Medicaid Expansion, Insurance Exchanges Taxing State Health Agencies

Dual deadlines for implementing new health insurance exchanges and enrolling Americans now eligible for Medicaid is leaving IT departments at state health agencies scrambling to update legacy systems while integrating them with new applications. Not surprisingly, some are opting for phased rollouts.

By John Moore
Thu, August 29, 2013

CIO — Medicaid is set to expand next year, and state IT departments are grappling with pressing deadlines, new eligibility rules and millions of potential applicants as they ready systems to accommodate the changes.

The expansion of government health insurance program stems from the Affordable Care Act (ACA), which seeks to expand Medicaid coverage to more low-income Americans. The revised program will include people under age 65 with incomes below 133 percent of the federal poverty level (FPL). The Congressional Budget Office and the Joint Committee on Taxation estimate that ACA will boost enrollment in Medicaid and the Children's Health Insurance Program by 13 million people over the next decade.

Medicaid is funded by federal and state governments, with each state administering its own program. States technology personnel are now prepping Medicaid systems for more enrollees and dealing with a new mechanism for determining Medicaid eligibility. The Modified Adjusted Gross Income (MAGI) methodology will provide a standard means test for all participating states. State eligibility determination systems will need to incorporate MAGI.

Related: Health Insurance Exchange Among Healthcare IT Trends for 2013

To top things off, states face a January 1, 2014 deadline for getting their systems in order. That's when Medicaid expansion goes into effect. Some states, however, hope to have enrollment systems operational in October, so people can begin applying for the new program. That same month, open enrollment is also scheduled to begin for state-operated health benefits exchanges, another component of ACA. The exchanges provide health coverage options for small businesses and uninsured people who don't qualify for Medicaid.

So Much to Do, So Little Time

In short, there's a ton of IT activity — and, according to some observers, not enough time to get everything done.

"States don't have sufficient time to meet the deadline and never did," says Rick Howard, a research director covering the public sector for Gartner and former CIO of the Oregon Department of Human Services.

As a consequence, most states building exchanges now plan for a soft launch of their insurance marketplaces, Howard says. This means they'll go live with scaled-back functionality and add capabilities over time.

"It may take another year or more of intense, iterative development before the exchanges, as well as new Medicaid/CHIP eligibility and enrollment systems, are stable and functioning with the rich set of capabilities needed to deliver a first-class consumer experience," he says.

The impact of Medicaid expansion varies. Some states have opted out of expansion. The 2012 Supreme Court decision on ACA upheld most of the law and also, in effect, left participation in Medicaid expansion up to the states.

The Advisory Board Company, a research and consulting firm with a healthcare focus, reports that 28 states are moving toward Medicaid expansion. For those participating states, the workload differs in terms of projected enrollment.

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