Feb 19 2010
HHS Secretary Kathleen Sebelius today 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 relief will help states continue to
provide critical health care services to the nearly 60 million
beneficiaries who depend upon it.”
“We believe today’s action will help states as they struggle to maintain
Medicaid and other budget priorities in these difficult economic times,”
said Secretary Sebelius. “This relief will help states continue to
provide critical health care services to the nearly 60 million
beneficiaries who depend upon it.”
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 today, 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.
“In asking Congress to extend the increased FMAP in his 2011 budget
proposal, the President recognizes both the critical role Medicaid plays
in the health of our most vulnerable citizens and difficulties states
are experiencing given the economic downturn,” Secretary Sebelius said.
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.
http://www.hhs.gov/news.