Federal Officials Confirm States May Lose Some Medicaid Drug Rebate Money

"The federal agency that oversees Medicaid confirmed Thursday that some money states receive as rebates from drugmakers will now be redirected to the federal government to help pay for the new health overhaul," Kaiser Health News reports. "However, federal officials said that states' losses would be offset by other changes in Medicaid, the federal-state health care program for low-income people. The health law increases the rebates that drugmakers must offer state Medicaid programs from 15.1 percent to 23.1 percent for most brand name drugs, and by smaller amounts for other drugs and generics. In the past, states and Washington shared those savings. But under the new law, Washington will keep all rebates within that 8-percentage-point range."

"State officials had hoped the federal government would interpret the law in a way that left their discounts untouched. But in a letter Thursday to state Medicaid officials, the federal Centers for Medicare and Medicaid Services explained, 'The amount of the savings resulting from the increases in the rebate percentages … will be remitted to the Federal government'" (Weaver, 4/22). 

The Associated Press/CNBC: Meanwhile, "[a] report from a liberal think tank says Indiana and other states are exaggerating their costs for expanding Medicaid under the federal health care overhaul. The Center on Budget and Policy Priorities says states' Medicaid costs from 2014 through 2019 will rise 1.25 percent over what they would have spent on Medicaid without the recently approved legislation. … A report for the state by Milliman, an actuarial consulting firm, found Indiana's Medicaid costs would increase $200 million through 2019 and go up by a total of $2.3 billion over the next 10 years… The center's report said those calculations were flawed (4/22).

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