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September 2015 St@teside

Financing Shared Administrative Functions between State-Based Marketplaces and State Medicaid Programs

State-based marketplaces (SBMs) were designed to serve as pathways to public and private health coverage, performing many cross-program functions that support access to both marketplace Qualified Health Plans (QHPs) and Medicaid. Such shared functions represent an opportunity for achieving savings through efficiencies, but, in doing so, states are required to properly attribute funding between programs through a process known as cost allocation. In exploring cost allocation, it is to a state’s advantage to take a broad view of Medicaid and SBM operations, focusing on statewide impacts rather than viewing the operations in silos.

This new issue brief, “Financing Shared Administrative Functions Between State-Based Marketplaces and State Medicaid Programs: Cost Allocation Methodologies,” prepared by the Center for Health Care Strategies with support from the State Health Reform Assistance Network, examines the mechanics of implementing cost allocation between Medicaid and marketplace programs. Targeted to state policy leaders interested in financing options for state-based marketplaces, it outlines:

  • potential shared administrative services between Medicaid and SBMs that may be cost allocated;
  • cost allocation methods between Medicaid and the marketplace; and
  • available federal Medicaid match funding to support shared administrative tasks.