On January 11, 2016, Acting Administrator for the Centers for Medicare and Medicaid Services (“CMS”), Andy Slavitt, highlighted investment in Medicaid as one of the “single biggest opportunities in the health care sector.” CMS estimates that over 30 states are currently redesigning their Medicaid eligibility or claims processing systems and anticipates that 2016 will be the most active year to date in the growing Medicaid IT industry. In a speech at the J.P. Morgan Annual Health Care Conference, Mr. Slavitt outlined CMS’s major regulations and initiatives to encourage investment in Medicaid technology systems. He indicated that these initiatives aim to update Medicaid technology systems to conform to proven IT-sector standards, and to increase opportunities for small vendors to develop solutions for Medicaid IT systems.

To further these goals, CMS has permanently extended the 90 percent federal match for investments in Medicaid systems.  CMS estimates that it currently  invests approximately $5 billion annually in state Medicaid IT. In return for this investment, CMS expects states to completely modernize and evolve their legacy Medicaid IT systems and to create systems that are modular, reusable, and utilize shared services.  By phasing out custom-developed IT systems, CMS believes small vendors will be able to develop focused solutions for use across multiple states.  This will expedite states’ IT timelines and decrease overall costs.  CMS has created a web resource allowing private sector companies to connect with states looking for innovative solutions on their IT systems.  This website can be found here.

CMS has stated they will issue a series of state guidance documents in order to initiate a new certification process for Medicaid system modules.  Additionally, CMS plans to issue a Request for Information asking the IT community how best to maximize CMS’s investment in creating efficient and effective solutions.  CMS seeks input from the industry, states, consumers and the private sector.