Medicare Part D Low-Income Subsidy
Additional Efforts Would Help Social Security Improve Outreach and Measure Program Effects Gao ID: GAO-07-555 May 31, 2007Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which created a Part D outpatient prescription drug benefit that enables Medicare beneficiaries to enroll in competing private drug coverage plans. The benefit also offers a subsidy administered by the Social Security Administration (SSA) to assist certain low-income Medicare beneficiaries with out-of-pocket costs. GAO was asked to review (1) SSA's progress in identifying and soliciting applications from individuals potentially eligible for the subsidy; (2) SSA's processes for making eligibility determinations, resolving appeals, and redetermining beneficiaries' eligibility; and (3) how the subsidy has affected SSA's workload and operations. To conduct this study, GAO reviewed the law, assessed subsidy data, and interviewed SSA and other officials.
SSA approved about 2.2 million Medicare beneficiaries for the low-income subsidy as of March 2007, despite barriers it faced in identifying the eligible population and soliciting applications; however, measuring the success of SSA's outreach efforts is difficult because there are no reliable data on the size of the eligible population. In 2005, SSA mailed 18.6 million subsidy applications to Medicare beneficiaries who were potentially eligible for the subsidy. SSA knew that this mailing was an overestimate, but took this approach to ensure that all who were eligible would be contacted. SSA had hoped to more specifically identify the eligible population using IRS tax data, but current law restricts the use of taxpayer data unless an individual has already applied for the subsidy. Further, SSA conducted a campaign of about 76,000 events held nationwide to educate people about the subsidy and how to apply for it. Since the initial campaign ended, however, SSA has not developed specific performance goals and measures to assess the progress of its continuing outreach efforts. SSA's efforts to solicit applications were hindered by beneficiaries' confusion about the difference between the subsidy and the Medicare Part D prescription drug plan, and the reluctance of some individuals to share personal financial information, among other factors. While the early subsidy participation rate compares favorably to those of some other low-income programs, the lack of reliable data on the size of the eligible population means that the extent to which SSA has signed up the eligible population for the benefit is unknown. While SSA has established processes for making subsidy eligibility determinations, resolving appeals, and conducting redeterminations, it has not established some key management tools to monitor the progress of all of its efforts, as specified in GAO's internal control standards. For example, while SSA tracks various results from its appeals process, it does not currently have a performance goal to assess the timeliness of appeals decisions, but agency officials told us that SSA plans to establish a goal of processing 75 percent of appeals in 60 days. Also, while SSA tracks the status of its redetermination decisions, officials do not believe that it is necessary to measure the time for processing individual redetermination decisions because they said that the time to complete the overall redeterminations cycle provides adequate information. SSA's implementation of the low-income subsidy did affect the agency's workload and operations, but according to SSA officials, the additional workloadhas been manageable overall as a result of increased funding that the agency received to carry out MMA activities. SSA hired 2,200 field office staff, and 500 headquarters staff to handle its new subsidy workload, as well as to carry out other activities for the program. In 2006, SSA staff spent the equivalent of 2,190 work years on low-income subsidy implementation activities, with about 50 percent of the time spent on subsidy applications. While there were periods of high subsidy application activity, SSA officials told us that subsidy program activities did not have an adverse impact on other SSA workloads. The officials attributed the minimal impact of Part D to several factors, including the highly automated subsidy application process and the $500 million congressional appropriation that SSA spent on MMA start-up costs. SSA estimates that its costs for low-income subsidy activities are $175 million annually.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-07-555, Medicare Part D Low-Income Subsidy: Additional Efforts Would Help Social Security Improve Outreach and Measure Program Effects
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Help Social Security Improve Outreach and Measure Program Effects'
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Report to the Committee on Finance, U.S. Senate:
United States Government Accountability Office:
GAO:
May 2007:
Medicare Part D Low-Income Subsidy:
Additional Efforts Would Help Social Security Improve Outreach and
Measure Program Effects:
GAO-07-555:
GAO Highlights:
Highlights of GAO-07-555, a report to the Committee on Finance, U.S.
Senate
Why GAO Did This Study:
Congress passed the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA), which created a Part D outpatient
prescription drug benefit that enables Medicare beneficiaries to enroll
in competing private drug coverage plans. The benefit also offers a
subsidy administered by the Social Security Administration (SSA) to
assist certain low-income Medicare beneficiaries with out-of-pocket
costs. GAO was asked to review (1) SSA‘s progress in identifying and
soliciting applications from individuals potentially eligible for the
subsidy; (2) SSA‘s processes for making eligibility determinations,
resolving appeals, and redetermining beneficiaries‘ eligibility; and
(3) how the subsidy has affected SSA‘s workload and operations. To
conduct this study, GAO reviewed the law, assessed subsidy data, and
interviewed SSA and other officials.
