SPECIAL PROVISIONS RELATING TO MEDICARE PRESCRIPTION DRUG BENEFIT
Sec. 1935. [42 U.S.C. 1396u-5] (a) Requirements Relating To Medicare Prescription Drug Low-income Subsidies Medicare Transitional Prescription Drug Assistance, and Medicare Cost-Sharing.—As a condition of its State plan under this title under section 1902(a)(66) and receipt of any Federal financial assistance under section 1903(a) subject to subsection (e), a State shall do the following:
(2) Eligibility determinations for low-income subsidies.—The State shall—
(B) inform the Secretary of such determinations in cases in which such eligibility is established; and
(3) Screening for eligibility, and enrollment of, beneficiaries for medicare cost-sharing.—As part of making an eligibility determination required under paragraph (2) for an individual, the State shall make a determination of the individual’s eligibility for medical assistance for any medicare cost-sharing described in section 1905(p)(3) and, if the individual is eligible for any such medicare cost-sharing, offer enrollment to the individual under the State plan (or under a waiver of such plan).
(4) Consideration of data transmitted by the social security administration for purposes of medicare savings program.—The State shall accept data transmitted under section 1144(c)(3) and act on such data in the same manner and in accordance with the same deadlines as if the data constituted an initiation of an application for benefits under the Medicare Savings Program (as defined for purposes of such section) that had been submitted directly by the applicant. The date of the individual’s application for the low income subsidy program from which the data have been derived shall constitute the date of filing of such application for benefits under the Medicare Savings Program.
(c) Federal Assumption Of Medicaid Prescription Drug Costs For Dually Eligible Individuals.—
(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 1843, 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 1903(d)(5). The amount so owed and applicable interest shall be immediately offset against amounts otherwise payable to the State under section 1903(a) subject to subsection (e), 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).
(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) 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 title 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 1860D-2(e), including drugs described in subparagraph (K) of section 1927(d)(2)); 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—
(II) the gross expenditures under this title 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 CMS-64) 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
(5) Factor.—The factor under this paragraph for a month—
(A) in 2006 is 90 percent;
(B) in 2007 is 88 1/3 percent;
(C) in 2008 is 86 2/3 percent;
(D) in 2009 is 85 percent;
(E) in 2010 is 83 1/3 percent;
(F) in 2011 is 81 2/3 percent;
(G) in 2012 is 80 percent;
(H) in 2013 is 78 1/3 percent;
(I) in 2014 is 76 2/3 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 title XVIII, or under an MA-PD plan under part C of such title; and
(ii) is determined eligible by the State for medical assistance for full benefits under this title for such month under section 1902(a)(10)(A) or 1902(a)(10)(C), by reason of section 1902(f), or under any other category of eligibility for medical assistance for full benefits under this title, 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 1902(a)(10)(C) or by reason of section 1902(f), 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.
(d)Coordination Of Prescription Drug Benefits.—
(1) Medicare as primary payor.—In the case of a part D eligible individual (as defined in section 1860D-1(a)(3)(A)) who is described in subsection (c)(6)(A)(ii), notwithstanding any other provision of this title, medical assistance is not available under this title for such drugs (or for any cost-sharing respecting such drugs), and the rules under this title relating to the provision of medical assistance for such drugs shall not apply. The provision of benefits with respect to such drugs shall not be considered as the provision of care or services under the plan under this title. No payment may be made under section 1903(a) for prescribed drugs for which medical assistance is not available pursuant to this paragraph.
(2) Coverage of certain excludable drugs.—In the case of medical assistance under this title with respect to a covered outpatient drug (other than a covered part D drug) furnished to an individual who is enrolled in a prescription drug plan under part D of title XVIII or an MA-PD plan under part C of such title, the State may elect to provide such medical assistance in the manner otherwise provided in the case of individuals who are not full-benefit dual eligible individuals or through an arrangement with such plan.
(e) Treatment Of Territories.—
(1) In general.—In the case of a State, other than the 50 States and the District of Columbia—
(A) the previous provisions of this section shall not apply to residents of such State; and
(B) if the State establishes and submits to the Secretary a plan described in paragraph (2) (for providing medical assistance with respect to the provision of prescription drugs to part D eligible individuals), the amount otherwise determined under section 1108(f) (as increased under section 1108(g)) for the State shall be increased by the amount for the fiscal period specified in paragraph (3).
(2) Plan.—The Secretary shall determine that a plan is described in this paragraph if the plan—
(B) provides assurances that additional amounts received by the State that are attributable to the operation of this subsection shall be used only for such assistance and related administrative expenses and that no more than 10 percent of the amount specified in paragraph (3)(A) for the State for any fiscal period shall be used for such administrative expenses; and
(C) meets such other criteria as the Secretary may establish.
(A) In general.—The amount specified in this paragraph for a State for a year is equal to the product of—
(i) the aggregate amount specified in subparagraph (B); and
(ii) the ratio (as estimated by the Secretary) of—
(I) the number of individuals who are entitled to benefits under part A or enrolled under part B and who reside in the State (as determined by the Secretary based on the most recent available data before the beginning of the year); to
(II) the sum of such numbers for all States that submit a plan described in paragraph (2).
(B) Aggregate amount.—The aggregate amount specified in this subparagraph for—
(i) the last 3 quarters of fiscal year 2006, is equal to $28,125,000;
(ii) fiscal year 2007, is equal to $37,500,000; or
(iii) a subsequent year, is equal to the aggregate amount specified in this subparagraph for the previous year increased by annual percentage increase specified in section 1860D-2(b)(6) for the year involved.
(4) Report.—The Secretary shall submit to Congress a report on the application of this subsection and may include in the report such recommendations as the Secretary deems appropriate.
 As in original. Comma missing.