On Thursday, HHS Secretary Kathleen Sebelius announced that the federal government would provide California with $675.4 million in budget relief by adjusting cost sharing formulas for the Medicare prescription drug benefit, the San Francisco Business Times reports (Rauber, San Francisco Business Times, 2/18).
The change will allow California to contribute a lower share to cover prescription drug coverage for residents dually eligible for Medicare and Medi-Cal, California's Medicaid program (Goldmacher, "PolitiCal," Los Angeles Times, 2/18).
California's budget assistance is part of the Obama administration's nationwide effort to forgive $4.3 billion in health care payments that states owe to the federal government (Zapler, San Jose Mercury News, 2/18).
Background
In 2006, the federal government incorporated elderly Medicaid beneficiaries into the Medicare prescription drug program. At that time, it required states to reimburse CMS for 90% of Medicaid recipients' costs.
Last year's federal economic stimulus package modified the formulas to reduce state shares of Medicaid costs. However, it did not apply the change to the Medicare drug benefit.
Assistance Details
The budget relief announced Thursday would apply the stimulus reimbursement rates to the amount states must pay to cover Medicare prescription drug coverage for Medicaid recipients (Yamamura, "Capitol Alert," Sacramento Bee, 2/18).
The new formula will be applied retroactively from October 2008 through the end of 2010 (San Francisco Business Times, 2/18).
Schwarzenegger Responds
Thursday's announcement comes one month after Gov. Arnold Schwarzenegger (R) requested $7 billion in federal assistance to help California close its nearly $20 billion budget deficit.
The governor in a statement said the budget relief demonstrates "that our bipartisan efforts for a more fair and equitable relationship with the federal government are paying off" (San Jose Mercury News, 2/18).
The governor also praised the efforts of Sens. Barbara Boxer (D-Calif.) and Dianne Feinstein (D-Calif.), who he credited with helping to secure the change ("Capitol Alert," Sacramento Bee, 2/18).