What GAO Found:
SSA approved about 2.2 million Medicare beneficiaries for the low-
income subsidy as of March 2007, despite barriers it faced in
identifying the eligible population and soliciting applications;
however, measuring the success of SSA‘s outreach efforts is difficult
because there are no reliable data on the size of the eligible
population. In 2005, SSA mailed 18.6 million subsidy applications to
Medicare beneficiaries who were potentially eligible for the subsidy.
SSA knew that this mailing was an overestimate, but took this approach
to ensure that all who were eligible would be contacted. SSA had hoped
to more specifically identify the eligible population using IRS tax
data, but current law restricts the use of taxpayer data unless an
individual has already applied for the subsidy. Further, SSA conducted
a campaign of about 76,000 events held nationwide to educate people
about the subsidy and how to apply for it. Since the initial campaign
ended, however, SSA has not developed specific performance goals and
measures to assess the progress of its continuing outreach efforts.
SSA‘s efforts to solicit applications were hindered by beneficiaries‘
confusion about the difference between the subsidy and the Medicare
Part D prescription drug plan, and the reluctance of some individuals
to share personal financial information, among other factors. While the
early subsidy participation rate compares favorably to those of some
other low-income programs, the lack of reliable data on the size of the
eligible population means that the extent to which SSA has signed up
the eligible population for the benefit is unknown. While SSA has
established processes for making subsidy eligibility determinations,
resolving appeals, and conducting redeterminations, it has not
established some key management tools to monitor the progress of all of
its efforts, as specified in GAO‘s internal control standards. For
example, while SSA tracks various results from its appeals process, it
does not currently have a performance goal to assess the timeliness of
appeals decisions, but agency officials told us that SSA plans to
establish a goal of processing 75 percent of appeals in 60 days. Also,
while SSA tracks the status of its redetermination decisions, officials
do not believe that it is necessary to measure the time for processing
individual redetermination decisions because they said that the time to
complete the overall redeterminations cycle provides adequate
information. SSA‘s implementation of the low-income subsidy did affect
the agency‘s workload and operations, but according to SSA officials,
the additional workload has been manageable overall as a result of
increased funding that the agency received to carry out MMA activities.
SSA hired 2,200 field office staff, and 500 headquarters staff to
handle its new subsidy workload, as well as to carry out other
activities for the program. In 2006, SSA staff spent the equivalent of
2,190 work years on low-income subsidy implementation activities, with
about 50 percent of the time spent on subsidy applications. While there
were periods of high subsidy application activity, SSA officials told
us that subsidy program activities did not have an adverse impact on
other SSA workloads. The officials attributed the minimal impact of
Part D to several factors, including the highly automated subsidy
application process and the $500 million congressional appropriation
that SSA spent on MMA start-up costs. SSA estimates that its costs for
low-income subsidy activities are $175 million annually.
What GAO Recommends:
GAO recommends that SSA develop specific performance goals and measures
for its outreach activities, develop key management tools for its
appeals and redetermination decisions, and also that SSA and the
Internal Revenue Service (IRS) work together to assess the extent to
which taxpayer data could help to better target individuals who might
qualify for the subsidy. IRS generally agreed with our recommendation,
and SSA generally agreed with all but one of our recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-555].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Barbara Bovbjerg at (202)
512-7215 or bovbjergbj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
SSA Has Made Progress in Approving Subsidy Applicants, despite Barriers
That Hindered Its Outreach Efforts, but Measuring Its Success Is
Difficult:
SSA's Processes for Determining Applicants' Subsidy Eligibility,
Resolving Appeals, and Redetermining Eligibility Lack Key Tools for
Monitoring Performance:
The Impact of the Subsidy Program Has Been Manageable:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Subsidy Application Mailings by State, May 27, 2005-August
10, 2005:
Appendix III: Comments from the Social Security Administration:
Appendix IV: Comments from the Internal Revenue Service:
Appendix V: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Part D Low-Income Subsidy Eligibility and Benefits, by
Beneficiary Group, 2007:
Table 2: Medicare Part D Low-Income Subsidy Estimates of the Eligible
Population Who Must Apply to Receive the Subsidy:
Table 3: SSA Appeals Workloads, August 2005-February 2007:
Table 4: SSA's Outlays Covered by the Medicare Trust Funds, Fiscal
Years 2003-2008:
Figures:
Figure 1: Flow of Low-Income Subsidy Information:
Figure 2: Total Number of SSA Outreach Events from May 2005 to August
2006:
Figure 3: Cumulative Number of Subsidy Applicants and Approvals,
November 2005 to December 2006:
Figure 4: Reasons for Subsidy Denials Based on SSA's Sampling of Denied
Claims:
Abbreviations:
CMS: Centers for Medicare and Medicaid Services:
FP: federal poverty level:
HHS: Department of Health and Human Services:
IRS: Internal Revenue Service:
MMA: Medicare Prescription Drug, Improvement, and Modernization Act of
2003:
PDP: prescription drug plan:
SSA: Social Security Administration:
SSI: Supplemental Security Income:
United States Government Accountability Office:
Washington, DC 20548:
May 31, 2007:
The Honorable Max Baucus:
Chairman:
The Honorable Charles E. Grassley:
Ranking Member:
Committee on Finance:
United States Senate:
High prescription drug costs can have a detrimental effect on low-
income seniors and the disabled, who are more likely than others to
suffer from chronic medical problems requiring prescription drugs.
