The Center for Medicaid and State Operations of the Centers for Medicare & Medicaid Services (CMS) has sent a letter to state Medicaid directors providing guidance on Section 4201 of the American Recovery and Reinvestment Act (ARRA), which established a payment program for providers that become meaningful users of EHRs.

The ARRA amends the Medicaid Act to provide for 100 percent reimbursement of Medicaid incentive payments for providers to encourage them to purchase, implement and operate EHR technology.

The letter advised state medical directors that they:

1. May request – immediately – a 90 percent federal financial participation (FFP) match for administrative planning activities and should submit and receive approval for a health IT advance planning document before starting any planning activities and expending funds;
2. Remain in contact with regional CMS for guidance while initiating planning activities;

1. View Medicaid planning activities as part of larger evolving state health IT efforts; and

1. Understand that planning activities are for the purposes of administering the incentive payments to providers, auditing and monitoring such payments, and participating in statewide efforts to promote interoperability and meaningful use of EHRs.

The letter also said that state Medicaid agencies should be “cognizant of,” several areas of Section 4201, such as requirements that:

1. States must engage in a number of regulatory, policy and planning activities before they make payments to providers, such as ensuring the incentive payments are used for certified EHR technology and that it is compatible with state or federal administration management systems.

1. To receive the 90 percent FFP matching funds the state should develop a state Medicaid health IT plan describing the state’s Medicaid incentive program and how it will integrate current and planned Medicaid  health IT assets  “within the larger state health IT/health information exchange roadmap."

1. Prior to claiming enchanced matching rates for health IT administration expenses, states should be prepared to comply with CMS oversight activies, such as receiving prior approval from CMS for intial health IT planning, planning documentation and expenditure reporting.