CMS Answers to Frequently Asked Questions 
(09/10/2013) 
 
Eligibility for 90 percent Federal matching funds for health information exchange activities 
through the Medicaid Electronic Health Record Incentive Program. 
 
Under the CMS guidance for funding health information exchange (HIE) activities, what kinds of 
activities are eligible for 90 percent Federal matching funds (90/10) through HITECH 
administrative funding? 
 
Within the parameters set by State Medicaid Director (SMD) Letter #11-004 and SMD Letter #10-016, 
states may request 90/10 HITECH administrative funding for a wide range of HIE activities that support 
meaningful use. 
 
States may request this funding for two broad categories of their administrative activities related to HIEs: 
(1) on-boarding, and (2) design, development, and implementation (DDI) of infrastructure.  In this 
context, on-boarding refers to the states or HIEs activities related to connecting a provider to an HIE so 
that the provider is able to successfully exchange data and use the HIEs services; this funding cannot 
cover costs incurred by the provider or the vendor.  For more information, please see the later FAQ that 
specifically discusses on-boarding.  With respect to infrastructure DDI, CMS is able to provide matching 
funds for a variety of state activities that will enable providers who are eligible for the Medicaid EHR 
Incentive Program to meet meaningful use. If the requirements of SMD Letters #10-016 and #11-004 are 
met, CMS will provide funding for state administrative activities related to core HIE services (for 
example, designing and developing a provider directory, privacy and security applications, and/or data 
warehouses), public health infrastructure, and electronic Clinical Quality Measurement (eCQM) 
infrastructure. 
 
CMS recognizes that there are multiple types of HIE models emerging among the states, and will review 
each proposal individually. SMD Letter #11-004 outlines some of the characteristics that CMS 
encourages, but a state may provide justification for why an alternate model is more appropriate given the 
unique circumstances in that state.  CMS encourages interested states to reach out to their CMS regional 
HITECH contacts to discuss any proposed HIE funding requests prior to submitting an Implementation 
Advance Planning Document Update (IAPD-U) for HIE funding.  Please note that cost allocation and fair 
share principles are critical requirements outlined in SMD Letter #11-004, and so the state must ensure 
that its funding request complies with the principles outlined in the SMD letter. 
 
Under the CMS guidance for funding health information exchange (HIE) activities, is 90/10 
HITECH administrative funding available for staffing costs? 
 
Yes, but only in specific circumstances.  States may request time-limited HITECH funding for staffing 
costs related to on-boarding eligible Medicaid providers to the HIE or to building initial infrastructure. 
The staff may sit in the state Medicaid agency or the HIE itself, depending on the states situation.  Any 
staffing costs for on-boarding or infrastructure must be time-limited to ensure that the costs do not 
become operational in nature. When requesting HITECH funds to cover staffing costs, states should 
present a justification that describes how many eligible providers are anticipated to on-board to the HIE 
and the amount of staffing time necessary to on-board those providers or build infrastructure. 
  1  Please note that HITECH administrative funding will also be available for personnel that sit within the 
Medicaid agency itself and support only Medicaid providers.  However, the fair share and cost allocation 
principles outlined in the State Medicaid Director (SMD) Letter #11-004 still apply.  If those personnel 
work on other State Medicaid program activities that do not benefit the Medicaid EHR Incentive 
Program, then HITECH funds must be cost allocated between the Medicaid EHR Incentive Program and 
the Medicaid agency personnels other activities. 
 
What process should states follow to request funding for health information exchange (HIE) 
infrastructure under the Medicaid EHR Incentive Program? 
 