According to recent studies, such high costs may cause some elderly
patients to forgo or restrict their use of prescription drugs. To help
the elderly and disabled with these costs, the Congress passed the
Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of
2003, which created a voluntary outpatient prescription drug benefit
(Medicare Part D).[Footnote 1] The benefit, which became available in
January 2006, enables Medicare beneficiaries to enroll in drug plans
sponsored by private companies. A key element of the prescription drug
benefit is the low-income subsidy, or "extra help," available to
Medicare beneficiaries with limited incomes and resources to assist
them in paying their premiums and other out-of-pockets costs.
While the MMA assigned the majority of the responsibilities for
implementing Medicare Part D prescription drug program to the
Department of Health and Human Services and its Centers for Medicare
and Medicaid Services (CMS), it charged the Social Security
Administration (SSA) with administering the low-income subsidy. In this
capacity, SSA is responsible for conducting outreach efforts to
identify and notify individuals of the availability of the subsidy,
making subsidy eligibility determinations, resolving appeals, and
conducting redeterminations of beneficiaries' continued subsidy
eligibility. SSA is also responsible for withholding Part D premiums
from monthly Social Security benefits for beneficiaries who select this
option. You asked us to review (1) the progress that SSA has made in
identifying and soliciting applications from individuals potentially
eligible for the low-income subsidy; (2) the processes that SSA uses to
make eligibility determinations, resolve appeals, and conduct
redeterminations for the subsidy; and (3) the impact that the subsidy
had on SSA's workload and other operations.
To conduct our work, we interviewed and obtained documentation from SSA
headquarters officials responsible for implementing the low-income
subsidy. We also obtained and discussed relevant documentation on SSA's
outreach strategy, efforts to target outreach for the low-income
population, and methods for obtaining input from state Medicaid
agencies in Colorado, Kansas, Pennsylvania, Texas, and Utah. We
interviewed officials in the Colorado, Kansas, Pennsylvania, and Utah
state Medicaid agencies because they had established processes to make
low-income subsidy determinations. We visited the Texas state Medicaid
agency to gain the perspective of a state that had not yet set up such
a process, but had plans to so in the future. We reviewed available
documentation on SSA's processes for making eligibility determinations,
resolving appeals, and making redeterminations. While we were generally
able to verify some data on the processing time for eligibility
determinations, based on electronic data provided to us, we did not
have all the information needed to verify the validity of other data.
We also interviewed SSA management and staff in eight SSA field offices
in Maryland, Virginia, Pennsylvania, and Texas to obtain their views on
the implementation, as well as client feedback they received regarding
the subsidy application process. We selected SSA offices in those
states because of the large number of subsidy applications that had
been mailed to individuals potentially eligible for the subsidy. We
visited SSA offices in Pennsylvania and Texas in particular because
counties in these states had the most applicants for the subsidy as of
June 2006. We interviewed CMS officials and obtained available
documentation on the agency's involvement with SSA's outreach efforts.
We also interviewed officials at the Internal Revenue Service (IRS)
concerning legal restrictions on its ability to release tax data to SSA
for the purposes of determining the population eligible for the subsidy
and their concerns if these restrictions were lifted. We also met with
various advocacy groups that represent low-income and disabled
beneficiaries to obtain their perspectives on SSA's implementation of
the low-income subsidy. In addition, we interviewed officials in the
five state Medicaid offices discussed earlier and two state health
insurance programs (Pennsylvania and Texas) to obtain information on
their efforts in assisting clients in applying for the subsidy and
their perspectives on SSA's implementation efforts. We conducted our
work from May 2006 through April 2007 in accordance with generally
accepted government auditing standards. Appendix I provides a more
detailed description of our scope and methodology.
