TennCare outlines MMIS modernization, federal matches for IT and long-term maintenance costs
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Summary
TennCare informed the Finance, Ways, and Means Committee that the MMIS modernization project has been re-scoped following federal guidance and will transition from heavy implementation spending toward a maintenance phase matched at a lower federal rate.
TennCare's chief financial officer, Zane Seals, told the Finance, Ways, and Means Committee that the state's Medicaid Management Information System (MMIS) modernization is a major, multi-year technology project and that the agency has recently adjusted strategy after new federal flexibilities.
What TennCare said: Seals said the agency benchmarks its IT spend against comparable public- and private-sector entities and that TennCare's IT spending is a smaller share of its overall budget than many benchmarks. He described a recent federal shift that allowed Tennessee to move from a modular modernization approach to a wholesale replacement strategy, a pivot he said should lower out-year costs even though it postpones earlier completion estimates. An older completion date of January 2027 is now outdated, he said.
Federal match and recurring state funding: Seals explained the federal matching rules for Medicaid IT: implementation costs receive the highest federal match (cited as 90.10% in committee), while ongoing maintenance is matched at a lower rate (cited as 75.25%). Committee members noted about $102 million in state dollars had been counted toward MMIS investments in committee materials; Seals said the recurring state share for MMIS maintenance in the current plan is roughly $23.5 million per year.
Ongoing updates: Seals emphasized that even a new MMIS will require continuous updates because federal policy, eligibility rules and delivery models change annually. He described the MMIS modernization as a long-running program that will transition from implementation spending to maintenance and modular additions over time.
Why it matters: MMIS is central to claims processing, eligibility and provider payments. The projects scope, timeline and federal match rates affect both TennCare operational capacity and the state's budget planning.
Attribution: Remarks summarized here are attributable to Zane Seals (CFO) and to committee exchanges with Chairman Hicks and others during the Oct. 30 hearing.