WASHINGTON – The Centers for Medicare & Medicaid Services has issued guidelines to state Medicaid directors regarding federal funding for the administration costs associated with Medicaid healthcare information technology initiatives.

The American Recovery and Reinvestment Act (ARRA) provides 100 percent federal financial participation to states for incentive payments to help eligible Medicaid providers adopt, implement, upgrade and meaningfully use certified electronic health record systems, and 90 percent for state administrative expenses related to the program.

In a letter dated Aug. 17, CMS listed the three minimum requirements for states to be eligible for the 90 percent administrative expenses:

• Administration of Medicaid incentive payments to Medicaid eligible providers and eligible hospitals;
• Oversight of the Medicaid EHR Incentive Program, including routine tracking of meaningful use attestations and reporting mechanisms; and
• Pursuit of initiatives that encourage the adoption of certified EHR technology for the promotion of healthcare quality and the electronic exchange of health information.

"CMS expects that states will take an incremental approach to the initial implementation of their Medicaid EHR Incentive Programs," wrote Cindy Mann, director of the Center for Medicaid and State Operations, in a letter to state Medicaid directors. "For example states may begin by focusing on provider outreach and registration, then on provider attestation and verification of eligibility, next on provider payments, and finally on capturing meaningful use data."

The letter also urged state Medicaid directors to look for ways to save money and avoid duplication as they administer their healthcare IT programs.

"CMS strongly encourages states to collaborate with other state-level and local partners in the design, development, and even procurement of systems needed to administer their EHR Incentive Programs," the letter states. "Doing so would make more effective use of both CMS' and states' share of the cost and would shorten the timeline for actually dispersing incentive payments to eligible providers."

CMS also warned of potential overlap with other federally-funded activities, such as provider outreach, development of a Master Patient Index and external inquiry management, "Where possible, these activities should be accomplished collaboratively," CMS states, "in which case costs are allocated across partners."