Results in Brief:
SSA approved approximately 2.2 million Medicare beneficiaries for the
low-income subsidy as of March 2007 despite barriers that limited its
ability to identify individuals who were eligible for the subsidy and
solicit applications from them; however, the success of SSA's outreach
efforts is uncertain because there are no reliable data on the eligible
population. Because of the lack of reliable data on the eligible
population, SSA identified 18.6 million Medicare beneficiaries who
might qualify for the subsidy, which was considered an overestimate of
the eligible population. SSA mailed low-income subsidy information and
applications to these Medicare beneficiaries to ensure that everyone
who might qualify for the subsidy was notified of the benefit and had
an opportunity to apply for it. SSA developed the 18.6 million estimate
by using its benefit records and data from other government sources.
SSA officials had hoped to use Internal Revenue Service (IRS) tax data
to identify the eligible population, but the law prohibits the use of
the data unless an individual has already applied for the subsidy. SSA
followed this mailing with phone calls and additional targeted
mailings. Further, SSA conducted an outreach campaign of 76,000 events
held nationwide. Since the initial campaign ended, however, SSA has not
developed specific performance goals and measures to assess the
progress of its outreach efforts. Besides being hindered by barriers to
identifying individuals potentially eligible for the subsidy, SSA's
solicitation efforts were hindered by beneficiaries' confusion about
the difference between the subsidy and the Medicare Part D prescription
drug plan, and the reluctance of some individuals to share personal
financial information, among other factors. The early subsidy
participation rate compares favorably to those of some other low-income
programs, but the extent to which SSA has been successful in signing up
the eligible population is unknown because there are no reliable data
on the size of the target population.
SSA has established application processes for determining low-income
subsidy eligibility, reviewing appeals and conducting redeterminations;
however, it has not established some key management tools to monitor
the progress of all of its efforts. GAO internal controls standards
state that establishing performance measures that compare actual
performance against expected goals is needed to monitor the
effectiveness of a program. To assess its low-income subsidy
eligibility process, SSA has tracked the progress of the approximately
6.2 million subsidy determinations since it began processing
applications in July 2005, but did not have goals for measuring the
processing time for these applications until March 2007. SSA's goal is
now to process 75 percent of the subsidy applications in 60 days. In
three separate studies since October 2005, SSA has sampled 10 percent
of its appeals to determine the reasons for them. SSA has also tracked
the amount of time for resolving appeals since August 2005. SSA data
showed that in July 2006, the agency took 91 days to decide 1,795
appeals, while in February 2007, SSA took 42 days to decide 2,463
appeals. Although SSA tracks processing time for appeals, it currently
has no performance goal to assess the timeliness of appeals decisions,
and lacks the capability to report the information. Agency officials
told us, however, that SSA plans to establish a goal of processing 75
percent of appeals in 60 days--similar to its goal for processing
subsidy applications--but will have to modify its system to produce
performance information. Further, while SSA tracked the status of 1.2
million redeterminations of subsidy eligibility, SSA does not measure
the amount of time it takes to process individual redetermination
decisions and has no plans to develop such information because
officials stated that measuring the time for completing the overall
redeterminations cycle provides adequate information.
SSA's implementation of the low-income subsidy did affect the agency's
workload and operations, but according to SSA officials, the additional
work has been manageable overall because of the increased funding the
agency received to carry out MMA start-up activities and other factors.
SSA hired 2,200 field office staff and 500 headquarters staff to handle
the new subsidy workload, as well as to carry out other activities for
the program. In 2006, SSA staff spent the equivalent of 2,190 work
years on the low-income subsidy activities, with about 50 percent of
the time spent on subsidy applications. SSA currently estimates the
amount of time that staff spend on low-income subsidy activities
through periodic sampling. However, SSA is working to implement a new
tracking mechanism by 2010 to more accurately capture all program data,
including data related to the MMA. While there were periods of high
subsidy application activity, SSA officials told us that subsidy
program activities did not have an adverse impact on other SSA
workloads. For example, in fiscal years 2005 and 2006, SSA exceeded its
goal of making timely payments on initial retirement and survivor
claims. The officials attributed the minimal impact of Part D to
several factors, including the highly automated subsidy application
process and the $500 million congressional appropriation that SSA spent
on MMA start-up costs. SSA estimates that its costs for low-income
subsidy activities are $175 million annually.
This report contains recommendations to the SSA Commissioner that are
intended to help the agency better assess its subsidy outreach efforts,
and the results of its appeals and redetermination processes. The
report also contains a recommendation to the Commissioners of SSA and
IRS for the agencies to work together to assess the extent to which IRS
data could help SSA to better target individuals who might qualify for
the subsidy, and to develop more precise estimates of the eligible
population. In its comments on a draft of this report, SSA generally
agreed with our recommendation to develop a comprehensive plan with
specific goals and measures to direct and monitor the performance of
its outreach efforts. In its comments and a follow-up discussion, SSA
officials told us that they believed that the agency's National
Strategic Communications Plan served as a comprehensive plan for its
outreach strategy, and shared their concerns about setting specific
goals and measures for outreach efforts in the absence of reliable data
on the population of individuals who might qualify for the subsidy. SSA
disagreed with our recommendation to begin collecting data on the
processing time for individual redetermination decisions, and establish
performance goals for assessing the timeliness of individual
redetermination and appeals decisions, and explained the basis for its
position. SSA and IRS agreed with our recommendation that the two
agencies work together to assess the extent to which IRS tax data may
help SSA to better identify individuals who might qualify for the
subsidy. However, IRS pointed out various limitations that might affect
the usefulness of the data, and stated that its data can only help SSA
to better target the individuals who may qualify for the subsidy. See
appendix III for a copy of SSA's comments, and appendix IV for a copy
of IRS's comments. SSA and IRS also provided a number of technical
comments, which we incorporated as appropriate.
