Medicaid to spend $380B for health IT vendors should line up

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With contracts expiring for as many as 21 state Medicaid Management Information Systems (MMIS) over the next five years, state programs are expected to disburse $380 billion in the coming year for health IT enhancements, according to a new report published by market research firm Input.

According to the report, nearly 22 percent of all state spending will be on MMIS. Earlier this year, Input projected that state and local governments investments in MMIS and health IT improvements will reach $10.8 billion by 2012.

Using IT to modernize healthcare is likely to be the centerpiece of reforms at the state and local level and the new report suggested that “now is the time for vendors to push for health IT enhancements.”

"State MMIS are primitive health information exchanges," said Kristina Mulholland, analyst for healthcare and social services at Input. "Since there has been a lack of major progress with private efforts in this area, the states and the Centers for Medicare & Medicaid Services (CMS) will have to continue making the investments here."

She added that the industry has already seen such investments with Medicaid’s transformation grants. More than $150 million in Medicaid transformation grants were approved for distribution over the 2007 and 2008 fiscal years.

Input’s report projects that MMIS will become the center of gravity for IT supporting state health IT and e-health efforts. The Medicaid Information Technology Architecture (MITA) and the Medicaid Maturity Model (MMM) are also guiding the modernization of MMIS toward a flexible, quality-based orientation, however, these transformative tools and standards are only in the early stages, Input said.