CMS sets rules on state stimulus payment systems

The Centers for Medicare and Medicaid Services will reimburse states for 100 percent of their payments to healthcare providers participating in the federal health IT stimulus program, according to a Sept. 1 letter from CMS to state Medicaid directors.

Moreover, state Medicaid agencies can immediately apply for 90 percent in federal matching funds to cover the initial planning that will be required to launch health IT incentive payment systems in their states, according to the letter from Cindy Mann, director of CMS’s Center for Medicaid and State Operations.

The letter and a package of supporting policy documents are the first formal direction CMS has provided state Medicaid agencies on how to manage the millions of dollars in incentive payments that will flow to healthcare practices under the federal stimulus law.

But federal financial support for state planning will not come without a hefty burden on state Medicaid agencies. According to the documents, CMS plans to keep a close eye on how states develop their incentive payment systems as well as how they mesh with other state health IT projects.

In order to receive the 90 percent administrative match, state Medicaid agencies must obtain from CMS an “HIT Advance Planning Document prior to initiating planning activities and expending funds.” States must receive prior approval of any initial planning eligible for the match, according to the letter.

CMS outlined a litany of state activities that could be eligible for 90 percent matching funds, including planning “for incentive payment delivery systems and audit tracking of payments to providers,” CMS said.

Work by states to set up “metrics and measures for providers to demonstrate meaningful use of electronic health records” would also be eligible for a match. So far, CMS has issued no guidance on how it plans to measure, account for, and verify payments that will be made to providers under the health IT stimulus plan.

States will also be on the hook for making payments to providers whose certified EHR software is incompatible with state and federal administrative management systems. “States risk making unallowable incentive payments prior to receiving guidance on how to make these systems compatible,” Mann said.  

Although the letter focuses on Medicaid, it notes that Medicare provider health IT incentives are also called for under the stimulus plan. CMS said it will be a “priority for these incentives to be coordinated in order to reduce confusion, improve administration, and maximize the ability to advance HIT across the health system.”

CMS will provide states with more guidance about planning and administrative expenses and will work with the states to determine when each is ready to start making payments, the letter said. CMS will detail the information in a proposed rule by the end of the year.

CMS is especially keen that state Medicaid agencies’  incentive payment management systems be linked to the states' overarching vision for health information exchange.

According to the letter, Medicaid offices will be required to submit a “State Medicaid HIT Plan,” or SMHP, describing “how it will integrate current and planned Medicaid HIT assets and fit within the larger State HIT/HIE roadmap,” the letter said.

“We expect the State to include in the SMHP their vision for Medicaid to become part of existing or planned Federal, regional, statewide, and/or local health information exchanges (HIE),” CMS said, “with projected dates for achieving objectives of the vision where appropriate.  

“State plans should build off of existing efforts to advance regional and State level HIE, facilitate and expand the secure, electronic movement and use of health information according to nationally recognized standards, and move towards nationwide interoperability.”

The 90 percent matching funds are in addition to matching funds rates that states now receive under current law for using state Medicaid claims processing and automated retrieval systems, referred to as the Medicaid Management Information System (MMIS).   

CMS expects that states to closely link their SMHP with these systems, as well as their work adhering to the Medicaid IT Architecture (MITA), an ongoing technology and business plan for Medicaid IT systems.

The MMIS contains a great deal of claims data and other information. “When combined with other systems and databases, [MMIS] can be of significant value in achieving the vision of using certified electronic health record technology to promote health information exchange, enhance quality and improve outcomes,” Mann said.

But CMS cautioned that states “should not begin implementation activities” related to their SHMP’s “until CMS issues future guidance on the Recovery Act HIT requirements or states risk not receiving (federal funding) for incentive payments due to non-compliance.”

CMS and the National Coordinator for Health IT will evaluate the states Medicaid health IT plans to make sure that planning activities are coordinated. CMS will publish more guidance in the near future on the review process, Mann said.

The letter to state Medicaid directors is at http://www.cms.hhs.gov/SMDL/SMD/ItemDetail.asp?ItemID=CMS1228276 .