U.S. Government Is Sued by Five States Over Medicare Payments


March 3 (Bloomberg) -- Five U.S. states today sued the federal government over an expanded federal prescription-drug program that they say the government is unconstitutionally requiring them to help fund.

Attorneys general in New Jersey, Texas, Kentucky, Maine and Missouri said monthly payments to help cover the expanded Medicare prescription drug program violated their sovereignty.

``In requiring the states to pay a specified dollar amount to support a federal program, the new law eliminates our ability to exercise control over a fundamental state function -- spending,'' New Jersey Attorney General Zulima Farber said in a written statement.

Under the Medicare law, which took effect Jan. 1, states must repay the federal government a large chunk of the money they will save as the federal Medicare program takes over drug- benefit benefits that had been paid under Medicaid.

While some states have argued they would end up paying more under the new formula, New Jersey didn't make such a claim and based its suit on sovereignty issues -- specifically that it will be paying for a federal program it has no control over.

Farber said New Jersey wasn't claiming that its bottom line will be hurt by the payback provision now. Instead, she said, the law hurts the state's ability to budget for future payments because the federal government controls the formula that determines how much the state must pay.

Ellen Griffith, a spokeswoman for the federal Centers for Medicare & Medicaid Services, didn't immediately return a phone call from Bloomberg News.