The HITECH Act provides 100 percent federal funding for Medicaid meaningful use incentive programs and 90 percent for reasonable state administrative expenses. States must, at a minimum, demonstrate adequate administrative and oversight procedures, and promote adoption of certified EHR products and secure exchange of health information.
The Centers for Medicare and Medicaid Services has sent a 19-page letter to state Medicaid agencies. The letter gives guidance on developing state-level incentive programs for the meaningful use of electronic health records.
CMS in the letter urges states to implement their Medicaid EHR incentive programs as soon as possible in 2011 to benefit most from available federal resources, such as time-limited funding and technical assistance.
Here is an excerpt from the letter:
Dear State Medicaid Director:
This letter provides guidance to State Medicaid agencies regarding implementation of section 4201 of the American Recovery and Reinvestment Act of 2009 (the Recovery Act), Pub. L. 111-5, and our recently published regulations at 42 CFR Part 495, Subpart D. Section 4201, as well as our final regulations, will allow the payment of incentives to eligible professionals (EPs) and eligible hospitals to promote the adoption and meaningful use of certified electronic health record (EHR) technology.
The Recovery Act provides 100 percent Federal financial participation (FFP) to States for incentive payments to eligible Medicaid providers to adopt, implement, upgrade, and meaningfully use certified EHR technology, and 90 percent FFP for State administrative expenses related to the program.
The Centers for Medicare & Medicaid Services (CMS) issued a State Medicaid Director (SMD) letter on September 1, 2009, that provided guidance to States on allowable expenses for activities supporting the administration of incentive payments to providers. CMS has now promulgated final regulations that also govern State administrative expenses related to administering the program. Both the SMD letter and our regulations at 42 CFR section 495.318 explain that, in order to qualify for the 90 percent FFP administrative match, a State must, at a minimum, demonstrate to the satisfaction of the Secretary compliance with three requirements:
• Administration of Medicaid incentive payments to Medicaid EPs 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 health care quality and the electronic exchange of health information.
You can access the full guidance letter at