State Officials Raise Concerns Over Prescription Drug Reimbursements for Dual-Eligibles
State Medicaid administrators are concerned that the new Medicare prescription drug benefit will not reduce state drug costs as promised, according to several officials who attended a congressional forum on Friday with CMS Administrator Mark McClellan, CQ HealthBeat reports. Prescription drug coverage for dual-eligibles -- who are covered by both Medicaid and Medicare -- will shift from Medicaid to Medicare when the new federal benefit takes effect in 2006.
California Medicaid official Stan Rosenstein said his state will pay $215 million more in prescription drug costs in 2006 under the Bush plan for dual-eligibles despite promises of savings for states through clawback payments to the federal government. Under the clawback provision, states in 2006 will be required to pay the federal government 90% of the dual-eligibles' prescription drug costs. Since states previously paid all of those costs, the Bush administration says that they will save 10% on drug costs.
However, officials from a number of states said savings will not be realized because their clawback payments will be based on state outlays from 2003. Some state officials said they have reduced drug outlays since 2003 through cost-saving measures such as preferred drug lists, rebates and other tactics, so the 90% payment based on 2003 outlays will not accurately reflect current spending levels. They also said that rebates received in 2004 for 2003 outlays should be factored into the 2003 baseline for clawback payments.
Another concern for states is an inflation factor built into the clawback payment formula. Over time, state clawback payments will decline to 75% of prescription drug costs for dual-eligibles, but the inflation factor will limit savings.
Officials argued that states that have worked to cut dual-eligibles' drug costs since 2003 should not be subject to the clawback inflation factor.
McClellan responded that the states will save $8 billion over 10 years from the drug benefit, including savings for dual-eligibles and new coverage for retired state employees.
McClellan also responded to concerns over the administrative costs of enrolling people in the drug benefit, stating that matching payments will be provided to states (CQ HealthBeat, 3/4).