Fee-for-Service HIE Policy

The Fee-for-Service Model

States may leverage the fee-for-service (FFS) model to promote HIE use among providers.  A state could determine, if appropriate, to pay providers that utilize HIE at a higher FFS rate than providers who do not, within applicable Federal payment limits.  The associated costs must be factored into the service rates and are not separately payable.  

Title XIX of the Social Security Act authorizes Federal financial participation for “medical assistance” to certain categories of covered individuals.  Section 1905(a) of the Act lists the services that are covered as medical assistance under the Medicaid State Plan, while section 1902(a)(30)(A) provides that the payment rates for those services must be consistent with efficiency, economy, and quality of care.  CMS considers service payment rates that take into account all of the costs directly associated with providing care to Medicaid beneficiaries, including costs associated with the use of HIE, to be generally consistent with section 1902(a)(30)(A) to the extent that those costs are not otherwise funded by Federal funding sources. 

CMS would need to understand the state’s measurable HIE metrics that would qualify and the process that the state would have in place to verify providers’ achievement of those metrics to become eligible for the higher payment amounts.  Further, CMS would need assurance that the higher payment amounts are not duplicating Federal dollars that already fund the same activities.  For instance, higher FFS rates would not be available to providers for HIE activities where the provider is receiving an incentive payment for the exact same HIE activities as part of meaningful use under the Medicare and Medicaid Electronic Health Records (EHR) Incentive Programs.