State to Receive $86 Million in Medicaid Relief

Obama Administration Reduces the Amount States Have to Pay to Offset Costs of Medicare Coverage for Prescription Drugs

OLYMPIA – Gov. Chris Gregoire today thanked the Obama Administration for providing Washington state with $86 million in financial relief. The funding is provided through a temporary reduction in the amount the state will have to pay to offset the costs borne by states associated with the federal Medicare Part D drug program:

“I am very grateful for this much needed financial support,” Gregoire said “While we’ve seen signs that our economy is stabilizing, many states like Washington are still struggling to ensure everyone receives the health care services they need and deserve.”

Health and Human Services Secretary Kathleen Sebelius announced the funding earlier today. The announcement is part of a nationwide action that will provide some budget relief to states in these difficult economic times.

“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.”

“I realize our recovery is going to take time, and will challenge us through the next biennium,” Gregoire said. “This funding will help rebuild our ending fund balance, and help protect us from making additional draconian cuts as we rebuild our economy.”

This temporary financial boost to states is made possible by the American Recovery and Reinvestment Act – which temporarily increased 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. 

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.