HHS, USDA Provide Additional Details on Cost Allocation Flexibility

The Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) included a number of changes that affect Medicaid eligibility and require upgrades to Medicaid enrollment systems. 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 human services programs. To encourage states to develop more integrated eligibility determination systems, the departments of Health and Human Services (HHS) and Agriculture (USDA) announced in August 2011, 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), without having to share in the common system development costs.

On January 23, 2012, HHS and USDA released additional guidance to states on this exception, including examples of allowable shared services and more details on the process.