DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850 
 
Center for Medicaid and CHIP Services 
 
CMCS Informational Bulletin 
  
 
DATE:  November 18, 2011 
 
FROM:  Cindy Mann, Director 
  Center for Medicaid and CHIP Services (CMCS) 
 
SUBJECT:   Tobacco Cessation Telephone Quitlines  
 
This Informational Bulletin provides further information about the quitline policy announced in 
the June 24, 2011 State Medicaid Director Letter on tobacco cessation services 
(http://www.cms.gov/smdl/downloads/SMD11-007.pdf), in response to questions we have 
received.  We hope that this will be helpful to States as they consider the opportunity to 
strengthen their tobacco cessation strategies for Medicaid beneficiaries.  
 
The June 24th letter recognizes costs associated with tobacco cessation quitline activities as being 
"proper and efficient" for the administration of the State plan under section 1903(a)(7) of the 
Social Security Act, to the extent the quitlines follow evidence-based Public Health Service 
protocols and directly benefit the Medicaid program.  Allowable quitline expenditures are 
claimable as administration at State option at the 50 percent Federal Medicaid matching rate 
specified at 42 Code of Federal Regulations 433.15(b)(7).     
 
Tobacco cessation quitlines involve specially-trained quit coaches who provide counseling, 
education and support to quitline callers who smoke or have recently quit smoking.  States have 
flexibility to design their own tobacco cessation quitline programs based on beneficiary needs, 
other existing resources, and available State funding sources.  We encourage the provision of 
comprehensive quitline activities where appropriate; however, allowable Medicaid 
administrative expenditures are limited to those directly related to implementing and operating a 
tobacco cessation quitline (e.g., personnel costs) and do not include costs related to tobacco 
cessation medications, either over-the-counter or prescription-based, that are dispensed through 
quitlines.  Medications may be covered under other authorities. 
  
States are currently required to cover over-the-counter and prescription tobacco cessation 
medications for pregnant women, and effective January 1, 2014 States will be required to cover 
prescription smoking cessation medications for all beneficiaries.  Before then, States have the 
option to cover medically necessary pharmacy services for other adults.  The smoking cessation 
medication must be prescribed and dispensed as a pharmacy service consistent with each States 
State plan and policies.       
If a tobacco cessation quitline serves Medicaid and non-Medicaid beneficiaries alike, States will 
need to have a cost allocation methodology in place to isolate costs that benefit the Medicaid 
program in accordance with OMB Circular A-87.  In order to properly allocate costs related to 
quitlines, States (or their contractors) can utilize a variety of methods; including, but not limited 
to: (1) a survey of callers to determine Medicaid eligibility, or (2) the calculation of a Medicaid 
eligibility ratio to determine the approximate percentage of Medicaid eligibles in the total 
universe of callers served by the quitline.   
  
We recognize that quitlines are often operated by independent vendors who have contracts with 
States.  If such contracts are with the State health department rather than the State Medicaid 
agency, States will need an interagency agreement between the two agencies in order for related 
costs to be claimed as Medicaid administration.  The costs of contracts with independent 
vendors, whether through interagency agreements or not, are typically included in the State 
Medicaid agencys Public Assistance Cost Allocation Plan (CAP) on file with the U.S. 
Department of Health and Human Services.   
  
We're also aware that independent quitline vendors have negotiated contracts with a number of 
Medicaid managed care entities.  Quitlines with managed care contracts are typically considered 
an expense of operating the managed care entity and are included in the capitation rate paid by 
the State Medicaid agency to the managed care entity.  In those instances, quitline costs would 
not be eligible for match in addition to the capitation rate.  States have the option, however, to 
carve out tobacco cessation quitline costs from the capitated rate and contract separately for such 
services as an administrative activity, in which case the quitline costs would be reimbursable.  
  
The effective date of this new administrative claiming policy, and the start date for the 
availability of FFP, is the date of issuance of the SMD letter; that is, June 24, 2011.  Allowable 
quitline expenditures should be reported on the Form CMS-64.10, Line 29 (Other Financial 
Participation).  
 
States do not have to submit an amendment to their State Medicaid plan in order to claim quitline 
expenditures as administration, although they may need to amend their public assistance CAPs, 
as discussed above.  We encourage States with questions regarding quitline activities to contact 
their Regional Office.   
 
Many States are moving ahead to create and strengthen their quitline activities with the benefit of 
federal Medicaid financing.  Please let us know if you have further questions or ideas for 
improvement.