DEPARTMENT OF HEALTH & HUMAN SERVICES  
Centers for Medicare & Medicaid Services  
7500 Security Boulevard, Mail Stop S2-26-12  
Baltimore, Maryland 21244-1850  
  
 
Center for Medicaid and State Operations  
  
 March 10, 2006                   SMDL #06-003  
 
Dear State Medicaid Director:   
  
I am writing to ask that you make every effort to cooperate with Medicare Advantage plans in their 
efforts to identify all dually eligible enrollees.  Your assistance will enable these plans to claim the 
appropriate capitated payment amounts for the care of dually eligible enrollees.  We also would expect 
State Medicaid programs to benefit from exchanging data on dual eligibles with Medicare Advantage 
plans.  For example, we would expect that this exchange of data would lead to increased coordination of 
benefit payments and enhanced ability to identify qualified Medicare beneficiaries.    
  
In light of the mutual benefits that can be realized, we encourage you to cooperate with Medicare 
Advantage plans.  Specifically, we would encourage State Medicaid agencies to accept and respond to 
Medicare Advantage plans finder files.  Finder files are batch eligibility inquiries that a Medicaid 
State agency can match to its beneficiary rolls.  By identifying certain individual identifiers, eligibility 
dates, and eligibility bases with respect to the Medicaid beneficiaries in the finder file, Medicaid State 
agencies will enable Medicare Advantage plans to claim the appropriate payment rate for their dual 
eligible enrollees.    
  
We understand several States are concerned about the permissibility of sharing eligibility data with 
Medicare Advantage plans under the Health Insurance Portability and Accountability Act (HIPAA) 
Privacy Rule and the Medicaid-specific privacy regulations found at 42 CFR section 431.300 et seq., 
and that those States are awaiting assurances from CMS prior to sharing these data.    
  
The Department of Health and Human Services Office for Civil Rights (OCR) recently issued a 
Frequently Asked Question (FAQ) addressing the permissibility under the HIPAA Privacy Rule of a 
State Medicaid agency and Medicare Advantage plan sharing protected health information in order to 
identify dually eligible individuals.  As explained in the FAQ, [t]he HIPAA Privacy Rule permits a 
covered entity to disclose protected health information (PHI) both for its own payment purposes, as well 
as for the payment purposes of another covered entity that receives the information.  Thus, consistent 
with the terms laid out in OCRs FAQ, State Medicaid agencies may accept and respond to Medicare 
Advantage plans finder files in order to identify dual eligible beneficiaries.  A copy of OCRs FAQ, 
which also may be found on the OCR Website at http://www.hhs.gov/ocr/hipaa/ , is enclosed.    
  
  
  
  Page 2  State Medicaid Director  
  
In addition, the CMS has concluded that the Medicaid-specific privacy regulations found at 42 CFR 
section 431.300 et seq. also allow State Medicaid agencies to respond to Medicare Advantage plan 
finder file eligibility inquiries, for the purpose of identifying dual eligibles enrolled in the Medicare 
Advantage plan.  Accordingly, we encourage you to work with the Medicare Advantage plans in your 
State to assist them in identifying all dual eligible individuals enrolled in their plans.  
  
If you have questions on anything discussed in this letter, please contact Ms. Ginni Hain, Director of 
CMSOs Division of Eligibility, Enrollment, and Outreach, at (410) 786-6036.    
 
Sincerely,  
  
/s/  
        
Dennis G. Smith  
Director  
  
Enclosure  
  
cc:  
  
CMS Regional Administrators  
  
CMS Associate Regional Administrators  
   for Medicaid and State Operations  
  
Martha Roherty  
Director, Health Policy Unit  
American Public Human Services Association  
  
Joy Wilson  
Director, Health Committee  
National Conference of State Legislatures  
  
Matt Salo  
Director of Health Legislation  
National Governors Association  
  
Lynne Flynn  
Director for Health Policy  
Council of State Governments  
  
  
  
   Page 3  State Medicaid Director  
  
Christie Raniszewski Herrera  
Director, Health and Human Services Task Force  
American Legislative Exchange Council  
  
Jacalyn Bryan Carden  
Director of Policy and Programs  
Association of State and Territorial Health Officials