New investment in Medicaid Management Information Systems (MMIS) by state and local governments will drive growth in annual spending on health IT, which is expected to go from $6.9 billion in 2007 to $10.8 billion in 2012, according to a study released yesterday by market research firm Input inc.
MMIS are a collection of both computerized and manual claims processing and information retrieval systems that most states are required to develop to manage and distribute Medicaid funds.
Input predicted the MMIS market will hit $4.1 billion in 2012, accounting for $2.6 billion of the annual growth in the health IT market of $3.9 billion. Overall the health IT market will expand at 8.6 percent annually, according to the firm.
“The rubber meets the road with MMIS,” said Chris Dixon, manager of state and local industry analysis for INPUT. “Medicaid spending is one of the two or three biggest ticket items in a state budget and it’s been the fastest growing pain point for states for some time.
“If you add in the sort of rolling budget crises that are popping up in states right now, it’s pretty clear that the first place they’re going to look to contain costs is Medicaid.”
Dixon noted that even though MMIS is not purely a health IT play, using IT to modernize the complex systems is likely to be the centerpiece of health care reforms at the state and local level.
To that end, the Centers for Medicare and Medicaid Services (CMS) awarded $150 million in “Medicaid Transformation Grants” to states last year. Three health IT categories -- e-prescribing, health IT and quality and health outcomes -- accounted for 79 percent of the funding awarded.
“We think that indicates the CMS has turned a corner in a pretty sudden and visible way towards health IT being almost synonymous with what they’re looking for in the way of Medicaid transformation,” Dixon said.
Twenty-nine of 36 vendor-operated MMIS systems are coming up for re-compete between now and 2012, according to Input. The remaining 15 states currently running the systems themselves could decide to outsource.
“MMIS and health IT are not often discussed in the same sentence, but I think the case we’re making here is that over the next five years, they’re going to have to be discussed if both state governments and vendors in this space want to be relevant to health IT,” Dixon said.
Health IT should be viewed as more than simply an electronic medical record system or an approach to cost containment, Dixon said. In the future, states will begin to explore ways to use business intelligence systems to analyze and manage health care costs and treatments more effectively.
“At a certain point, once you’ve outsourced to a high-volume process or you’ve eliminated as much waste, fraud and abuse as you can, states have got to start forward-thinking toward such health IT concepts as transparency and outcomes-based thinking,” Dixon said.
Government Health IT presents Rick Friedman, director of the division of state systems for the Center for Medicaid and State Operations with the U.S. Department of Health and Human Services, in this recent eSeminar regarding how the federal Centers of Medicare and Medicaid Services is partnering with state Medicaid and health and human services officials to bring Medicaid into the digital age. Paul McCloskey, Government Health IT editor, moderates.
