Medicaid modernization: Four priorities for state directors

I recently participated in the Medicaid Enterprise Systems Conference (MESC) 2025 that brought together state Medicaid directors, technology staff and industry experts to explore the latest trends and innovations in Medicaid modernization. As Medicaid undergoes significant changes, driven by federal and state policy shifts, budget constraints and the need for more efficient operations, several key considerations emerged as critical for success. However, four key takeaways stood out to me as particularly significant.

Medicaid modernization strategies

The Centers for Medicare and Medicaid Services (CMS) is pushing for a more thoughtful approach to modernization, emphasizing beneficial changes for Medicaid programs and their stakeholders. This shift in perspective is crucial as states navigate complex legacy systems and explore new technologies. To achieve this, states should focus on improving customer-facing interfaces, such as user-friendly portals, mobile apps or responsive web experiences, by simplifying interactions and improving communication with members and providers.

By taking a closer look at their current systems and processes, states can identify areas where modernization can have the most significant impact. This involves assessing member and provider experiences, core business needs, system capabilities and team experience. Modern identity management services, system integration vendors and AI-based code refactoring can also be important in modernization efforts. They can make it easier, safer and faster to move systems.

The Alabama Medicaid Agency, for example, is developing and implementing various processes and solutions for their modernization program, including Enterprise Architecture and Business Process Modeling.

States should consider:

• Simplifying interactions to reduce administrative burdens and improve communication channels
• Identifying and prioritizing modernization efforts based on core business needs to streamline processes and improve both data management and analytics capabilities
• Assessing current system capabilities and technical debt, identifying areas for improvement and determining the need for new technologies or system integrations
• Understanding and addressing the team's technical expertise

Why state collaboration is the key

MESC 2025 showed how important it is for state Medicaid agencies to work together. States can benefit from sharing their experiences and problems, especially as new state leaders deal with the challenges of modernization.

The Medicaid Enterprise Advisory (MEA) Exchange is a collaborative forum that facilitates discussion among state Medicaid agencies, their partners and CMS. This group provides a platform for states to share ideas, best practices and solutions to common challenges, reducing the need to "reinvent the wheel." By participating in the MEA Exchange, states can gain valuable insights from peers who have faced similar challenges, thereby accelerating their own modernization efforts.

The MEA Exchange collaboration happens through a monthly call. Contact us to get involved with the group.

Leveraging AI for CMS template changes

CMS has introduced new templates for Advance Planning Documents (APDs), request for proposals (RFPs) and project status reporting to simplify reporting and facilitate comparisons among states. While this means more documentation for states, it also presents an opportunity to leverage AI for greater efficiency and accuracy.

AI can assist in summarizing data; categorizing and summarizing market research for analysis of alternatives (AoA); reviewing RFP requirements for duplication, gaps and inconsistencies; and associating enhancements in Implementation Advanced Planning Documents (IAPDs).

The State of Tennessee has streamlined the APD development process, using tools like content management, workflows and dashboard reporting. This process automates each phase, ensuring consistency and expediting APD development across multiple concurrent projects. The result is improved efficiency and quality in APD development.

States should consider:

• Getting familiar with the new templates and associated requirements
• Leveraging AI tools to streamline documentation processes
• Automating processes wherever possible to reduce manual effort and improve documentation quality

Benefits of AI adoption in Medicaid

The adoption of AI in Medicaid is gaining momentum, with a focus on careful and practical application. While AI has the potential to automate both tedious and complex tasks, it's essential to approach its adoption with caution. States should prioritize transparency, review AI-generated answers carefully and ensure that AI systems are used to support, rather than replace human judgment. By doing so, states can harness the benefits of AI while maintaining the integrity and accuracy of their operations.

TennCare is using AI to automate quality assurance for member notices, proactively identifying gaps and reducing manual workload. This approach delivers measurable results and sets a new standard for member services.

States should consider:

• Prioritizing transparency in AI adoption and reviewing AI-generated content carefully, ensuring humans are in the loop
• Implementing AI with a focus on practical applications that align to state-specific needs and priorities
• Evaluating AI effectiveness in their Medicaid programs continuously and adjusting as needed

By understanding these key considerations, state Medicaid directors and their technology staff can navigate the evolving landscape of Medicaid modernization. It will ease the adoption of new technologies and collaborative approaches to improve the efficiency and effectiveness of their programs.

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