In addition to these technical requirements, CMS specified operational  requirements—known as critical success factors—to help states prioritize  the many changes that they were making to their eligibility systems to  comply with PPACA. For example, states running their own exchanges would  not need to implement the factor relating to sending and receiving  applications to and from the FFE. Nationally, States Reported Spending More Than $1.8 Billion to Replace or Modify Medicaid Eligibility It Systems

Reported spending of 90/10 funding across all 50 states and the District  of Columbia totaled more than $1.8 billion for Medicaid eligibility IT  system changes as of September 30, 2014, with the federal government  contributing more than $1.6 billion and states contributing about   $200 million. Similarly, the amount of spending reported for each quarter has also  grown steadily, with the most significant increases reported over the most  recent quarters. According to CMS, 34 states implemented full system  replacements, while 17 states implemented system modifications. Selected States Met Most Critical Success Factors, Often by Using Alternative Approaches

Officials from the selected states reported that they were largely able to  implement three critical success factors that applied to all states—the  abilities to (1) accept a single, streamlined application; (2) verify applicant  eligibility based on electronic data sources, such as the federal data  services hub; and (3) convert existing income standards to MAGI, and  process Medicaid applications based on these rules—by the beginning of  the initial open enrollment period, October 1, 2013. In some states, the use of these alternative approaches reflected unique  program aspects of states’ Medicaid programs or IT systems, as  illustrated by the following examples. While none of the 36 states using the FFE was able to establish  this connection by the first day of the initial open enrollment period, 22  states were able to do so at some point in October 2013, and were joined   The experiences in  by another 3 states by the end of December 2013.our selected states largely mirrored the experiences of states nationally. CMS officials noted that they continue  to work with these states to ensure implementation as soon as possible. CMS Modified Existing Monitoring Practices and Added A New Framework to Oversee Spending of 90/10 Funding

CMS’s oversight of states’ use of 90/10 funding largely mirrored—but  further modified—its existing oversight of states’ MMIS IT changes, which  are also eligible for a 90 percent federal match. To provide more timely  information on the amount of 90/10 funding that had been spent, CMS  implemented a new financial management process in 2013 to monitor  funding for Medicaid eligibility IT system changes each federal fiscal  year. The Department  also highlighted actions it has undertaken to expedite states’ access to  90/10 funding and to enhance its review of related state spending, among  other activities. In addition, HHS provided technical comments that were  incorporated, as appropriate. Appendix I: Total State Reported Spending for Medicaid Eligibility IT System Changes and Maintenance

The Centers for Medicare & Medicaid Services (CMS) expanded the  availability of an enhanced federal financial participation (FFP) matching  rate of 90 percent—which we refer to as 90/10 funding—to states’  expenditures related to the design, development, and installation of new  or improved Medicaid eligibility IT systems incurred from April 19, 2011,  through December 31, 2015.
Why GAO Did This Study

Medicaid eligibility IT systems play a key role in states' efforts to coordinate eligibility and enrollment processes for Medicaid, the Children's Health Insurance Program, and health insurance exchanges, as required by the Patient Protection and Affordable Care Act (PPACA). However, many states' eligibility IT systems were outdated and lacked the technical capacity to support such efforts. CMS expanded the availability of a federal financial participation matching rate of 90 percent (90/10 funding) to states for costs associated with such IT system changes. With these funds, CMS required states to implement certain requirements—known as critical success factors—by October 1, 2013.
GAO was asked to provide information on states' receipt and use of these funds and related federal oversight. This report examines: (1) 90/10 funding states have spent on eligibility IT system changes; (2) states' use of this funding to implement critical success factors, and whether any implementation challenges remain; and (3) CMS's oversight of this funding and related system changes.
GAO analyzed state-reported expenditures of 90/10 funding from June 30, 2011, through September 30, 2014; interviewed state Medicaid officials from six states, which were selected from states reporting the most expenditures of 90/10 funding; reviewed relevant laws, regulations and CMS guidance; and interviewed CMS officials.
In responding to a draft of this report, HHS concurred with our findings and provided technical comments that were incorporated, as appropriate.

What GAO Found

Reported spending across all 50 states and the District of Columbia totaled more than $1.8 billion for Medicaid 90/10 funds—funds for eligibility information technology (IT) system changes—through September 30, 2014. Spending has grown steadily, with the most significant increases over the most recent quarters. According to the Centers for Medicare & Medicaid Services (CMS), 34 states used 90/10 funds to implement full system replacements of their eligibility systems, while 17 states used these funds to implement modifications to their existing systems.
Using alternative approaches that reflected unique program aspects, selected states reported implementing most factors identified by CMS as being critical to enrolling individuals by October 1, 2013. However, the requirement that states transfer—send and receive—applications with the federally facilitated exchange (FFE) was the most challenging factor for states to implement, and none of the 36 states using the FFE was able to do so by October 1, 2013. One year later, 4 states remained unable to transfer applications one or both ways, but CMS continues to work with them to ensure implementation as soon as possible.
CMS modified its existing oversight to expedite states' access to these 90/10 funds and to enhance its review of state spending. CMS also followed a new practice for incrementally reviewing IT system changes. While selected states were not always clear on new requirements under the framework, they appreciated such timely reviews, enabling them to make technical changes throughout the process.