The level of state CIO involvement varies from state to state depending on organizational charts. Some agency CIOs report directly to their agency head and only on a dotted line to the state CIO.

“Some state CIOs may think, ‘Thank God there is a designated health IT coordinator to worry about these issues,’” said Greg DeBor, a client partner in Computer Sciences Corp.’s (CSC) health-care practice. “But nevertheless, they have to be aware of what is going on and familiar with it, because they are going to own this stuff in the end.”

CIOs should look at how telehealth and HIE investments tie into controlling Medicaid costs, even as the programs expand, Danis said. The most critical piece is how they ensure coordination between Medicaid, the Children’s Health Insurance Program and the planned HIEs.

Medicaid operations are divided into two traditionally siloed IT systems, one for eligibility and another — the Medicaid Management Information Systems (MMIS) — to handle claims processing. Danis said Keane is starting to see RFPs for solutions in which the eligibility system must be able to share real-time data with the MMIS and an HIE. “And some states are saying the MMIS of the future must be able to reach into the eligibility system to see who’s on Medicaid and who’s not, and to make sure that Medicaid is the payer of last resort,” he added. “That is a huge challenge for state CIOs.”

Medicaid CIOs Under the Gun

If state CIOs are feeling overwhelmed by the change of pace, the CIOs of state Medicaid agencies are feeling even more anxiety. Ivan Handler, CIO of the Illinois Department of Healthcare and Family Services, thinks about the HITECH Act and health reform every day. “We have to move on eligibility and enrollment,” he said. “We have to be prepared to handle a half million new Medicaid enrollees in 2014.” Illinois’ systems that handle Medicaid, the Children’s Health Insurance Program and Child Support Services were developed in-house more than 20 years ago.

“We have to upgrade everywhere, and we are doing planning activities around that,” Handler said, “but we cannot do five to seven separate technology initiatives at once to re-create our own infrastructure. Our staffing is down, and we cannot afford to buy applications in the traditional way.”

Handler is proposing a fairly radical revision to how his agency buys and supports software. “I want to look at acquiring business services hosted in the cloud instead of procuring and running our own systems.” He’s talking to software vendors and federal officials about possibly procuring those types of services. “I am going to beat the drum and see who starts dancing.”

Handler doesn’t see how the traditional method of procurement and management of these systems can work in an era that requires rapid deployment and greater interoperability — and when state budgets are being cut.  “I know people are under a lot of pressure with deadlines and financial issues,” he said. “It may be perceived as safer to do things the same old way, but I don’t think it is safer. I think the probability of failure is higher and the cost to the state will be greater.”

In Washington state, a consolidation of health agencies is being driven at least partly by the federal health reform agenda. “One interesting fallout of all the federal activity on health IT is that interaction between state agencies has become more of a necessity now and not optional,” said Rich Campbell, director of systems and monitoring, and Medicaid CIO for the Washington State Department of Social and Health Services. His agency is merging with the state Health Care Authority, which oversees seven health-care programs, including Basic Health, a state-sponsored program that provides affordable health coverage to low-income residents.

Campbell, who will be CIO for the merged organization, said there are opportunities for savings in shared infrastructure. “We are in a good place already with MMIS,” he said. Washington recently rolled out a system compliant with the federal Medicaid Information Technology Architecture, which has a Web service-oriented framework. “It will absolutely make it easier for us to be more flexible about how we share data,” Campbell said, also noting that eligibility is still handled by a legacy system. “A year and a half ago we looked at replacement, but because of funding issues, that was put on the back burner. Now as we move toward health insurance exchange planning, it’s doubtful that [the legacy] system will support it.”

To help CIOs like Campbell, the U.S. Department of Health and Human Services plans to offer an enhanced federal matching rate of 90 percent for the design and development of new systems and 75 percent for the maintenance and operation of Medicaid eligibility systems. But even that may not be enough. “With the budget situation in Washington state, it is difficult to come up with the 10 percent,” Campbell said. “We have to fight for that. Also, we have had staffing cuts, so maintaining the expertise and bandwidth to make change is becoming more difficult. And there is so much change so fast, it is hard to absorb.”

Creating HIE portals will challenge many states. Although two, Utah and Massachusetts, already have exchanges established. CSC’s DeBor worked as an adviser on the Massachusetts Health Connector, which launched in May 2007. “It was a challenge technologically, but also because it hadn’t been done before and there were things the law was vague about,” he recalled.

David Raths  |  contributing writer