Federal government gives states more than $4 billion to help with Medicare Part D 'clawback' costs

The Obama administration is granting $4.3 billion to states to help them offset the cost of Medicare drug coverage for those dually eligible for Medicare and Medicaid.

The relief helps states with the so-called clawback payment, which is the amount states pay to the federal government to offset some of the added expense to Medicare Part D of assuming drug costs for residents dually eligible for both programs. The government will offer the boost through an increase in the federal medical assistance percentage (FMAP). This temporary adjustment in the clawback payments will be applied for the period October 1, 2008 through December 31, 2010. 

“We believe today's action will help states as they struggle to maintain Medicaid and other budget priorities in these difficult economic times," Department of Health and Human Services Secretary Kathleen Sebelius said in a statement Thursday.