Information technology (IT) systems are an essential tool in administering a modern state Medicaid program. This brief provides information regarding the Medicaid program functions that are supported by IT, details spending on the systems, discusses federal oversight of the systems projects, and highlights challenges for Medicaid IT systems.
The IT systems that support a state’s Medicaid program are known as Medicaid Enterprise Systems (MES). Generally, states use these systems for eligibility determinations and renewals; claims and encounter data processing; provider enrollment; health care quality measurement; value-based payment; pharmacy benefit management; fraud, waste, and abuse analysis; and other functions as needed by a state’s Medicaid program.
In fiscal year 2025, total federal and state MES spending was $9.0 billion. This was about 20 percent of total Medicaid administrative spending. While total administrative spending has grown steadily from 2010–2025, the increases in MES spending have been relatively flat since 2015. However, MES spending is expected to increase as states make investments in IT systems needed to implement various provisions in the 2025 Budget Reconciliation Act, including the community engagement requirements.