New Law Boosts Medicaid Funding to States, Modifies Medicaid AMP Policy
On August 10, 2010, President Obama signed into law H R 1586, the Education Jobs and Medicaid Assistance Act. Among other things, the legislation provides an extra $16.1 billion in enhanced Medicaid matching funds to the states after temporary spending under the American Recovery and Reinvestment Act (ARRA) expires at the end of the year. Specifically, H.R. 1586 provides a 3.2% increase in the federal matching rate for all states (compared to the 6.2% rate currently in effect) for the period of January – March 2011, which is further reduced to 1.2% for April through June 2011. For the same six-month period, states with high unemployment also would continue to receive additional funding authorized by the ARRA. This increased Medicaid funding is offset in part by changes in Medicaid average manufacturer price (AMP) policy. Currently, the calculation of AMP excludes certain payments and rebates if received from or provided to entities other than retail community pharmacies. H.R. 1586 provides an exception to that exclusion for inhalation, infusion, instilled, implanted, or injectable drugs that are not generally dispensed through retail community pharmacies. This change is expected to save $2 billion over 10 years.
