California Will Not Sue Over Medicare ‘Clawback’ Provision

California will withdraw from a proposed lawsuit against the federal government to challenge the "clawback" provision of the Medicare prescription drug benefit, Attorney General Bill Lockyer (D) announced Thursday, the Los Angeles Times reports (Los Angeles Times, 2/24).

Under the "clawback" provision of the drug benefit, Medicare will assume the prescription drug costs for dual eligibles, but states will have to pay the federal government as much as 90% of the estimated amount they would have spent on Medicaid coverage for medications for residents dually eligible for Medicare and Medicaid. The rate will decrease to 75% over time.

California would have lost $130 million over two years under the original calculation, but the administration of Gov. Arnold Schwarzenegger (R) said the state will save $60 million under a new calculation the Bush administration announced on Feb. 9 (California Healthline, 2/10).

HHS Secretary Mike Leavitt said states' clawback payments will be 25% less than previously anticipated through 2015 (California Healthline, 2/10).

Lockyer said the federal government has told state officials that California would not have to make payments to the federal government under the clawback provision (Los Angeles Times, 2/24).