Background:
The enactment of the MMA in December 2003 added a voluntary outpatient
prescription drug benefit to the Medicare program, known as Medicare
Part D.[Footnote 2] Prior to this, the Medicare program did not
generally pay for outpatient drugs. The new Medicare Part D drug
benefit, which became available in January 2006, enables Medicare
beneficiaries to select among private drug plans sponsored by private
companies. Beneficiaries who elect to enroll in a Part D plan are
responsible for a monthly premium, which varies by the individual plan
selected. A key element of the prescription drug benefit is the low-
income subsidy, or "extra help," available to low-income elderly and
disabled individuals to assist them in paying their premiums,
deductibles, and co-payments. Without the subsidy, individuals enrolled
in Part D would have to pay greater out-of-pocket costs for their
prescription medications.
While the Department of Health and Human Services' CMS has
responsibility for implementing the Part D prescription drug benefit,
SSA is responsible for administering the subsidy.[Footnote 3] The MMA
requires that SSA solicit and process subsidy applications to determine
applicants' eligibility, resolve appeals for applicants dissatisfied
with their subsidy determinations, and periodically redetermine
individuals' continued eligibility. SSA transmits information on its
approved subsidy determinations and individuals' subsidy levels to CMS,
which in turn transmits the information to the appropriate drug plan.
CMS provides information to SSA and to prescription drug plans for
individuals who automatically qualify for the subsidy and the Part D
prescription drug benefit, based on information it receives from state
Medicaid agencies on individuals' eligibility for Medicaid and from SSA
on individuals who receive Supplemental Security Income (SSI). SSA also
withholds premium payments from the monthly Social Security checks of
individuals who elect this payment option; otherwise, individuals make
direct payments to their selected prescription drug plan. Figure 1
shows the flow of information among SSA, CMS, state Medicaid agencies,
prescription drug plans, pharmacies, and beneficiaries.
Figure 1: Flow of Low-Income Subsidy Information:
[See PDF for image]
Source: GAO analysis of SSA data; images (Art Explosion).
[End of figure]
To implement the new responsibilities under the MMA, SSA established a
Medicare Planning and Implementation Task Force in December 2003. The
objectives of the task force included determining the affected
population; the number of staff, locations, and material resources
needed; and agreeing on specific responsibilities with other federal
government agencies. Under the MMA, the Congress provided SSA with a
$500 million appropriation from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical Insurance Trust Fund to pay
for the initiation of SSA's Part D responsibilities for fiscal years
2004 and 2005, but later extended the appropriation to fiscal year
2006. The appropriation was exhausted in fiscal year 2006, and MMA
spending is now subject to SSA's overall spending ceiling under the
Limitation on Administrative Expenses appropriation.
Eligibility for the Medicare Part D Low-Income Subsidy:
All Medicare beneficiaries entitled to benefits under Medicare Part A
or enrolled in Part B are eligible to enroll in Medicare Part
D.[Footnote 4] Some Medicare beneficiaries automatically qualify for
the low-income subsidy, while others are required to apply for it and
must meet the eligibility requirements established under the MMA. Those
eligible for the subsidy generally fall into three broad categories
(table 1 describes the Part D low-income subsidy associated with each
category, as well as the costs for Medicare beneficiaries who do not
qualify for the subsidy).
* Full-benefit dual eligibles: These are low-income Medicare
beneficiaries who qualify for full coverage under their state's
Medicaid program,[Footnote 5] which, prior to the effective date of
Part D, provided coverage for their outpatient prescription drug costs.
These individuals are automatically enrolled by CMS in the Part D
prescription drug program. They automatically qualify for the full
subsidy and do not need to file an application. These beneficiaries are
referred to as "deemed."
* Partial-benefit dual eligibles: These are Medicare beneficiaries who
qualify for more limited Medicaid coverage, SSI, or state Medicare
Savings Programs.[Footnote 6] Similar to full-benefit dual eligibles,
they are automatically enrolled in a Part D prescription drug plan by
CMS. They also automatically qualify for the full subsidy and do not
need to file an application. They are also referred to as "deemed."
