DHS BUDGET REQU~ST FOR FY

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1 DHS BUDGET REQU~ST FOR FY ($ Amounts in Thousands) Page # of Governor's Executive Budget: APPROPRIATION: Pp. C1.8, E30.5, E30.16, E30.17 Payment to Federal Govt. - Medicare Drug Progr~m l. SUMMARY FINANCIAL OAT A Actual Available Budgeted State Funds $526,460 $535,974 1 $563,996 Federal Funds $0 $0 $0 Other Funds $0 $0 $0 Total $526,460 $535,974 $563,996 IA. REQUESTED SUPPLEMENTALS (Included above) State Funds $4,115 Federal Funds $0 Total $4,115 Includes a recommended supplemental appropriation of $4.115 million. Appropriation Act 1-A of 2014 provided $ million in Fiscal Year ( 134

2 II. DET AI L BY MAJOR OBJECT APPROPRIATION : ($ Amounts in Thousands) Payment to Federal Govt. - Medicare Drug Program Change Budgeted Percent Actual Available Budgeted vs. Available Change PERSONNEL Total Personnel $0 $0 $0 $0 0.00% OPERATING Total Operating $0 $0 $0 $0 0.00% FIXED ASSETS Total Fixed Assets $0 $0 $0 $0 0.00% GRANT & SUBSIDY State Funds $'526,460 $535,974 $563,996 $28, % Federal Funds $0 $0 ' $0 $0 0.00% Other Funds $0 $0. $0 $0 0.00% Total Grant & Subsidy $526,460 $535,974 $563,996 $28, % NONEXPENSE Total Nonexpense $0 $0 $0 $0 0.00% BUDGETARY RESERVE ' Total Budgetary Reserve $0 $0 $0 $0 0.00% UNCOMMITTED Total Uncommitted $0 $0 $0 $0 0.00% OTHER Other Fu;;ds $0 $0 $0 $0 0.00% Total Other $0 $0 $0 $0 0.00% TOTAL FUNDS State Funds $526,460 $535,974 $563,996 $28, % Total Funds $526,460 $535,974 $563,996 $28, % 135

3 APPROPRIATION: Payment to Federal Govt. - Medicare Drug Program III. HISTORY OF LAPSES ($ Amounts in Thousands) Estimated State Funds $0 $0 $0 IV. COMPLEMENT INFORMATION /31/ /31/2014 Budgeted State/Federally Funded Authorized Filled Federally Funded Authorized Filled Other Funded Authorized Filled Total Authorized Filled - V. DERIVATION OF REQUEST I LEGISLATIVE CITATIONS I DISBURSEMENT CRITERIA Derivation of Request: The recommended appropriation is based on the projected number of individuals per month who are dually eligible for both Medicaid and Medicare mutliplied by the State share of the State specific per capita, per month expenditure for covered drugs for dual-eligible persons. Legislative Citations: Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA, PUb.L ) Disbursement Criteria: The Medicare Prescription Drug, Improvement and Modernization Act of 2003 created the Medicare Part D prescription drug benefit effective January 1, The Federal government is requiring'states to help fund this Federal program. This payment is made monthly to the Federal government to reduce the Part D costs. The State payment for each month is the product of the State's per capita expenditure (pee), the phase down percentage and the number of dual eligibl~s who ~re enrolled in the Part D program. The PCE is based on historical State specific Medicaid data increased for growth in prescription drug spending nationally and adjusted for the State's Federal Medical Assistance Percentage. The phase down percentage was set at 90 percent in Calendar Year 2006 and decreased annually by 1.67 percent until the phase down reached 75 percent in Calendar Year The Federal government annually notifies the States of their PCE for the forthcoming year. 136

4 VI. EXPLANATION OF CHANGES ($ Amounts in Thousands) APPROPRIATION: Payment to Federal Govt. - Medicare Drug Program GRANT & SUBSIDY TOTAL 1. Provides for the increase in the average per capita payment from $ in Fiscal Year to $ in Fiscal Year : 2. Impact of the increase in utilization from projected average monthly eligibles of 344,104 in Fiscal Year to 352,359 in Fiscal Year : State $ Federal $ Other $ Total $ $15,164 $0 $0 $15,164 $12,858 $0 $0 $12,858 $28,022 $0 $0 $28,

5 Service Month Payment to Federal Government - Medicare Drug Program Fiscal Year ~ Governor's Executive Budget Fiscal Year Dual eligibles Per Capita Premium Payment Payment Month May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 actual 341,222 $ $43,172,351 actual 340,593 $ $43,088,151 actual 341,383 $ $43,186,004 actual 343,360 $ $43,435,651 actual 342,561 $ $43,332,561 actual 343,702 $ $45,019,942 actual 346,290 $ $45,373,663 actual 343,269 $ $44,993,341 projected 345,686 $ $45,956,239 projected 346,370 $ $46,047,132 projected 347,057 $ $46,138,524 projected 347,748 $ $46,230,416 FY Funds 4,129,242 $ $535,973,974 FY Funds Rolled Back to FY ($424) Total FY Cash Requirement $535,973,550 Act i-a of 2014 $531,859,000 Surplus/(Deficit) ($4,114,550) Jul-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Payment to Federal Government - Medicare Drug Program Fiscal Year Governor's Executive Budget Fiscal Year Service Month Dual eligibles Per Capita Premium Payment May-15 projected 348,444 $ $46,322,814 Jun-15 projected 349,142 $ $46,415,719 Jul-15 projected 349,845 $ $46,509,135 Aug-15 projected 350,552 $ $46,603,065 Sep-15 projected 351,262 $ $46,697,513 Oct-15 projected 351,976 $ $46,604,225 Nov-15 projected 352,695 $ $46,699,334 Dec-15 projected 353,417 $ $46,794,968 ~. Jan-16 projected 354,143 $ $47,689,164 Feb-16 projected 354,874 $ $47,787,505 Mar-16 projected 355,608 $ $47,886,390 Apr-16 projected 356,346 $ $47,985,824 Total FY Cash Requirement 4,228,303 $ $563,995,657 Payment Month ' Jul-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May

6 PAYMENT TO FEDERAL GOVERNMENT - MEDICARE DRUG PROGRAM PROGRAM STATEMENT The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, Public Law ) created the Medicare Part D prescription drug benefit, effective January 1, A number of the Part D beneficiaries are eligible for both Medicare and Medicaid. Prior to implementation of Part D, persons in Pennsylvania eligible for both Medicaid and Medicare had their drug benefit covered by Medical Assistance, Pennsylvania's Medicaid program. Thus, when Part D was developed, a provision was included in the MMA requiring the states to continue making payments for prescription drug coverage for dual eligibles, and continue providing direct coverage of drugs excluded from coverage under Medicare Part D, but covered under the state Medicaid program. The State payment is made on a monthly basis and was designed to reflect 90 percent of the estimated State savings to the Medical Assistance Program for calendar year This percentage was phased down by 1.67 percent annually until reaching 75 percent in The Centers for Medicare and Medicaid Services (CMS) worked with the states to collect historical prescription drug payment data to develop a state-specific Per Capita Expenditure (PCE).. Annually, the PCE is adjusted for growth in national per capita drug spending and adjusted for the annual change in the state-specific Federal Medical Assistance Percentage, to reflect the State share of the per capita costs. The CMS notifies the States annually of the PCE for the forthcoming calendar year. The Commonwealth's monthly Part D payment is the product of the PCE, the phase-down percentage and the number of individuals who were eligible for both Medicare and Medicaid in the month for which the payment is being made. 139

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