DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
 
   
 
          RE: Calendar Year (CY) 2014 Jan - Sep Phased- 
        down State Contribution Final Per-Capita Rates  
 
October 15, 2013 
 
 
Dear State Medicaid Director: 
 
As you know, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 
requires the Centers for Medicare & Medicaid Services (CMS) notify each State, no later than October 15 
of each calendar year (CY), of its annual per capita drug payment expenditure amount for the following 
year. Payments for the phased-down State contribution are made on a monthly basis. These payments are 
defined by the MMA to be the product of the annual per capita full dual-eligible drug payment amount 
and the monthly State enrollment of full dual eligibles.  
 
This letter is to notify you of the phased-down State contribution full dual-eligible per capita Medicaid 
drug payment amount for January  September 2014, as required by the MMA.  
 
Jan - Sep 2014 phased-down State contribution per capita rates are shown in Attachment 1. The per capita 
drug expenditure amount for Jan - Sep 2014 is based on the value for Oct - Dec 2013 with the following 
adjustments:  
 
1. The value is adjusted by the annual percentage increase (API) in per capita Part D expenditures for the 
2014 contract year (-4.03 percent), along with an adjustment to account for revisions to prior year 
estimates of per capita drug cost growth from 2003 to 2006 (0.00 percent). This results in a total growth 
rate of -4.03 percent.  
 
2. The phased-down contribution percentage is reduced from 7813 percent of projected State per capita 
expenditures to 7623 percent. 
 
3. Based on the effects of the API update and the reduction in the phased-down contribution percentage, 
the net change in the State phased-down per capita drug payment amount for CY2014 is -6.07 percent. 
Details are described in Attachment 2, provided by the CMS Office of the Actuary. 
 
Questions regarding these calculations may be directed to Vasanthi Kandasamy, Division of Information 
Analysis and Technical Assistance, Data and Systems Group, at 410-786-0433 or via email at 
Vasanthi.Kandasamy@cms.hhs.gov. 
 
Sincerely, 
 
/s/ 
 
 
            Elaine Olin 
            Director, Data & Systems Group   
ATTACHMENT 1: Phased-down State Contribution Rates January-September 2014 
 
STATE  STATE NAME  Jan-Sep 2014 
AL  Alabama  63.37 
AK  Alaska  144.11 
AZ  Arizona  48.49 
AR  Arkansas  54.43 
CA  California  97.40 
CO  Colorado  125.50 
CT  Connecticut  154.40 
DE  Delaware  110.61 
DC  District of Columbia  55.38 
FL  Florida  111.03 
GA  Georgia  76.07 
HI  Hawaii  86.47 
ID  Idaho  78.78 
IL  Illinois  126.16 
IN  Indiana  86.07 
IA  Iowa  112.07 
KS  Kansas  113.40 
KY  Kentucky  75.39 
LA  Louisiana  93.62 
ME  Maine  84.58 
MD  Maryland  131.89 
MA  Massachusetts  103.39 
MI  Michigan  62.99 
MN  Minnesota  127.30 
MS  Mississippi  52.25 
MO  Missouri  118.27 
MT  Montana  85.12 
NE  Nebraska  119.41 
NV  Nevada  88.16 
NH  New Hampshire  146.62 
NJ  New Jersey  157.75 
NM  New Mexico  52.70 
NY  New York  116.32 
NC  North Carolina  88.58 
ND  North Dakota  110.62 
OH  Ohio  116.03 
OK  Oklahoma  68.90 
OR  Oregon  94.96 
PA  Pennsylvania  126.48 
RI  Rhode Island  125.16 
SC  South Carolina  52.40 
SD  South Dakota  119.51 
TN  Tennessee  100.09 
TX  Texas  81.35 
UT  Utah  87.18 
VT  Vermont  108.14 
VA  Virginia  132.84 
WA  Washington  125.75 
WV  West Virginia  67.60 
WI  Wisconsin  106.85 
WY  Wyoming  138.83 
  ATTACHMENT 2: Phased-Down State Contribution to Part D 
Annual Rate Update for 2014 
 
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)  requires 
CMS to calculate the payment rates for the Phased-Down State Contribution (PDSC) to Part D each 
year using the latest available National Health Expenditure (NHE) estimates of per capita drug 
expenditure growth for the period 2003 to 2006, combined with the annual percentage increase (API) 
in average per capita aggregate Part D expenditures for 2007 and later years, as defined in section 
1860D-2(b)(6) of the Social Security Act.  As announced on April 1, 2013, the API for 2014 is 
4.03%.1   
 
The 2014 API includes an adjustment for revisions to the 2007 through 2013 percentage increases, 
based on subsequent data and projections, as described in the April 1 announcement.  Since the 
MMA requires use of the latest NHE estimates for 2003 through 2006, the 2014 PDSC rates must 
also be adjusted for updates, if any, to estimates of per capita prescription drug expenditure growth 
for the period 2003 to 2006 that have occurred since the promulgation of the 2013 rates.  The 2013 
rates were based on historical NHE estimates from January 2012 and reflected a cumulative per 
capita prescription drug expenditure growth rate of 23.89% from 2003 to 2006.  The current, January 
2013, NHE estimates show the same cumulative growth rate for that period.2  Consequently, no 
adjustment for 2003 to 2006 growth is needed. 
 
The final PDSC payment rates include a discount factor (the factor for the month specified in 
section 1935(c)(5)), which is 7623% in 2014.  Since the factor for 2013 was 7813%, the 2014 payment 
rates will include an adjustment of  2.13% (7623/7813 1) and the net payment rate will decrease by 
6.07% ((1 0.0403)  7623/7813  1 = 0.0607).  The table below summarizes these calculations. 
 
2014 Phased-down State Contribution Payment Rate Increase 
Annual Percentage Increase for 2014  4.03% 
Adjustment for updated 2003-2006 growth  0.00% 
2014 PDSC per capita expenditure increase  4.03% 
Change in discount factor  2.13% 
Final 2014 PDSC payment rate increase  6.07% 
Note:  Percentages in this table are multiplicative, not additive.  Calculations based on displayed values may vary 
from results shown, since values are carried to additional decimal places. 
 
Office of the Actuary 
September 6, 2013 
 
                                                 
1 See http://www.cms.gov/MedicareAdvtgSpecRateStats/Downloads/Announcement2014.pdf,  
Details of the API calculation are contained in Attachment VI.    
2 The current per capita estimates are $607 for 2003 and $752 for 2006.  These values are derived from data found at 
http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-
Reports/NationalHealthExpendData/Downloads/nhe2011.zip.