Medicaid Metamorphosis: Transforming Toward a Modular Future

Client Situation

In August 2016, the Centers for Medicare & Medicaid Services (CMS) introduced a transformative change to the procurement and implementation of Medicaid Information Technology (IT) systems by states. Despite the time that has passed, many State Medicaid agencies (SMA) are still diligently working to fully comply with this mandate.

With the release of State Medicaid Director (SMD) letter 16-010, CMS promoted a modular approach, introducing new possibilities for Medicaid Enterprise Systems (MES). The strategy involves packaging business processes or groups of processes into distinct "modules" with open interfaces. These modules can be easily integrated with each other, creating a more flexible and service-oriented architecture.

Yet, this newfound flexibility comes with its own set of challenges that many agencies are still grappling with today. The modular approach introduces a higher level of complexity, requiring meticulous planning, procurement, and implementation of the future-state MES. With more vendor and solution options entering the fray, careful planning and navigation is essential.

This case study highlights how North Highland collaborated with a SMA to develop a strategic plan for its MES transformation. Together, we navigated the complexities of the modular approach, optimizing its benefits while ensuring a smooth and successful implementation.

Our Approach

North Highland implemented a practical and comprehensive six-workstream framework to guide the SMA through a successful MES transformation journey. This approach was carefully curated, with each workstream and its deliverables providing valuable input for the next steps and outputs. The first three workstreams—Define, Assess, and Explore—formed the foundation for the strategy-setting process. Let's delve into each. 


During this workstream, we focused on establishing the desired future state and overall direction for the project. Through a collaborative process involving key stakeholders from the SMA, we helped the agency articulate its future vision.

To ensure alignment across all elements of the SMA’s strategy, North Highland developed a strategy map, capturing four key inputs:

  • Department mission
  • MES vision
  • MES goals
  • MES objectives

The strategy map provided an effective framework for capturing, communicating, and managing the strategy throughout the transformation. The resulting deliverable, the Medicaid Enterprise/Medicaid Management Information System (MMIS) strategy, presented a clear and concise vision of the desired future state. It set the direction for the overall MES procurement and implementation strategy, including well-defined goals and objectives, while considering constraints and dependencies. The strategy also established a conceptual model of the future MES solution. 

Guided by this strategy, the SMA's communications, decision-making, and subsequent activities fell into alignment. All stakeholders worked in unison, ensuring a focused and strategic approach to the transformation. The Medicaid Enterprise/MMIS strategy proved invaluable, empowering the SMA to confidently navigate the complex process of system modernization while aligning efforts with its vision for the future.


The Assess workstream evaluated critical inputs that then shaped the procurement and implementation strategy. North Highland conducted a comprehensive assessment across five key areas:

  • Technology
  • Business processes
  • Procurement
  • Funding
  • Governance

This assessment helped the SMA better understand the gap between its current state and desired future MES. Through a high-level gap analysis, we pinpointed areas for improvement and established a clear roadmap for the transformation. This informed the Current Capabilities and Asset Assessment deliverable, which provided a detailed understanding of the SMA's existing technology infrastructure, business processes, and organizational capabilities.


During this project phase, the primary focus was on providing the agency with crucial insights into healthcare technology trends and effective MES procurement and implementation strategies. The goal was clear: align with best practices and maximize the potential for success.

To achieve this, North Highland conducted a thorough Market Scan. This involved extensive research, leveraging both publicly available and premium sources, collecting state MES and MMIS procurement documents, and conducting interviews with CMS, eight Medicaid agencies, and 15 solution vendors. This comprehensive approach allowed us to identify industry trends and various state approaches to MES transformation.

Using the collected inputs, we crafted the SMA's procurement and implementation strategy. The Market Scan played a key role in ensuring that the SMA remains informed about the latest developments in healthcare technology and industry standards. Armed with this knowledge, it can confidently incorporate cutting-edge solutions into its MES transformation, setting the stage for a successful and forward-looking MES.

Value Delivered

North Highland's expertise and collaborative approach proved instrumental in empowering the SMA to make informed decisions, gain federal approval, and confidently plan the future of its Medicaid program.

Our systematic and collaborative approach laid a strong foundation for the SMA's successful MES transformation. By harnessing our Medicaid domain expertise and working closely with our federal partner, CMS, we provided the Department with a comprehensive set of Planning Phase artifacts. These artifacts will help steer communications, decision-making, and activities in subsequent project phases.

Our work with the SMA resulted in a well-defined strategy, complete with clear goals and objectives. Drawing on insights from a diverse range of stakeholders (e.g., business and IT subject matter experts, process owners, executive leadership, providers, partner agencies, other state Medicaid agencies, vendors, and CMS), we produced deliverables that described the SMA’s current state, market trends, and future vision—all fully aligned with its goals.

Equipped with this strategy, roadmap, and compelling business case, the SMA successfully secured the necessary funding and resources to turn its vision of a more adaptable and efficient Medicaid enterprise solution into a reality.

As a result of these successes, the SMA extended its partnership with North Highland. We are now helping implement comprehensive project management processes and providing additional services to support the SMA through the entire MES transformation journey. To date, we have supported the procurement and implementation of various modules, including Claims and Financial Management, Third Party Liability, Pharmacy Benefit Manager, System Integrator, and Electronic Visit Verification.

Image of person writing out work streams on sticky notes

The Three Key Phases


  • Establishing the desired future state and overall direction for the project
  • Developing a strategy map
  • Creating the Medicaid Enterprise/Medicaid Management Information System (MMIS) strategy


  • Evaluating critical inputs that shaped the procurement and implementation strategy
  • Conducting a comprehensive assessment across five key areas: technology, business processes, procurement, funding, and governance
  • Conducting a high-level gap analysis to pinpoint areas for improvement
  • Establishing a clear roadmap for the transformation
  • Creating the Current Capabilities and Asset Assessment deliverable to provide a detailed understanding of the SMA's existing technology 


  • Providing the agency with crucial insights into healthcare technology trends and effective MES procurement and implementation strategies
  • Aligning with best practices to maximize the potential for success
  • Conducting a thorough Market Scan
  • Crafting the SMA's procurement and implementation strategy


A Streamlined Approach to Modular Certification - Here's How to Be Ready

A Streamlined Approach to Modular Certification: Here's How to Be…

Modularity in Focus
White papers

Modularity in Focus

What's Next for State HHS Agencies

What's Next for State HHS Agencies?