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Medicaid IT: Finally Ready to Move Out of the Dark Ages

For more than a decade, the feds have been pushing states to modernize their Medicaid management information systems so they could report comparable data. The effort is starting to pay off.

The federal government sends more than $400 billion every year out to states to fund Medicaid programs. It doesn't seem like it's too much to expect for Washington to know what it's getting for that kind of money.

But figuring out what states are doing — or at least comparing what different states are doing — has long been an impenetrable maze. There are variations in Medicaid policy in every state. And because states maintain different Medicaid management information systems, even collecting comparable data has been an impossible dream.

When members of Congress want to find out how Medicaid is performing nationwide in any given policy or program area, they can't be given apples-to-apples data from every state. At least, none that's more current than, say, information from 2012.

"The federal government has long been frustrated by its inability to say definitive and timely and relevant things about all 50 state Medicaid programs," says Matt Salo, executive director of the National Association of Medicaid Directors. "On some level, it's untenable in the long run."

Things are starting to change. For more than a decade, the federal Centers for Medicare and Medicaid Systems (CMS) has been pushing states to upgrade their Medicaid IT systems. The feds want states to break their enormous systems into separate units that can be updated more quickly and easily. They also want states to move systems to the cloud and to make greater use of private vendors.

Most of all, they want states to be able to collect and report comparable data. The number of major categories that CMS expects states to be able to report on in such a way will double this spring.

The feds want all this so much that they're willing to pay for it, or at least most of it. Washington now pays 90 percent of Medicaid IT upgrade costs, which is a higher share than it pays for Medicaid administrative costs generally.

There isn't a state Medicaid program that doesn't support the federal goals, at least in theory. Some even describe them as "noble." But there are still hurdles toward meeting those goals. Upgrading and modernizing Medicaid management information systems has been a difficult process that drags on for years. Finishing the job will take yet more years to come. "It's a reasonable request on CMS' part," says Emily Blanford, a health policy expert with the National Conference of State Legislatures, "but getting there has been really tough."

States' Extreme Variability

It often comes as a surprise to find out exactly how old many government IT systems are. People are shocked to learn, for instance, that in some states voting machines are now old enough to drive. When it comes to Medicaid, some states have systems that are old enough to have children who are old enough to drive. "There are still states out there that have Medicaid payment systems that were built in the '70s," says Steven Westberg, business information systems manager at the Oregon Health Authority.

These are complex systems that have to handle dozens of separate processes on a massive scale — patient eligibility, provider enrollment, benefit management, fraud detection, and on and on. Creaky old computers are always being asked to do something more — meld with other assistance programs, for instance, to automatically sign up Medicaid recipients for food stamps.

When the federal government wants information about any or all of that, it has to contend with the fact that over time each state has developed its own ways of keeping track of things. "We've been given a list of fields and definitions of fields that they want pushed back to them on a routine basis," says Caprice Knapp, medical services division director for the North Dakota Department of Human Services. "Even though they've provided some pretty standardized definitions, locally we have our own codes."

It's not just that states code things differently. Their Medicaid programs do entirely different things. Not every state has expanded Medicaid under the Affordable Care Act, for example. Some states are imposing work requirements on Medicaid recipients. Some states run entirely fee-for-service programs, while others are 100 percent managed care.

State Medicaid information systems were generally built to allow states to figure out how their own programs are performing over time, not to offer comparisons with other states. "The very nature of Medicaid is that there is extreme state variability in terms of everything — who is covered, what benefits are covered, how care is delivered, what are the metrics to define success," Salo says. "The extreme variability is a feature, not a bug."

Moving to the Cloud

The federal government has been prodding states to upgrade their Medicaid information systems since 2006. By that time, some state systems were already 30 years old, in many cases predating widespread use of the Internet. Now, nearly half as much time has passed again.

States are making progress. Washington and Wyoming, for example, are among states that have moved or are in the process of moving their entire systems to the cloud. Getting there isn't easy, but once the move is accomplished things are done more efficiently and it's easier and cheaper to make incremental upgrades. Changes that used to take years can be accomplished in a matter of months.

Wyoming's system now has eight separate components — a fraud, waste and abuse system, a pharmacy system, a benefit management system, and so on. Despite splitting things up, the state's Medicaid system as a whole should be less siloed than it was before because all the various elements are feeding information into a single data warehouse.

"We're hoping to speed up provider enrollment and offer better customer service," says Jesse Springer, Medicaid technology and business operations unit manager at the Wyoming Department of Health. "Each of these approaches has its own benefits. Some create internal efficiencies, some lead to actual savings."

Still, states face a challenge akin to changing horses midstream. Even as they're trying to build entirely new systems, they're having to reconfigure their legacy systems to be able to extract the kinds of data that the feds want. "It's probably going to be a seven- to 10-year project, by the time you plug all the pieces together," says Westberg, of the Oregon Health Authority.

Learning from Each Other

The states are all at various stages in terms of modernizing their Medicaid systems. The good news is that, because their neighbors are going through the same thing, they can learn from each other. Nevada, for instance, has studied Colorado's dozen-year upgrade carefully. Illinois and Michigan have been working to design a new Medicaid IT system together. "The nice thing is that states are not in competition with each other," Springer says. "We can share and borrow work from each other. That's encouraged."

It's never quite as simple as one state plugging in changes from its neighbor, however. Again, each state's underlying Medicaid policies are different. "Nobody does anything the same," says NCSL's Blanford. "It seems like an IT system should have interoperability, but everyone has little things you have to catch, so then it's custom and more expensive."

As soon as you have to make changes, you can end up setting off the whole cycle of planning, then funding and procurement, and then contracting and implementation. But more than the programming hassles, states are worried that moving increasingly to common standards and reporting means they could ultimately lose some of the flexibility that allows them to tailor Medicaid to fit their own needs.

The twin problems of upgrading antique systems and making sure each state retains program flexibility have made the Medicaid IT upgrade a generational effort. But states are at last getting closer to giving the feds what they want.

In so doing, they're finding that it's useful for them, also, to have a better sense of what's happening in other states in terms of actual Medicaid delivery. "The eventual goal is to be able to benchmark states against each other," says Westberg, the Oregon Health Authority manager, "and find out if there are more effective ways of doing things, so we can learn from what other states are doing."


Alan Greenblatt is a senior staff writer for Governing. He can be found on Twitter at @AlanGreenblatt.
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