California, Four Other States To File Lawsuit To Block ‘Clawback’ Provision
California and four other states plan to file a lawsuit against the federal government that would seek to block CMS from billing states for the cost of prescription drugs for dual eligibles, the Los Angeles Times reports (Halper, Los Angeles Times, 2/2).
Under the "clawback" provision of the drug benefit, Medicare will assume the prescription drug costs for dual eligibles, but states will have to pay the federal government as much as 90% of the estimated amount that they would have spent on Medicaid coverage for medications for dual eligibles; the rate will decrease to 75% over time (California Healthline, 1/20). However, the states seeking to file the suit allege the federal government is overbilling them for the costs because of flaws in the formula for calculating the payments, according to the Times.
California Attorney General Bill Lockyer (D) said the states, including Kentucky, New Jersey, Missouri and Texas, will appeal directly to the U.S. Supreme Court to attempt to block the payments. Lockyer, who announced the plan in a letter to lawmakers, said the states plan to file the suit later this month.
According to the Times, at least 15 governors have said their states will spend more under the Medicare drug benefit through fiscal year 2006-2007 than they would have spent if they had continued providing prescription drug coverage to dual eligibles through Medicaid. In California, state officials estimate that by the middle of 2007, they will have spent $161 million more on providing prescription drug coverage under the drug benefit than they would have spent under the previous system.
California Gov. Arnold Schwarzenegger (R), who has endorsed the lawsuit, said, "Our state is poised to take action to ensure California does not pay more than its fair share."
State Controller Steve Westly (D) said California would not pay the bill from the federal government when it arrives this month. Westly spokesperson Yusef Robb said, "The controller is not going to cut this check," adding, "California is going to lead where Washington fails. We think changes need to be made." CMS spokesperson Gary Karr said, "Over the long haul, we believe the states will save money."
Karr said states' calculations of losses do not take into consideration the assistance that the federal government is providing for the costs of prescription drugs for state employees (Los Angeles Times, 2/2).