Issue Brief 10-43
October 20, 2010

The Medicare Modernization Act (MMA, P.L. 108-173) that established the Medicare Part D prescription drug program requires states to make cost-sharing payments to the federal government, commonly known as the “clawback.” As required by MMA, the Centers for Medicare & Medicaid Services (CMS) must notify states by October 15 of their per-beneficiary monthly clawback charges for the following year. The recent CMS release indicates that the slight increase in annual per capita Part D drug expenditures is more than offset by the statutory reduction in the state contribution, resulting in a net change of -1.72% in calendar year (CY) 2011. Despite this reduction, states will see an increase in their monthly clawback payments because of the phase-out and then elimination of the Federal Medical Assistance Percentage (FMAP) increases included in American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) that occurs in CY 2011.