The Joint Finance-Appropriations Committee approved $4 million in funding to readyIdaho’s Medicaid system for integration with an online exchange portal.

Most of the money, about $3.6 million in all, comes from a federal match program. The state is asked to pay 10 percent of the costs, or about $400,000 of the initial allocation.

The money approved Monday is a first for the process to ready Medicaid for the exchange, which is an online insurance purchase portal similar to Amazon.com. The Medicaid administration agency, the Idaho Department of Health and Welfare, says readying the state’s systems for the exchange will take at least $35 million in funding, mostly for technological support upgrades.

The department is being asked to introduce an entirely new function into the Medicaid system. Under the 2010 federal health reforms, states are being mandated to provide Medicaid eligibility evaluation in real time instead of a multi-day method, which has been used in the past. In order to achieve that, DHW needs to overhaul its computer mainframes and integrate with verification outlets, including the U.S. Department of Homeland Security for citizenship affirmation and the IRS for income confirmation.

The money approved Monday will be spent before the end of the fiscal year on June 30 if it clears the Legislature and is signed by the governor. The rest of the funding will be appropriated for fiscal year 2013.

The funds do nothing to create a state-based or federally run health exchange. While that debate is yet to be had in the Capitol, DHW is simply preparing for the integration.

Lawmakers are working under pressure from the federal government. While the readiness ofIdaho’s Medicaid system is part of the 2010 federal health care law,Idahocould also lose health care funding if the appropriate changes are not enacted.

That could represent a fiscal nightmare for the state if it happens.Idahois spending $436 million on Medicaid this year, a number the federal government matches 3-to-1. The federal government’s share of the Medicaid program is more than $1.2 billion this year.

The Senate and House health and welfare committee chairs support the funding, asking the budget committee to spend the money in Feb. 15 testimony before the panel.

The spending measure now heads to the House floor.

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