HHS, USDA Announce Cost Allocation Flexibility
On August 10, 2011, the departments of Health and Human Services (HHS) and Agriculture (USDA) issued a joint letter to notify states of a time-limited, specific exception to the cost allocation requirements in section C.3 of OMB Circular A-87. Specifically, the exception allows federally funded human services programs to benefit from the investments in state eligibility systems being made by state-operated Exchanges, Medicaid, and the Children’s Health Insurance Program (CHIP). This means that programs, such as Temporary Assistance for Needy Families (TANF), the Child Care Development Fund (CCDF), and the Supplemental Nutrition Assistance Program (SNAP), can utilize these systems without having to share in the common system development costs. However, these programs would still be required to pay for the costs associated with features that are relevant for human services programs only, as well as share in maintenance and operational costs.
HHS and USDA are making this change to encourage states to develop more integrated eligibility determination systems as they implement the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152). While extensive coordination and collaboration is required between Health Benefit Exchanges and Medicaid systems, many states are considering ways to coordinate system changes with the eligibility determination systems used for other programs. Many individuals who are eligible for Medicaid are eligible for other programs as well. Moreover, many uninsured individuals who will become eligible for health subsidy programs under ACA may already be receiving assistance under human services programs.