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From Health Law Daily, December 15, 2014

Despite fast federal funding, one-stop shopping for Medicaid, federal Marketplace comes slowly

By Michelle L. Oxman, J.D., LL.M.

The availability of federal matching funds has helped states update and even replace their information technology (IT) systems for used to determine eligibility for Medicaid, but the goals of one-stop shopping and real-time information sharing between state agencies and the Health Insurance Exchange, or Marketplace (Marketplace) are a long way off. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) made matching funds at 90 percent available for states’ expenditures to develop information systems to accept applications for Medicaid and insurance through either the Medicaid agency or the Marketplace. This enhanced funding will be available through December 2015. The Government Accountability Office (GAO) found that as of October 2014, six states still could not exchange the necessary data with the federally facilitated Marketplace (FFM) (GAO Report, No. GAO-15-169, December 12, 2014).

Use of the funds. All 50 states and the District of Columbia (collectively, states) have used the funding to upgrade their systems, but progress has been uneven. Thirty-four states used the funds to replace their existing systems with a new system, while 17 made modifications. When the funding first became available in April 2011, only a few states were ready to use them, but their progress accelerated. By March 2014, all 51 reported expenditures, which totaled about $1.8 billion.

Streamlined enrollment system. The ACA was intended to operate with a streamlined enrollment system for all health care affordability programs, i.e., Medicaid, the Children’s Health Insurance Program (CHIP), and the subsidized private insurance available through the Marketplace. The information systems of the Medicaid and CHIP agencies and the Marketplace were to be able to communicate and transfer information so that applicants could begin the process at any of the agencies, and their information would be transferred seamlessly to the appropriate agency.

The FFM. The FFM was not capable of exchanging information with state agencies when open enrollment began on October 1, 2013. Seven states could send information to the FFM by the end of November, and 23 more could do so five months later. For many months, the FFM was able to send only “flat files,” which did not contain the complete application information. Still, six of the 31 states that use the FFM did not have functioning two-way exchanges of information necessary to verify Medicaid or CHIP coverage in October 2014. The lack of functionality contributed to delays in enrollment.

CMS’ oversight and administration. Some state officials told the GAO that CMS was slow to release its technical requirements; states that implemented the first set of standards had to make significant changes when CMS released the final standards. CMS expedited its review of advance planning documents, however, and reviewed states’ progress in stages, referred to as “gates,” rather than waiting until 60 days after the systems became operational. The agency also added line items to the CMS-64, the form used to report state Medicaid expenditures, and enhanced its review of the reports. The agency remains committed to helping states implement the upgrades completely.

Focus on six states. The GAO examined the extent to which each of the states met “critical success factors” designated by CMS, which included the ability to accept a streamlined application, verify income eligibility using electronic sources, convert the preexisting income eligibility standards to the Modified Adjusted Gross Income (MAGI) standards under the ACA, and coordinate with the Marketplaces, as applicable. The auditors focused particularly on six states that, together, had made about one-third of the expenditures of 90 percent matching funds. Four of them, Kansas, New Mexico, North Carolina, and Pennsylvania, depended on the FFM rather than establishing their own Exchange or partnering with the federal government.

Of the six, five successfully modified their systems to make MAGI-based determinations. Kansas’ new system was not online as of October 2014; it used CMS’ MAGI-in-the-cloud.

Real-time transfers. No state has achieved the goal of real-time transfers of information. Montana has come closest; it can transfer a file to the FFM in 15 minutes.

MainStory: TopStory GAOReports HealthReformNews MedicaidPaymentNews HITNews CMSNews

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