State Medicaid Director (SMD) Letter #11-004 and SMD Letter #10-016 indicate that states may request 
90/10 HITECH administrative funding for HIE infrastructure under the Medicaid EHR Incentive 
Program.  To request this funding, states must submit an Implementation Advance Planning Document 
Update (IAPD-U) using the approved template, which can be found at http://www.cms.gov/Regulations- 
and-Guidance/Legislation/EHRIncentivePrograms/Downloads/Medicaid_HIT_IAPD_Template.pdf.  In 
particular, the IAPD-U template Appendix D outlines all the information required for an HIE funding 
request. The HIE funding request may be submitted in a separate IAPD-U, or it may be included in an 
IAPD-U that requests other funding for the states Medicaid EHR Incentive Program. 
 
CMS asks that states reach out early to their regional CMS HITECH contacts if they are considering 
submitting an IAPD-U for HIE funding.  Given the complexity of an HIE request, along with the 
parameters set out in SMD Letter #11-004, CMS prefers to have one or more preliminary discussions to 
go over the states current IAPD landscape, the states technical model, and the states approach to 
meeting the fair share and cost allocation principles. 
 
What funding opportunities are available to states under the Medicaid EHR Incentive Program 
with respect to the on-boarding of providers to a health information exchange (HIE)? 
 
Under State Medicaid Director (SMD) Letter #11-004 and SMD Letter #10-016, states may request 90/10 
HITECH administrative funding to on-board providers that are eligible for the Medicaid EHR Incentive 
Program.  In this context, on-boarding refers to the HIEs activities involved in connecting a provider to 
the HIE so that the provider is able to successfully exchange data and use the HIEs services. This 
HITECH funding is available to cover an HIEs reasonable costs (e.g., interfaces and testing) to on-board 
eligible providersthat is, the costs incurred by an HIE to on-board a provider. This funding cannot 
cover the providers costs to supplement the functionality of providers specific EHR, nor can it cover the 
EHR vendors costs.  It is CMSs view that such on-boarding activities meet the criteria set forth in SMD 
Letter #10-016, Enclosure C. 
 
Funding for on-boarding must comply with the guidance in SMD Letter #11-004 with respect to the fair 
share principle and cost allocation.  However, funding for on-boarding can be used only to connect 
providers to the HIE if those providers are eligible for Medicaid EHR Incentive payments.  Because 
funding for on-boarding will not directly benefit parties who do not participate in the Medicaid EHR 
Incentive Program, the fair share principle will be satisfied without contributions from other payers.  All 
appropriate on-boarding costs can be cost allocated entirely to the 90/10 HITECH funding. 
  2  Please note that all Medicaid HITECH funding for HIE activities must enable Medicaid providers to meet 
meaningful use. 
 
Under the CMS guidance for funding health information exchange (HIE) activities, is HITECH 
funding available to states for the design, development, and implementation (DDI) of public health 
infrastructure? 
 
Yes, we encourage states to request 90/10 HITECH administrative funding for DDI of public health HIE 
infrastructure under the guidance provided in State Medicaid Director (SMD) Letter #10-016 and SMD 
Letter #11-004.  States may request HITECH funds to design, develop, and implement a public health 
HIE infrastructure that will enable providers to meet the meaningful use objectives related to public 
health (i.e., electronic lab reporting, immunization registries, cancer registries, specialized registries, and 
syndromic surveillance).  Please note that this funding for public health activities is available for states 
that plan to create an interface through their HIE to allow providers to submit data to public health 
departments through a single portal.  CMS encourages states to take advantage of this funding to create 
the functionality at the HIE level.  If providers who are not eligible for the Medicaid EHR Incentive 
Program will also benefit from this infrastructure, the states request must address the fair share principle 
and cost allocation.  CMS will only reimburse these costs at the 90 percent match rate to the extent they 
benefit the Medicaid EHR Incentive Program.  Other entities that contribute to the HIE must contribute 
their agreed-upon share. 
 
Please note that the allocation of costs to the Medicaid EHR Incentive Program may vary for different 
components of the public health infrastructure.  For example, the Medicaid EHR Incentive Program may 
benefit proportionally more from interfaces to an immunization registry than to a cancer registry. 
 
