State Phased-Down Billing

The Medicare Prescription Drug Improvement and Modernization Act of 2003 (Medicare Modernization Act or MMA) established the Medicare Part D prescription drug benefit effective January 2006. At that time, Medicare became the primary payer for most prescription drugs for full-benefit dually eligible beneficiaries. However, the MMA established the phased-down state contribution process, in which states are responsible for making monthly payments to CMS, representing a portion of the expenditures for beneficiaries whose Medicaid drug coverage has been assumed by Medicare Part D.

The 2024 version of the State Phased-Down (SPD) Billing Guide (PDF) updates information and instructions for states on operations concerning the state phased-down contribution process, including:

• Relationship between state reporting and the SPD contribution amount
• SPD Contribution Billing
• State Itemized Liability Report
• Offset Against State Medicaid Grant Award
• Methods States May Use to Pay the SPD Contribution Amount
• Fedwire Procedures
• Pay.gov

Send an email to DPBCStateBuy-in@cms.hhs.gov for SPD contribution billing inquiries and requests.

Phased-Down State Contribution Per Capita Rates

CY 2025 Quarters 1-3 (Jan-Sep) Phased-Down State Contribution Rates Memorandum (PDF)

CY 2024 Quarter 4 (Oct-Dec) Phased-Down State Contribution Rates Memorandum (PDF)

CY 2024 Quarters 1-3 (Jan-Sep) Phased-Down State Contribution Rates Memorandum (PDF)

Want regular email updates? Sign up by visiting this link.

We’re always looking for ways to improve the experience and usability of our webpages. If you’ve Feedback or issues to report, please contact us at MMCOWeb@cms.hhs.gov.