Medicare Part D Clawback Payments Projected to Increase by Almost $1 Billion in CY 2016

The Centers for Medicare & Medicaid Services (CMS) announced the parameters that will guide calendar year (CY) 2016 individual and state costs for the Medicare Part D drug benefit. CMS projects a 6.37% annual percentage increase in per capita Part D expenditures. After accounting for prior-year revisions, the annual percentage increase is 11.76%, the highest adjusted percentage increase since the program’s inception. In recent years, the Part D program has benefited from a slowdown in prescription drug costs, particularly as major specialty medications have lost their patent protection. With the availability of new specialty drugs, such as Hepatitis C drugs, this trend appears to be reversing. 

The release of the annual percentage increase, as well as enrollment data for persons dually eligible for Medicare and Medicaid, and FFIS projections of Federal Medical Assistance Percentages (FMAPs) for federal fiscal year (FY) 2017, allow for preliminary estimates of state clawback costs for CY 2016. Based on the projections, CY 2016 clawbacks are estimated to cost states $9.5 billion, almost $1 billion more than CY 2015.