Health and Human Services Secretary Kathleen Sebelius has announced $4.3 billion in financial relief to states through reductions in payments that offset the cost of Medicare coverage for prescription drugs for Medicare and Medicaid eligible patients.
"We believe (the) action will help states as they struggle to maintain Medicaid and other budget priorities in these difficult economic times," said Sebelius. "This relief will help states continue to provide critical healthcare services to the nearly 60 million beneficiaries who depend upon it."
The temporary financial boost is from the American Recovery and Reinvestment Act of 2009 (ARRA). The law granted a significant increase in the amount states receive from the federal government to help pay for Medicaid programs (the federal medical assistance percentage payments or FMAP.)
Sebelius has reported that HHS will apply the ARRA increased FMAP to “clawback payments.” This 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.
The 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," Sebelius said.
The savings, which are retroactive to October 2008, will be deducted from what states would owe going forward.