Report: States to spend $380 billion on IT for Medicaid

In the coming year state Medicaid programs are expected to spend about $380 billion, or 22 percent of all state spending, on information technology, according to a report from business consulting firm INPUT (Source: “Medicaid to spent $380B on IT, consulting firm estimates,” Healthcare IT News, Aug, 22, 2008).

The influx in Medicaid IT spending is expected because 21 state Medicaid Management Information Systems have expiring contract over the next five years, giving vendors an opening to sell new technology. The authors of the study say the spending is nessesary, in part, because private ventures are not making enough progress on developing health information exchanges.

"State MMIS systems are primitive health information exchanges," said Kristina Mulholland, analyst for healthcare and social services at INPUT. "Since there has been a lack of major progress with private efforts in this area, the states and the Centers for Medicare & Medicaid Services will have to continue making the investments here. We've already seen this with CMS's Medicaid Transformation Grants."