HHS Secretary Kathleen Sebelius announced $4.3 billion in financial relief to states by reducing the amount they will have to pay the federal government to offset the cost of Medicare coverage for prescription drugs for state residents eligible for both Medicare and Medicaid.
This temporary financial boost to states is made possible by the American Recovery and Reinvestment Act of 2009 (ARRA). That law granted a significant, yet temporary, increase in the amount states receive from the federal government to help pay for their Medicaid programs. The increase was to the federal share of Medicaid costs, referred to as federal medical assistance percentage payments (FMAP).
In a call with state governors, Secretary Sebelius reported that HHS will apply the ARRA increased FMAP to so-called clawback payments.
The clawback payment is the amount states pay to the federal government as required by the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). It is intended to offset some of the added expense to Medicare Part D of assuming drug costs for residents dually eligible for both programs. Prior to MMA, state Medicaid programs covered prescription drug costs for these beneficiaries.
Because Medicaid is a state/federal matching program, the higher FMAP under ARRA results in a temporary reduction of the states’ share of spending and therefore in their clawback obligation.
This temporary adjustment in the clawback payments will be applied for the period October 1, 2008 through December 31, 2010. In his 2011 budget, President Obama calls for the FMAP increase established in ARRA to be extended through June 30, 2011.
States make clawback payments monthly and CMS is currently reprogramming its billing system to calculate the new, reduced payments owed by states. The savings, which are retroactive to October 2008, will be deducted from what they otherwise would have owed going forward.
Texas
According to the CMS website, the state’s obligation under the pre-ARRA formula was $777,317,414 – with the newly calculated payment at $567,316,054 and the total estimated savings to the state is $210,001,360.
The complete release and table of all states can be found at: http://www.hhs.gov/news/press/2010pres/02/20100218c.html
