(1) Phased-down State contribution
(A) In general Each of the 50 States and the District of Columbia for each month beginning with January 2006 shall provide for payment under this subsection to the Secretary of the product of
(i) the amount computed under paragraph (2)(A) for the State and month;
(ii) the total number of full-benefit dual eligible individuals (as defined in paragraph (6)) for such State and month; and
(iii) the factor for the month specified in paragraph (5).
(B) Form and manner of payment Payment under subparagraph (A) shall be made in a manner specified by the Secretary that is similar to the manner in which State payments are made under an agreement entered into under section
1395v of this title, except that all such payments shall be deposited into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund.
(C) Compliance If a State fails to pay to the Secretary an amount required under subparagraph (A), interest shall accrue on such amount at the rate provided under section
1396b (d)(5) of this title. The amount so owed and applicable interest shall be immediately offset against amounts otherwise payable to the State under section
1396b (a) of this title subject to subsection (e) of this section, in accordance with the Federal Claims Collection Act of 1996
and applicable regulations.
(D) Data match
The Secretary shall perform such periodic data matches as may be necessary to identify and compute the number of full-benefit dual eligible individuals for purposes of computing the amount under subparagraph (A).
(2) Amount
(A) In general The amount computed under this paragraph for a State described in paragraph (1) and for a month in a year is equal to
(i) 1/12 of the product of
(I) the base year State medicaid per capita expenditures for covered part D drugs for full-benefit dual eligible individuals (as computed under paragraph (3)); and
(II) a proportion equal to 100 percent minus the Federal medical assistance percentage (as defined in section
1396d (b) of this title) applicable to the State for the fiscal year in which the month occurs; and
(ii) increased for each year (beginning with 2004 up to and including the year involved) by the applicable growth factor specified in paragraph (4) for that year.
(B) Notice
The Secretary shall notify each State described in paragraph (1) not later than October 15 before the beginning of each year (beginning with 2006) of the amount computed under subparagraph (A) for the State for that year.
(3) Base year state medicaid per capita expenditures for covered part D drugs for full-benefit dual eligible individuals
(A) In general For purposes of paragraph (2)(A), the base year State medicaid per capita expenditures for covered part D drugs for full-benefit dual eligible individuals for a State is equal to the weighted average (as weighted under subparagraph (C)) of
(i) the gross per capita medicaid expenditures for prescription drugs for 2003, determined under subparagraph (B); and
(ii) the estimated actuarial value of prescription drug benefits provided under a capitated managed care plan per full-benefit dual eligible individual for 2003, as determined using such data as the Secretary determines appropriate.
(B) Gross per capita medicaid expenditures for prescription drugs
(i) In general The gross per capita medicaid expenditures for prescription drugs for 2003 under this subparagraph is equal to the expenditures, including dispensing fees, for the State under this subchapter during 2003 for covered outpatient drugs, determined per full-benefit-dual-eligible-individual for such individuals not receiving medical assistance for such drugs through a medicaid managed care plan.
(ii) Determination In determining the amount under clause (i), the Secretary shall
(I) use data from the Medicaid Statistical Information System (MSIS) and other available data;
(II) exclude expenditures attributable to covered outpatient prescription drugs that are not covered part D drugs (as defined in section
1395w–102 (e) of this title, including drugs described in subparagraph (K) of section
1396r–8 (d)(2) of this title); and
(III) reduce such expenditures by the product of such portion and the adjustment factor (described in clause (iii)).
(iii) Adjustment factor The adjustment factor described in this clause for a State is equal to the ratio for the State for 2003 of
(I) aggregate payments under agreements under section
1396r–8 of this title; to
(II) the gross expenditures under this subchapter for covered outpatient drugs referred to in clause (i).
Such factor shall be determined based on information reported by the State in the medicaid financial management reports (form CMS64) for the 4 quarters of calendar year 2003 and such other data as the Secretary may require.
(C) Weighted average The weighted average under subparagraph (A) shall be determined taking into account
(i) with respect to subparagraph (A)(i), the average number of full-benefit dual eligible individuals in 2003 who are not described in clause (ii); and
(ii) with respect to subparagraph (A)(ii), the average number of full-benefit dual eligible individuals in such year who received in 2003 medical assistance for covered outpatient drugs through a medicaid managed care plan.
(4) Applicable growth factor The applicable growth factor under this paragraph for
(A) each of 2004, 2005, and 2006, is the average annual percent change (to that year from the previous year) of the per capita amount of prescription drug expenditures (as determined based on the most recent National Health Expenditure projections for the years involved); and
(B) a succeeding year, is the annual percentage increase specified in section
1395w–102 (b)(6) of this title for the year.
(5) Factor The factor under this paragraph for a month
(A) in 2006 is 90 percent;
(B) in 2007 is 881/3 percent;
(C) in 2008 is 862/3 percent;
(D) in 2009 is 85 percent;
(E) in 2010 is 831/3 percent;
(F) in 2011 is 812/3 percent;
(G) in 2012 is 80 percent;
(H) in 2013 is 781/3 percent;
(I) in 2014 is 762/3 percent; or
(J) after December 2014, is 75 percent.
(6) Full-benefit dual eligible individual defined
(A) In general For purposes of this section, the term full-benefit dual eligible individual means for a State for a month an individual who
(i) has coverage for the month for covered part D drugs under a prescription drug plan under part D of subchapter XVIII of this chapter, or under an MAPD plan under part C of such subchapter; and
(ii) is determined eligible by the State for medical assistance for full benefits under this subchapter for such month under section
1396a (a)(10)(A) or
1396a (a)(10)(C) of this title, by reason of section
1396a (f) of this title, or under any other category of eligibility for medical assistance for full benefits under this subchapter, as determined by the Secretary.
(B) Treatment of medically needy and other individuals required to spend down In applying subparagraph (A) in the case of an individual determined to be eligible by the State for medical assistance under section
1396a (a)(10)(C) of this title or by reason of section
1396a (f) of this title, the individual shall be treated as meeting the requirement of subparagraph (A)(ii) for any month if such medical assistance is provided for in any part of the month.
