CMS eligibility systems guidance: "Good news" for Medicaid directors

Medicaid directors have been concerned that they would have to set up duplicative or "shadow" eligibility systems to distinguish between current eligibles and new eligibles under the Affordable Care Act (ACA), according to Tricia Brooks, a senior fellow at the Georgetown University Center for Children and Families in Washington, DC.

"A new CMS [Centers for Medicare & Medicaid Services] guidance solidly squashed speculation and fears," she says. "This is good news for state Medicaid directors."

The May 2011 CMS Exchange and Medicaid Information Technology Guidance 2.0 contains information for guiding development of the technology to be used for the exchanges, Medicaid and Children's Health Insurance Program (CHIP) coverage under the ACA, notes Ms. Brooks.

The ACA promises to transform public health coverage programs, including Medicaid, CHIP and subsidized coverage through the Exchange, into a consumer-focused, simplified, coordinated system of coverage options, she explains.

"The central player in this transformation is a state's information technology (IT) infrastructure," says Ms. Brooks. "The vision for these systems is to create a streamlined, paperless and real-time process whereby individuals apply on their own, or receive assistance from navigators, for coverage."

Despite the ability to deliver real-time eligibility decisions accessing trusted electronic sources of data such as the Internal Revenue Service and Homeland Security, says Ms. Brooks, some critical challenges remain.

CMS is investing significant federal funding to support the development of new Exchange IT systems and to upgrade or enhance Medicaid eligibility systems, she notes.

"This critical federal support — 100% for Exchange IT systems and 90% for Medicaid/CHIP systems is essential to delivering on the promise of health reform, particularly given the current state fiscal climate," says Ms. Brooks.

Additional guidance temporarily waives some requirements to allocate costs to other programs, such as the Supplemental Nutritional Assistance Program, for states that have integrated eligibility systems, says Ms. Brooks.

"This is a golden moment for states to seize an extraordinary funding opportunity to advance their aging systems," she says.

Many challenges remain

There are still certain challenges in converting to Modified Adjusted Gross Income (MAGI) and implementing other eligibility changes, says Ms. Brooks, such as eliminating the asset test for most people in Medicaid.

There must be a mechanism to distinguish between people who are newly eligible through the ACA, such as parents who meet current income guidelines but are not eligible due to a state asset test, and those who have been eligible but not enrolled, she explains.

Consistent, simplified eligibility decisions must be made in real-time, says Ms. Brooks, adding that the ACA aligns the rules for counting income and household size for subsidized premiums and reduced cost-sharing in the Exchange, as well as CHIP and most people in Medicaid.

The change to MAGI must ensure that children who are currently eligible and protected by the maintenance of effort provisions of the ACA remain eligible, says Ms. Brooks. "Thus, states will need to establish new effective gross income eligibility levels," she says. "These need to take into consideration that certain income disregards and expense deductions that states employ now will no longer be used in 2014."

CMS is working to address these changes, says Ms. Brooks, and issued a solicitation in June 2011 for a contract to help come up with a straightforward method of calculating newly eligibles for Federal Medical Assistance Percentages purposes and in determining effective eligibility levels.

"This will help states get beyond the concept of using 'shadow systems' to determine eligibility first one way, under the new rules, and then another under the old rules," she says.

Coming up with a methodology to address the challenges in converting to MAGI and simplifying the rules, is just part of the agency's effort to propel states forward, says Ms. Brooks. States will receive explicit guidance in how to use consistent standards in accessing data sources to verify eligibility, for instance, says Ms. Brooks.

"In the end, this will relieve states of the burden of re-inventing the wheel over and over again," she says. With a largely real-time, paperless system, individuals and families will be able to access coverage faster, says Ms. Brooks.

Even with the advanced state of technology, simplified and aligned rules, the ability to tap trusted sources of eligibility data, and strong technical assistance from CMS, she says, "the goals are ambitious and the clock is ticking."

Many states stand to save administrative costs dedicated to their current paper-driven, manual processes, adds Ms. Brooks. "This is not to say that everything will be smooth sailing ahead. These are complex systems that require much lead time to design, develop, test and deploy," she says. "I am optimistic that we'll get there, but probably not with a lot of time to spare."

Contact Ms. Brooks at (202) 365-9148 or