2004 Memorandums
IM-64      06/23/04
In Memorandum IM-# 42 dated May 11, 2004 regarding the Medicare Prescription Drug Discount Card and Transitional Assistance, we stated that the Centers for Medicare and Medicaid Services (CMS) had not yet given clearance as to whether the portion of prescription drugs paid by the $600 credit was to be allowed toward meeting spenddown. CMS has now given this clearance.

The portion of prescription drug cost paid for by the Medicare $600 credit is NOT allowed to meet spenddown. CMS has indicated that we must follow normal spenddown rules, that there is no special provision for drug costs paid for by this credit.

Under normal spenddown policy, the amount of a prescription drug allowed to meet spenddown is the amount of liability the person incurs. Any portion of a prescription drug paid by Medicare Transitional Assistance is not an allowable expense for meeting spenddown. Thus, if the person is to pay only a 5% or 10% coinsurance for a particular prescription, only the 5% or 10% coinsurance is allowed towards meeting spenddown. Also any discount provided by the card sponsor for a particular drug is not allowable as an expense.

  • Review this memorandum with appropriate staff.
  • Do not allow the portion of a prescription drug paid by the $600 credit toward meeting spenddown.