Modernization vs. Modularization: Understanding the Difference

Healthcare is changing rapidly, and technology is both propelling this transformation and struggling to keep up with it. 

Medicaid, and the healthcare safety net it provides to millions of Americans, sits at the same nexus of opportunity and challenge as the rest of the healthcare industry. Meeting the needs of members today and in the future — and in fact securing the sustainability of state Medicaid programs — will require the evolution of current technology systems. All stakeholders agree on this. However, there is no clear consensus on the best way to achieve modernization.

Following the First Movers

In recent years, modularity has been a common thread across the modernization efforts of the Centers for Medicare and Medicaid Services (CMS). The thought behind this is that dividing complex Medicaid management systems into separate, scalable components that address specific business functions will afford states greater cost savings, flexibility, vendor diversity and efficiency within their programs. However, experience has shown that modernizing through modular replacement is not the sole answer for states pursuing modernized Medicaid systems.

Evolving the Medicaid Enterprise

To support the dynamic nature of public health in the digital age, it’s necessary to embrace new ways of thinking and adapting technology. States are taking increasingly diverse approaches to evolving their systems for the outcomes they aim to achieve today and in the future. Some states are incorporating modularity into their existing systems. Others are making incremental, in-place enhancements to improve current care quality and access while maximizing resources for other initiatives that will benefit citizens in the long term.

Modernization efforts can be as extensive as a replacement of an MMIS business area with a fully modular solution or as small-scale as a new data interface, rules engine or user experience enhancement. 

As states journey to a more modern enterprise, here are two prevalent paths that have emerged.

Modernization Through Modular Replacement 

Modular replacement is a strategy that seeks to break up an MMIS system into individual, business-specific components to align with CMS’ original modernization vision: for states to move away from a single, monolithic system. Instead, a modular ecosystem could allow for greater innovation and flexibility in serving Medicaid members. 

The intention of this approach is to enable states to implement a modular claims and encounter processing system and then incrementally replace other adjacent Medicaid business functions. Discrete modules are loosely coupled together, working seamlessly to support the timely delivery of services and a more streamlined flow of information across programs. 

Modernization in Place 

Modernization in place is an alternate strategy that includes direct system enhancements to the current core system and involves the implementation of modular solutions around core MMIS functions. Incremental updates to an in-place system could include the adoption of completely new cloud-based technologies, an investment in advanced analytics and AI capabilities, or any number of performance and efficiency-enhancing measures that will drive states toward their desired business outcomes.

Modernization in place may be an appealing option for states looking to achieve near-term business value while sustaining their core claims and encounter processing operations as they build out their long-term technology roadmaps.

The Most Successful Modernization Approach

How states choose to modernize their systems is a decision that must be based on state-specific priorities, risk tolerance, desired outcomes, budgetary considerations, and the current and desired technical capabilities of their Medicaid systems. It is critical that these factors are evaluated carefully before a modernization approach is determined.

A complete overhaul of core MMIS functionality may indeed be required to deliver the benefits of the latest technologies. However, making strategic enhancements to current systems might be a perfectly acceptable solution to accelerate enhanced functionality.

Clearly, there is no one-size-fits-all approach. And while modularization can be a powerful solution, it isn’t the only solution. The most successful modernization approach for a state to take is one that is driven by its specific objectives for the programs it administers and the populations it serves.  

For a more in-depth look at Medicaid modernization, read our white paper, Modernizing Medicaid: An Outcomes-Based Roadmap.