CMS: Prescription drug program helps to slow Medicaid spending

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Medicare Part D has helped put the brakes on Medicaid spending, the Centers for Medicare & Medicaid Services said this week.

Federal outlays for Medicaid are expected to increase by only 1.8% in fiscal year 2006. The growth is less dramatic due in large part to the shift of many prescription drug costs to Medicare. Other reasons for the slowdown include: greater use of home- and community-based long-term care instead of nursing homes; waivers and other efforts to increase the use of private health plans; and other reasons.

But Medicare spending in FY 2006 has increased more than expected because of the costs of Medicare Part A, which covers hospital care, and Medicare Part B, which covers physician and other outpatient care. Still, CMS also lowered its five-year estimated cost for the Medicare prescription drug benefit.