The public health landscape greatly varies among states, and CMS encourages interested states to reach 
out to their CMS regional HITECH contacts to discuss any proposed HIE funding requests prior to 
submitting an Implementation Advance Planning Document Update (IAPD-U). 
 
To allow providers to meet the view/download patient data meaningful use objective, may a state 
request funding for personal health records (PHRs) under the current guidance for requesting 
health information exchange (HIE) funding? 
 
Yes.  Under Stage 2 meaningful use, providers must provide patients the ability to view online, download, 
and transmit the patients health information.  CMS understands that for many providers, utilizing a PHR 
through a HIE will be the best way to achieve this objective.  As such, CMS allows states to request 
funding for PHRs under the Medicaid EHR Incentive Programs guidelines for requesting HIE funding. 
The parameters for this funding are outlined in State Medicaid Director (SMD) Letter #10-016 and SMD 
Letter #11-004, which emphasizes the fair share and cost allocation principles.  For a provider to use the 
PHR service via the HIE, the PHR technology would need to be certified as an EHR Module to meet the 
meaningful use objectives certification criterion. When reviewing a states request for PHR funding, 
CMS will consider how the proposed PHR solution affects the states entire HIE landscape and whether 
there are any other PHRs options in the state.  CMS expects any proposed PHR solution to support 
providers and stakeholders throughout the state, and not just those who are eligible for the Medicaid EHR 
Incentive Program.  This strategy will best promote sustainability by bringing in other payers and by 
avoiding the creation of silos. 
  3  Under the CMS guidance for funding health information exchange (HIE) activities, could a state 
use HITECH funds to develop and implement functionality to allow patients to download their 
claims and/or clinical data that is housed in the Medicaid Management Information System 
(MMIS), similar to the Blue Button program in the Department of Veterans Affairs? 
 
As  State Medicaid Director (SMD) Letter #10-016 makes clear, states cannot use HITECH administrative 
funds on activities that could otherwise be funded with MMIS matching funds. That includes activities 
related to developing and implementing functionality to allow patients to download their data that is 
housed in the MMIS, because states could potentially use MMIS funds to create this functionality for 
claims or clinical data that is housed within the MMIS.  It is CMS policy that MMIS funding is available 
for clinical decision support functionality that ties directly to the MMIS to reduce cost and improve 
outcomes.  See 42 CFR 433 Subpart C, and State Medicaid Manual Part 11.  Please note that MMIS 
funding would not be allowable for infrastructure outside the MMIS environment. 
 
Does a state have the option to utilize 90/10 HITECH administrative funding to update existing 
health information exchange (HIE) infrastructure to align with new federal HIE guidelines and 
requirements to exchange with Federal agencies? 
 
Yes, states can utilize 90/10 HITECH administrative funding to update existing HIE infrastructure to 
align with new Federal HIE guidelines and requirements to exchange data with Federal agencies.  For 
funding to be available for this purpose, the HIE infrastructure must be used to support Medicaid eligible 
providers in achieving meaningful use; for instance by supporting the achievement of the requirement to 
submit a summary of care record electronically for more than 10 percent of eligible transitions. 
 
Can a state use 90/10 HITECH administrative funding for the Medicaid EHR Incentive Program to 
upgrade existing Direct infrastructure to align with the Office of the National Coordinator for 
Health Information Technologys (ONC) Direct: Implementation Guidelines to Assure Security and 
Interoperability and/or requirements for exchanging with Federal agencies? 
 
Yes, states can utilize 90/10 HITECH administrative funding for the Medicaid EHR Incentive Program to 
upgrade existing Direct infrastructure, which supports eligible providers in achieving relevant meaningful 
use objectives, to align with ONC guidelines.  For instance, states could use the funds to move from a 
single certificate for a Health Information Service Provider (HISP) to certificates being issued to each 
health care related organization in a HISP or a more granular component of an organization (e.g., by 
department or by individual). 
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