² Other Medicare beneficiaries: Medicare beneficiaries who are not
deemed eligible must apply and meet the income and resource
requirements to receive the subsidy. These beneficiaries generally
qualify if they have incomes below 150 percent of the federal poverty
level and have limited resources.[Footnote 7] In addition to applying
for the subsidy, these individuals must also apply to enroll in the
Part D prescription drug plan. Low-income subsidy benefits are provided
to these individuals on a sliding scale, depending on their income and
resources.
Table 1: Part D Low-Income Subsidy Eligibility and Benefits, by
Beneficiary Group, 2007:
Type of beneficiary: Full-benefit dual eligibles[C, D];
Income[A]: At or below 100 percent of the federal poverty level, (FPL)
(at or below $10,210 for individuals or $13,690 for couples);
Resources[B]: Not applicable[E];
Monthly premium and annual deductible: 0 premium and 0 deductible;
Co-pay: $1/generic and $3.10/brand name drug; no co-pay after $3,850 in
annual out-of-pocket drug spending; no co-pay if institutionalized.
Type of beneficiary: Full-benefit dual eligibles[C, D];
Income[A]: Above 100 percent of FPL (above $10,210 for individuals or
above $13,690 for couples);
Resources[B]: Not applicable[E];
Monthly premium and annual deductible: 0 premium and 0 deductible;
Co-pay: $2.15/generic and $5.35/brand name drug; no co-pay after $3,850
in annual out-of-pocket drug spending; no co-pay if institutionalized.
Type of beneficiary: Partial-benefit dual eligibles[F] (participants in
a Medicare Savings Program or Supplemental Security Income (SSI)
beneficiaries[D]);
Income[A]: Varies according to type of beneficiary. For Medicare
Savings Program and SSI beneficiaries, income levels are set by income
eligibility requirements for those programs;
Resources[B]: Not applicable[E];
Monthly premium and annual deductible: 0 premium and 0 deductible;
Co-pay: $2.15/generic and $5.35/brand name drug; no co-pay after $3,850
in annual out-of-pocket drug spending.
Type of beneficiary: Other subsidy-eligible beneficiaries;
Income[A]: Below 135 percent of FPL (less than $13,784 for individuals
or $18,482 for couples);
Resources[B]: Below $7,620 for individuals or $12,190 for couples;
Monthly premium and annual deductible: 0 premium and 0 deductible;
Co-pay: $2.15/generic and $5.35/brand name drug; no co-pay after $3,850
in annual out-of-pocket drug spending.
Type of beneficiary: Other subsidy-eligible beneficiaries;
Income[A]: Below 135 percent of FPL (less than $13,784 for individuals
or $18,482 for couples);
Resources[B]: Between $7,620 and $11,710 for individuals, or between
$12,190 and $23,410 for couples;
Monthly premium and annual deductible: 0 premium and $53 deductible;
Co-pay: 15 percent co-pay between $54 and $3,850 in annual out of
pocket spending; $2.15/generic and $5.35/brand name drug after $3,850
in annual out-of-pocket drug spending.
Type of beneficiary: Other subsidy-eligible beneficiaries;
Income[A]: Between 135 and 149 percent of FPL (between $13,784 and
$15,315 for individuals or between $18,482 and $20,535 for couples);
Resources[B]: Below $11,710 for individuals or $23,410 for couples;
Monthly premium and annual deductible: Sliding scale premium based on
income and $53 deductible;
Co-pay: 15 percent co-pay between $54 and $3,850 in annual out-of-
pocket spending; $2.15/generic and $5.35/brand name drug after $3,850
in annual out-of pocket drug spending.
Type of beneficiary: Medicare beneficiaries who are not eligible for
the subsidy[G];
Income[A]: 150 percent of FPL or more (above $15,315 for individuals or
above $20,535 for couples);
Resources[B]: $11,710 or more for individuals or $23,410 or more for
couples;
Monthly premium and annual deductible: Variable premium, based on plan
chosen, an average of $32 per month; $265 deductible;
Co-pay: 25 percent co-pay between $266 and $2,400 in annual out-of-
pocket spending; no benefit between $2,400 and $3,850; 5 percent
coinsurance or $2.15/generic and $5.35/brand name drug after $3,850 in
annual out-of-pocket drug spending[H].
Source: GAO analysis of the MMA, as well as CMS and SSA regulations and
guidance.
[A] The income limits shown above are those that apply to individuals
with no dependents. If household members rely on the Medicare
beneficiary or the spouse of the beneficiary for support, SSA uses the
federal poverty levels based on household size. Also, if an applicant
lives in Alaska or Hawaii, SSA applies the slightly higher poverty
levels applicable to those states.
