Issue Briefs | Jan 12, 2013

Financial Sustainability of Medicaid and Exchange Integrated Eligibility Systems: State Cost Allocation Methodologies

Center for Health Care Strategies – Veronica Guerra, Carolyn Ingram, and Shannon McMahon

This brief and companion chart, prepared by Center for Health Care Strategies, reviews cost allocation methodologies states use to determine how exchange development expenses are charged to different agencies. Through a review of Implementation Advance Planning Documents/Implementation Advance Planning Document Updates (IAPD/IAPDU) from California, Massachusetts, Minnesota, Nevada, Oregon and Rhode Island, the brief analyzes various cost allocation methodologies that can be used by other states in developing suitable methodologies for ACA compliant eligibility system integration efforts. The brief also provides examples of strategies used for validating and tracking costs included in the cost allocation plans. The methodologies included in this analysis have been reviewed and individually approved by the Centers for Medicare & Medicaid Services (CMS) after the state’s IAPD submission, and are consistent with the cost allocation principle requiring that methodologies produce an equitable result that is repeatable and based on valid recorded data. The models analyzed offer insights to aid states in developing appropriate methodologies that efficiently allocate costs, maximize federal contributions and ensure the long-term financial sustainability of the Exchange, Medicaid and other human service programs.