Medicare Clawback Update: CY 2020 Savings, CY 2021 Estimates

This Issue Brief provides two updates on states’ clawback payments—the cost-sharing payments to the federal government for the Medicare Part D prescription drug program:

1. FFIS has updated calendar year (CY) 2020 clawbacks to reflect a 6.2 percentage-point increase in the Federal Medical Assistance Percentage (FMAP) included in the Families First Coronavirus Response Act. FFIS estimates $1.8 billion in state savings, with state payments falling from $12.5 billion to $10.7 billion.     
2. The Centers for Medicare & Medicaid Services (CMS) announced the parameters that will guide CY 2021 individual and state costs for the Medicare Part D drug benefit. CMS projects a 3.16% increase in per capita Part D expenditures. After accounting for prior-year downward revisions, the annual percentage increase is 2.85%. Based on the release, FFIS estimates that CY 2021 clawbacks will cost states $12.8 billion. This estimate is reduced to $10.9 billion if the FMAP increase remains in effect.