States Could See Large Increases in CY 2022 Clawback Payments

The Centers for Medicare & Medicaid Services (CMS) announced the parameters that will guide calendar year (CY) 2022 individual and state costs for the Medicare Part D drug benefit. CMS projects a 5.36% increase in per capita Part D expenditures. However, after accounting for prior-year revisions, the annual percentage increase is 7.31%. This is a notable increase from relatively modest growth in recent years.

In addition, states may see even higher clawback costs in CY 2022 due to the potential termination of a temporary 6.2 percentage-point increase in the Federal Medical Assistance Percentage (FMAP) implemented in response to the COVID-19 public health emergency (PHE). While the exact end date of the increase is unknown, the Department of Health and Human Services (HHS) has indicated the PHE will remain in place through the end of CY 2021.

Assuming the temporary FMAP increase does not continue into CY 2022, FFIS estimates that CY 2022 clawbacks will cost states $14.8 billion, a 25% ($3 billion) increase from CY 2021.