[B] These resource limits include $1,500 per person burial expenses for
the individual and the spouse if there is one, and they live together.
[C] These individuals receive full Medicaid benefits. For all
beneficiaries eligible for the full subsidy, premiums are 0 for those
prescription drug plans that offer basic coverage at or below the
standard Part D premium. Beneficiaries may be eligible for the full
subsidy amount, but still pay some portion of their premium if they
enroll in a plan whose premium is above the appropriate threshold. In
2007 the National Average Part D Benchmark Premium is $27.35.
[D] Both of these groups are deemed eligible for the subsidy and are
automatically signed up for it. Persons in the "other subsidy-eligible
beneficiaries" group must apply to receive the subsidy.
[E] The MMA does not impose a resource test when determining whether
individuals in these deemed groups qualify for the low-income subsidy.
These beneficiaries, however, may be subject to a resource test in
order to qualify for Medicaid or other benefit programs.
[F] Medicare Savings Program participants include Qualified Medicare
Beneficiaries, Specified Low-Income Medicare Beneficiaries, and
Qualifying Individuals.
[G] This group includes all nondeemed individuals who do not meet
either the income or resource test, or both.
[H] This is the standard benefit package under Part D. Actual cost-
sharing arrangements may vary by plan.
[End of table]
When Part D became available in January 2006, the prescription drug
coverage provided under Medicaid for the estimated 6.2 million dual
eligibles was transferred to Medicare Part D. To ensure that these
individuals did not have a lapse in their drug coverage when the Part D
benefit took effect in January 2006, CMS automatically enrolled them in
a randomly selected Part D drug plan that was within established low-
income subsidy benchmarks. [Footnote 8] For the initial enrollment
period, CMS also automatically enrolled beneficiaries who were
identified as eligible for the low-income subsidy, but had not selected
a prescription drug plan by the May 15, 2006, deadline.[Footnote 9] In
January 2007, approximately 630,000 dual eligibles, who were
automatically receiving the subsidy in 2006, lost their deemed status.
These were people who lost their Medicaid, Medicare Savings Plan, or
SSI coverage at some point during the year. To continue their subsidy
eligibility, these individuals needed to apply for the subsidy or
regain their deemed status. According to SSA, by mid-March 2007,
approximately 100,000 of these beneficiaries had applied and been
approved for the subsidy.
Applying for the Subsidy:
Medicare beneficiaries who do not automatically qualify for the Part D
low-income subsidy can apply for the benefit directly through SSA or
through their state Medicaid office. Individuals who apply through SSA
may submit their subsidy application using SSA's paper application or
an Internet application form. Applicants may also have their
information entered electronically by visiting an SSA field office or
by calling SSA's toll-free phone line. On the basis of applicant's
income and resource information, SSA issues a letter to inform the
applicant of whether or not he or she has been approved for the
subsidy. SSA sends a predecisional notice to applicants who appear to
be ineligible for the subsidy based on the income and resource
information they provided, and allows them 20 days to provide other
information for the agency to consider. If applicants do not provide
such information within the required time frame, SSA sends a final
letter to inform them that they do not qualify for the subsidy. If an
individual applies for the subsidy through SSA, SSA is responsible for
resolving any subsequent appeals, and for redetermining the applicant's
continued subsidy eligibility.
As required by the MMA, beneficiaries may also apply for the subsidy
through their state Medicaid office. However, according to state
Medicaid officials we spoke with, they have encouraged beneficiaries to
apply for the subsidy through SSA whenever possible. To prepare for
those beneficiaries that request to have their subsidy applications
processed by a state office, state Medicaid officials we spoke to said
that they modified their Medicare Savings Program or Medicaid
applications, when appropriate, to collect the necessary information
for subsidy determinations. As of March 2007, only the Colorado and
Kansas state Medicaid agencies have made Part D subsidy determinations.
When state Medicaid agencies make subsidy determinations for
individuals, they are also responsible for subsequent appeals and
redetermination decisions.
SSA Has Made Progress in Approving Subsidy Applicants, despite Barriers
That Hindered Its Outreach Efforts, but Measuring Its Success Is
Difficult:
SSA approved 2.2 million subsidy applicants as of March 2007, despite
factors that limited its efforts to identify the eligible population
and solicit applications; however, measuring the success of its efforts
is difficult because there are no reliable data on the size of the
eligible population. To compensate for the lack of reliable data on the
eligible population, SSA used data from a variety of federal sources to
initially target its outreach effort to approximately 18.6 million
potentially eligible Medicare beneficiaries, which it believed to be an
overestimate of the potentially eligible population. To solicit
applications from the approximately 18.6 million Medicare
beneficiaries, SSA launched an outreach effort that included mass
mailings and a public campaign of over 76,000 events held nationwide.
