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)

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