With potential budget cuts looming and increased scrutiny on Medicaid system compliance, this is the opportunity to be proactive in protecting millions in enhanced federal funding. The May 2025 Centers for Medicare and Medicaid Services (CMS) issued the State Health Official (SHO) letter, which is the latest regarding data reporting compliance. The letter focuses on the Transformed Medicaid Statistical Information System (T-MSIS) Data Quality compliance to increase the attention and priority given to data reporting and federal regulations compliance for Medicaid Enterprise Systems (MES) modules in operations to ensure continued enhanced federal financial participation (FFP). While State Medicaid Agencies (SMAs) are maneuvering through the evolving landscape of MES Certification to ensure modules are meeting federal certification requirements at implementation, they must also safeguard enhanced FFP for current module operational expenditures by demonstrating regulatory and data reporting compliance on an ongoing basis.

Within the last few years, CMS highlighted the importance of MES’s ongoing compliance requirements by issuing two important guidance documents:

• CMS Informational Bulletin (CIB), May 24, 2023: Medicaid Enterprise Systems Compliance and Reapproval Process for State Systems with Operational Costs Claimed at the 75 Percent Match Rate

Indicates compliance and reapproval for modules currently receiving enhanced FFP will be demonstrated through various key reports, evidence, and attestations submitted annually through the Advance Planning Document (APD) process. This process outlines how CMS determines whether an MES module is no longer compliant and must go through a reapproval process.

• CMS SHO letter, May 28, 2025: Data Reporting Compliance for T-MSIS

Informs the resumption of Data Quality (DQ) compliance through T-MSIS reporting beginning in September 2025, the data reporting support and tools provided by CMS, and that the MES Compliance and Reapproval Process (outlined in the May 24, 2023, CIB) will go into effect if DQ compliance deviates from requirements.

With this increased federal focus, organizations will need to examine their current MES enterprise structure supporting ongoing compliance, begin strategic roadmap planning, and implement program-wide module compliance monitoring. PCG’s Eclipse Certification & Compliance Services (ECS) can support SMAs with a clear assessment of how thoroughly they are prepared for CMS enterprise or module review and what changes are needed to ensure federal funding for the life of each modular solution. Using PCG’s ECS framework allows for a tailored approach, adaptable to an organization’s MES Certification and ongoing compliance needs and maturity, which includes:

1. MES Ongoing Compliance enterprise-wide program evaluation assessing alignment and oversight opportunities to determine a central standardized governance model
2. MES module systematic audit valuation of reports and artifacts produced for Conditions for Enhanced Funding (CEF) evidence and APD attestations
3. MES Ongoing Compliance roadmap design, including priority actions based on systematic audits and strategic planning for ongoing compliance activities at the enterprise level
4. Module program team engagement on MES Ongoing Compliance awareness, priority initiatives to improve or enhance reporting based on audit results, and roadmap planned activities, tracking, and assurances
5. MES Ongoing Compliance governance structure implementation to include program initiative tracking and issue resolution, standardized plans, and a central ongoing compliance documentation library

Learn more about how you can prepare for MES certification and ongoing compliance here.

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