DEPARTMENT OF HEALTH & HUMAN SERVICES 
Health Care Financing Administration  
 Center for Medicaid and State Operations 
7500 Security Boulevard 
Baltimore, MD 21244-1850 
April 21, 1997 
 
Dear State Medicaid Director: 
 
Recently, in various discussions on the implementation of welfare reform, States have expressed concern that possible Medicaid 
Eligibility Quality Control (MEQC) errors could be cited for eligibility decisions based on information obtained from the State Data 
Exchange (SDX). You should be aware that section 7264 of the 'State Medicaid Manual" provides that MEQC errors are not cited in 
cases where the State caseworker made an incorrect eligibility determination based on current but inaccurate information received 
from any primary source Federal agency using automated computer matching. A primary source agency is one which is the originator 
of the information. For example, the Social Security Administration is the primary source of information concerning SSI and RSDI 
benefits. This MEQC policy has been in effect since April 1994. 
 
This SMM provision originated from States complaints that information contained on the SDX was outdated in many cases, leading to 
MEQC errors cited during the Federal re-review. We revised the SMM (section 7264) to address this situation. Although we have 
ceased Federal MEQC re-reviews, we will maintain the policy that MEQC errors are not cited if the Federal agency provided 
erroneous information and the State requested the information correctly. For example, an aged alien loses Supplemental Security 
Income due to his immigration status. As part of the ex parte review, the Medicaid caseworker obtained from the SDX information 
that the beneficiary received a Title II benefit of $250 per month. Using this information, the caseworker determines the alien 
Medicaid eligible under another category. During the State's subsequent MEQC review, the reviewer learned that the beneficiary's 
Title II benefits were actually $300 a month at the time of the eligibility determination. Although the case is in error due to excess 
income, the reviewer would not cite an MEQC error since the caseworker relied on the latest information available from the SDX at 
the time of the eligibility determination.  
Page  2  State Medicaid Director 
 
Rather, the reviewer should forward a corrective action notice to the caseworker for proper and immediate attention. 
 
If the State has data available through client reporting or other means that are more accurate than current information available 
through a Federal primary source, the State should use its information in making eligibility determinations. 
 
If you have any questions on this matter, please contact Ms. Janet E. Reichert at 
(410) 786-4580. 
 
 
Sincerely,  
 
/s/ 
 
Judith D. Moore  
Acting Director  
Medicaid Bureau 
 
cc:  
 
All HCFA Regional Administrators 
All HCFA Associate Regional Administrators Division of Medicaid 
Lee Partridge, American Public Welfare Association 
Joy Wilson, National Conference of State Legislature 
Jennifer Baxendell, National Governors' Association 
Lloyd Bishop, Office of Legislation and Intergovernmental Affairs,  
HCFA