing and treatment of patients. Under the current statutory and regulatory framework, state Medicaid agencies are authorized to receive federal funding for Medicaid IT and associated activities, much of it at an enhanced federal matching level (75% or 90% federal match).1

In an issue brief for the Robert Wood Johnson Foundation’s State Health and Value Strategies program, Manatt Health outlines potential IT investments in responding to COVID-19 and strategies for states to support these investments. The issue brief highlights the Medicaid authorities and the provisions that may allow states faster access to and more flexible use of funds in retooling their Medicaid delivery systems in this era of pandemic. Highlights of the brief are summarized below. Click here to download the full brief, including a detailed appendix of relevant guidance.


Long-standing federal statute and regulations authorize federal matching funds for automated data processing (ADP) systems for the state administration of Medicaid, the Children’s Health Insurance Program (CHIP) and human services programs, and establish the rules and process for states to request federal support of ADP systems.2 Additional federal statute and regulations govern Medicaid ADP systems—providing enhanced federal matching funds to state Medicaid agencies for Medicaid program administrative systems—and authorize enhanced federal matching funds to state Medicaid agencies for activities facilitating healthcare providers’ adoption of electronic health records (EHRs) and exchange of health information.3 The combination of these authorities may enable states to secure funding quickly for IT activities responding to COVID-19.

Review of Current Authorities

Medicaid Enterprise Systems (MES)

Section 1903(a)(3) of the Social Security Act allows states to receive enhanced federal funding for activities related to their Mechanized Claims Processing and Information Retrieval Systems—the IT that supports eligibility and enrollment (E&E system) and the array of Medicaid program management and administration functions.4 These systems are collectively referred to as a state’s MES. Under this authority, states may receive a 90% federal match for the design, development, installation or enhancement of these systems5 and a 75% federal match for their maintenance and operation.

Funds through this authority also can be used to support health information exchanges (HIEs). States may also potentially use this authority to support the implementation of application programming interfaces that allow patients to access their Medicaid claims and encounter information.6

Health Information Exchange

Section 1903(a)(3) of the Social Security Act also allows states to receive enhanced federal funding for the administration of the Medicaid EHR incentive program. States must demonstrate compliance with criteria articulated under the American Recovery and Reinvestment Act to qualify for these funds, including a requirement to pursue initiatives that encourage the adoption and “meaningful use” of certified EHRs and the electronic exchange of health information.7 In subsequent guidance, CMS specifically called out states’ abilities to access a 90% federal match for EHR and HIE promotion efforts with the caveats that state activities should be developmental and time-limited and that Medicaid should not be the sole or primary source of startup or operational funding.8, 9 This funding opportunity is available through 2021.10

How States Access Federal Funding

To receive (regular or enhanced) federal funding for IT systems or equipment for MES or HITECH initiatives, states must receive federal approval by submitting Advance Planning Documents (APDs) to CMS.11 These documents describe a state’s proposed use of federal dollars for Medicaid IT projects and demonstrate compliance with regulatory conditions and standards. Within approved APDs, before making a major expenditure for IT equipment and services (defined by dollar thresholds), states must submit acquisition documents (such as contracts) to CMS for prior approval.12 Without approval, states may spend (in total state and federal dollars) up to $500,000 and receive enhanced federal match, and up to $5 million and receive regular match. States may use the APD process to amend their budgets or timelines for implementation and may request expedited federal approval.

Using Medicaid IT to Address the COVID-19 Crisis

Below are Medicaid IT solutions that states could explore with CMS to leverage enhanced funding:

  • Update E&E systems and support state workforce. In response to the Families First Coronavirus Response Act, states may pursue changes to their E&E systems that would be eligible for enhanced federal funds for MES systems. States may need to enhance or update their systems to ensure the retention of covered individuals who were enrolled as of March 18, 2020 (a condition of receiving an increased federal match for most Medicaid expenditures for the emergency period).13 States also may need to update their forms, interfaces and system mechanisms if they elect to enroll uninsured individuals in coverage for COVID-19 testing and related services. Under both scenarios, states also will need to make plans to “undo” these E&E system changes and return their systems to standard operations, since the enhanced federal match and the authority for the optional eligibility group expire at the end of the public health emergency. In addition, states could use enhanced federal funds to expand call center capacity to support those seeking coverage or provide laptops or other technology to support remote working by state personnel.
  • Enhance and rapidly scale state telehealth technologies and infrastructure. States could leverage enhanced funding to procure new or upgrade existing hardware or software programs for telehealth. Enhanced federal match may be available for developing telehealth-enabling technology to be used by Medicaid providers. CMS has also indicated openness to considering purchase of telehealth-enabling equipment for provider use, so long as the equipment is loaned and eventually recovered by the state. Other avenues to explore with CMS are purchasing telehealth-enabling equipment for loan to Medicaid beneficiaries; expanding medical screening and triage tools to include screening for social interventions that support medically vulnerable individuals; or investing in technology infrastructure for connecting Medicaid programs, providers and beneficiaries to community-based organizations for social service referrals.
  • Deploy light EHR clinical documentation and reporting tools. Some states are rapidly building out temporary triage and testing facilities, tents and overflow sites. States may deploy lightweight clinical documentation tools that can be used to triage residents to a COVID-19 testing site, document symptoms, and order and report tests to a central county, state or healthcare agency. CMS guidance suggests that enhanced funding could support the incorporation of app-based technologies to help providers use EHRs.14
  • Expand information exchange capabilities. States could consider seeking enhanced federal funding for electronic lab results reporting to Medicaid and public health institutions; real-time alerts and notifications from hospital emergency departments to identify visits and admissions attributed to COVID-19; syndromic surveillance registries to help detect emerging health issues; and connection of providers to patient data through HIEs.15
  • Implement the Patient Unified Lookup System for Emergencies (PULSE) System. PULSE allows emergency healthcare workers to have direct access to patient information from all connected healthcare organizations. CMS announced that a COVID-19 iteration of PULSE (PULSE-COVID) supporting some immediate use cases is now available.16
  • Data integration analytics and reporting. State agencies building COVID-19 dashboards may access enhanced federal funding to integrate administrative claims and encounter data with lab results and clinical data. Claims data can be used to identify and target high-risk individuals for interventions. Predictive analytics services also can identify potential future hot spots and disease transmission trends. In addition, enhanced funding could be available to acquire or lease needed software for MMIS.

How States Can Seek Funding and Flexibility for Medicaid IT Solutions

States are in active dialogue with CMS to seek and exercise various flexibilities in Medicaid program policies and operations in responding to COVID-19. States will want to ensure this dialogue includes flexibilities for Medicaid IT systems and services.

Immediate Implementation Steps

  • Leverage flexibility for immediate spending under current APD. Within an approved APD, states have the ability to spend up to $500,000 (total computable) and up to $5 million (total computable) and receive enhanced and regular match, respectively, for IT investments and activities without first seeking federal approval. States will want to review their current E&E, MMIS and HITECH APDs to identify immediate modifications that could be made to respond to COVID-19. It may also be prudent for states to affirm CMS will exercise its flexibility to waive any reductions in federal match for failure to comply with federal E&E and MMIS performance standards and conditions.
  • Submit an As-Needed APD Update for approved APD requests. States will want to review current system funding, assess impact, and request additional funding or project extensions for an approved APD project whose implementation is underway by submitting an As-Needed APD Update to CMS. If a state has incurred, or is anticipating, any of the following changes as a result of COVID-19, it must submit an As-Needed APD Update to the federal government:

    - Projected cost increase of $300,000 or 10% of the project cost, whichever is less

    - Schedule extension of more than 60 days for major milestones

    - Significant change in the procurement approach or scope of procurement activities

    - Change in system concept or scope of the project

    - Change to the approved cost methodology

    - Change of more than 10% of estimated cost benefits17
  • Seek emergency expedited federal approval for near-term IT priorities. States will want to afford themselves the opportunity of the expedited approval of federal funding for IT equipment and services in emergency situations.18 In their request, states should:

    1) Demonstrate and document an immediate need to acquire the IT equipment and/or services to respond to COVID-19.19

    2) Describe the equipment and services to be acquired and an estimate of their costs.20

    3) Demonstrate that the funds could be reasonably spent within the duration of the emergency. CMS has indicated it uses a proxy of 90 days.21

Thinking Ahead: Future Implementation Steps

  • Secure current IT investments. As they look beyond the COVID-19 pandemic, states will want to ensure that they protect their Medicaid IT investments and access to enhanced federal funding. States will want to submit As-Needed APD Updates as necessary to acquire any needed federal approvals. In addition, if states are experiencing significant challenges in meeting MES performance standards and conditions, they may consider exploring compliance waivers to not jeopardize access to an enhanced federal match.22
  • Evaluate COVID-19 investments. States should evaluate their IT changes, considering which are permanent versus temporary. For those that are temporary, states should design the transition plans and secure the appropriate federal Medicaid IT funding for returning to pre-COVID-19 operations.
  • Secure new IT investments for the future. States will need to adapt to a post-COVID-19 landscape that may require significant changes to their Medicaid IT approaches. States could leverage the APD process to assess the needs of their health systems, providers and residents and design a plan for Medicaid IT transformation that helps fill gaps in care.

1 Social Security Act (SSA) § 1903; 42 C.F.R. Part 433, Subpart C; 42 C.F.R. Part 495.

2 SSA §§ 422; 430; 454A; 471; 1102 and 1902(a); 45 C.F.R. Part 95.

3 SSA §§ 1903(a)(3), 1903(r) and 1903(t).

4 42 C.F.R. 433.111(b)(1) An E&E system is the system used to process applications from Medicaid/CHIP applicants and beneficiaries to determine program eligibility, as well as change in circumstance updates and renewals. MMIS is used to process claims for Medicaid payment from providers and to perform other functions necessary for economic and efficient operations, management, monitoring, and administration of the Medicaid program. 42 C.F.R. 433.111(b)(2)(ii).

5 See 42 C.F.R. 433.112 and 433.116.

6 https://www.cms.gov/newsroom/fact-sheets/interoperability-and-patient-access-fact-sheet

7 Pub. L. 111-5, adding Social Security Act § 1903(a)(3)(F) and 1903(t).

8 https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/downloads/SMD11004.pdf. Administrative costs associated with maintenance and operations are matched at 50% FFP for HITECH.

9 https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/downloads/SMD10016.pdf

10 https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/downloads/SMD10016.pdf; https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/downloads/SMD11004.pdf

11 45 C.F.R. Part 95, Subpart F; 42 C.F.R. 433.112.

12 45 C.F.R. 95.611(a)(2), (b)(2), (c)(2) (defining thresholds for an enhanced federal match); 95.611(a)(1), (b)(1), (c)(1) (defining thresholds for a regular federal match). See also https://www.medicaid.gov/sites/default/files/federal-policy-guidance/downloads/smd16009.pdf.

13 Sections 6004 and 6008 of Families First, Pub. L. No. 116-127 (2020).

14 https://www.medicaid.gov/sites/default/files/federal-policy-guidance/downloads/smd18006.pdf

15 https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/downloads/SMD10016.pdf

16 CMS, COVID-19 Frequently Asked Questions (FAQs) for State Medicaid and Children’s Health Insurance Program (CHIP) Agencies (April 2, 2020), https://www.medicaid.gov/state-resource-center/downloads/covid-19-faqs.pdf.

17 45 C.F.R. 95.611(c)(2)(ii).

18 45 C.F.R. 95.624.

19 45 C.F.R. 95.624(a).

20 45 C.F.R. 95.624.

21 CMS Medicaid and CHIP All-State Call, April 14, 2020, accessible at: https://www.cms.gov/files/zip/covid19allstatecall04172020.zip.

22 See 42 C.F.R. 433.131; 433.112(b).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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