CMS Announces New Initiative to Revalidate MES

The Centers for Medicare & Medicaid Services (CMS) has undergone significant changes in its certification protocols for Medicaid Enterprise Systems (MES) over the years. Changes have included transitioning from the Medicaid Enterprise Certification Toolkit (MECT) to a model that is more outcome-based, i.e., Streamlined Modular Certification (SMC). As a result, different states currently operate MES modules under various certification models.

On May 24, 2023, the CMS issued a Center for Medicaid and CHIP Services (CMCS) Information Bulletin (CIB) with the aim of harmonizing certification practices among states. This guidance, authorized by 42 CFR § 433.119, applies to states operating with 75% federal financial participation (FFP) for MES operations, which encompasses the majority of states. It mandates revalidation of MES modules under the SMC guidance in order to maintain funding levels.

The CMS’ objective is to validate compliance with relevant federal regulations, and outcomes outlined in states’ Advance Planning Documents (APDs). To achieve this, CMS will require APDs to be updated to include outcomes if needed.

The CMS reviews may be comprehensive or focus on modules that exhibited weakness in previous reviews. Modules that fail to meet state and federal regulations, as indicated by state operational reporting or metrics, may be prioritized for review.

The CMS will collaborate with states to determine the scope and timeline for reapproval, taking into account the potential flexibility in enforcement during the 14 month period as states unwind Public Health Emergency (PHE) requirements and transition from Medicaid Continuous Enrollment.

Compliance with SMC involves three main components, detailed in CMS’ SMC guidance. First, MES modules must adhere to the Conditions for Enhanced Funding specified in 42 CFR § 433.112(b)(1) through (22). Second, modules must align with defined outcomes that support Medicaid program priorities, as stated in the APD. Finally, states must define and submit reports containing metrics that demonstrate the achievement of the defined outcomes in module operations, as part of the annual Operational Advance Planning Document (OPAD) submissions.

If CMS identified noncompliance with the Conditions for Enhanced Funding either during the reapproval process or subsequent to certification, states will be required to submit a corrective action plan within 30 days of notification. This plan should address the identified issue and outline steps to resolve it. States may request 90% federal match for resolving issues. Failure to resolve issues within the timeline outlined in the corrective action plan may lead to a reduction in federal financial participation (FFP) from 75% to 50%. Once deficiencies have been rectified, states must request reapproval of the MES module.

The impact of this guidance will vary by state, depending on their current MES certification model. States that are undergoing certification or were recently certified may already be in the process of complying with SMC and may not experience significant changes. However, states operating under MECT/MEET or previous certification models will need to adopt SMC as outlined in the CIB. The specific details regarding the transition process must be defined through collaboration with CMS State Officers.

To proactively prepare for the CMS’ review, states should assess their current systems for risks, issues, and alignment with SMC. States should review the most recent APD for compatibility with SMC and modernization plans, consider plans for addressing any outstanding issues or alignment gaps with SMC, and engage in discussions with CMS State Officers to ensure a smooth transition.