Phased-Down State Contribution (PDSC)
Phased-down state contribution payment refers to the states' monthly payment made to the Federal government beginning in 2006 to defray a portion of the Medicare drug expenditures for full-benefit dual eligible individuals whose Medicaid drug coverage is assumed by Medicare Part D. The monthly state contributions for each year, beginning in January of 2006, will be the product of the projected monthly per capita drug payment, the total number of full-benefit dual eligible individuals for the state in the applicable month, and the applicable ten year phased- down factor for the year (see the following table). State contributions will decline each year until 2015, at which time the applicable 10 year phased-down factor for each year will be fixed at 75 percent.
Annual Phased--Down Percentages of State Contributions to Medicare Part D Drug Benefit Costs
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Year State Percentage
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2006 90
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2007 88 1/3
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2008 86 2/3
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2009 85
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2010 83 1/3
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2011 81 2/3
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2012 80
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2013 78 1/3
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2014 76 2/3
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2015 and thereafter 75
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Calculating Your PDSC
The contribution is calculated as 1/12th of the base year (2003) Medicaid per capita expenditures for prescription drugs (that is, covered Part D drugs) for full-benefit dual eligible individuals,
(1) Multiplied by the State medical assistance percentage;
(2) Increased for each year (beginning with 2004 up to and including the year involved) by the applicable growth factor;
(3) Multiplied by the number of the State's full-benefit dual eligible individuals for the given month; and
(4) Multiplied by the phased-down State contribution factor.
Rebate adjustment factor takes into account drug rebates and, for a State, is equal to the ratio of the four quarters of calendar year 2003 of aggregate rebate payments received by the State under section 1927 of the Act to the gross expenditures for covered outpatient drugs. State medical assistance percentage means the proportion equal to 100 percent minus the State's Federal medical assistance percentage, applicable to the State for the fiscal year in which the month occurs.
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