February 25, 2010

States Get Fiscal Relief for Some Part D-Related Expenses

The Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA), which established the Medicare Part D prescription drug program, eliminated Medicaid prescription drug coverage for people dually eligible for Medicare and Medicaid (duals), and required all duals to receive their drug coverage through a Part D plan.  MMA also required states to reimburse the federal government for costs associated with the transfer of prescription drug coverage for this population from state Medicaid programs to Medicare.  The reimbursement to the federal government is known as the "clawback" payment.

Health and Human Services (HHS) Secretary Kathleen Sebelius announced on February 18, 2010, that HHS was providing an additional $4.3 billion in fiscal relief to the states by reducing the clawback payments for Part D costs.  The temporary adjustment applies to clawback payments for the period October 1, 2008, through December 31, 2010.   The funding comes from the temporary increase in the federal share of Medicaid costs that was included in the American Recovery and Reinvestment Act of 2009 (ARRA).

The HHS announcement includes a table that shows, for each state, the clawback amount before and after the application of the ARRA funding as well as the resulting savings. http://www.hhs.gov/news/press/2010pres/02/20100218c.html

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