Though individuals' reluctance to share personal financial information
and other factors that initially hindered SSA's solicitation efforts
have lessened, various advocacy groups are concerned that eligibility
requirements and a complicated application may discourage potential
applicants. While advocacy group and state Medicaid agency officials we
interviewed believe that SSA has made some contact with all Medicare
beneficiaries eligible for the subsidy, they say that more personalized
assistance, such as door to door contact, is needed. While SSA provides
various personalized services to assist individuals in completing their
subsidy applications, agency officials told us that SSA does not have
the resources to go door to door to make contacts. We found that the
subsidy program's participation rate compares favorably to those of
other low-income programs at similar stages of implementation. However,
because no reliable data exist on the population of potential
eligibles, it is unclear how effective SSA's outreach efforts have
been.
SSA Approved 2.2 Million Subsidy Applicants, despite Barriers Limiting
Its Ability to Identify the Eligible Population and Solicit
Applications:
Although SSA faced barriers in identifying the population eligible for
the subsidy and soliciting applications from individuals, it had
approved 2.2 million subsidy applicants as of March 2007. SSA conducted
its initial outreach campaign from May 2005 to August 2006 to educate
individuals about the subsidy and to help them apply for it. SSA
officials told us that their outreach goals were to (1) ensure that as
many individuals potentially eligible for the subsidy were informed of
the benefit, (2) ensure that all potentially eligible Medicare
beneficiaries had an opportunity to apply for the benefit, and (3)
solicit 5 million subsidy applications over fiscal years 2005 and 2006
(SSA actually received 5.5 million applications during this time
period). To accomplish these goals, SSA launched an outreach campaign
that included over 76,000 events conducted in collaboration with
various federal, state, and local partners, such as state Medicaid
agencies, state health insurance programs, and various advocacy groups
for Medicare beneficiaries. SSA carried out the campaign by requiring
each of its field offices to conduct a certain number of outreach
events. These events were held at senior citizen centers, public
housing authorities, churches, pharmacies, and other venues. As figure
2 shows, the number of outreach events has declined significantly, from
a high of 12,150 in July 2005 to 230 at the completion of the campaign
in August 2006.
Figure 2: Total Number of SSA Outreach Events from May 2005 to August
2006:
[See PDF for image]
Source: GAO analysis of SSA data.
[End of figure]
Although SSA's initial outreach campaign has ended, SSA is continuing
to conduct outreach efforts to solicit applications from individuals
potentially eligible for the subsidy. For example, SSA has conducted
various activities to increase subsidy applications from individuals in
rural and homeless communities. SSA also recently launched a new
strategy during the week of Mother's Day to inform relatives and
caregivers about the subsidy, and is planning a similar effort during
Father's Day. Additionally, SSA is targeting approximately 630,000 dual
eligibles who lost their automatic eligibility for the subsidy to help
them apply for the subsidy. While SSA has incorporated its strategy for
continuing subsidy outreach efforts into its National Strategic
Communications Plan, the plan does not contain specific performance
goals and measures. As a result, SSA has no basis for assessing its
progress and identifying areas that require improvement.
Barriers That Limited SSA's Efforts in Identifying the Eligible
Population:
SSA initially targeted 18.6 million individuals who might be eligible
for the subsidy, which was an overestimate of the eligible population.
SSA took this approach because there were no reliable data on the size
of the eligible population. SSA developed the targeted population to
which to mail the subsidy applications by screening out Medicare
beneficiaries whose income made them ineligible for the Part D subsidy
using income data from its benefit records, as well as income data from
the Office of Personnel Management, the Department of Veterans Affairs,
the Railroad Retirement Board, and the Office of Child Support
Enforcement of the Department of Health and Human Services (HHS). SSA
realized that using these data sources would result in an overestimate
of the number of individuals who might qualify for the subsidy. While
the data provided information on individuals' income, it provided
limited information on individuals' assets or nonwage income, which is
needed to determine eligibility for the subsidy. Because of the lack of
such information, SSA proceeded with a more generalized targeting of
Medicare beneficiaries to ensure that all individuals who were
potentially eligible for the subsidy were made aware of the benefit and
had an opportunity to apply for it. SSA officials said that they would
have preferred to specifically target Medicare beneficiaries who were
more likely to be eligible for the subsidy by using tax data from IRS
on individuals' wage, interest, and pension income, which would be
needed to determine individuals' level of income and assets. Without
such data, SSA can neither estimate how many individuals might qualify
for the subsidy nor identify individuals to target for more direct
outreach. The officials said that their prior experience with other low-
income-based programs had shown that more targeted outreach efforts
helped to elicit a higher response rate. Current law permits SSA to
obtain income and asset data from IRS to assist in verifying income and
asset data provided by individuals who have applied for the
subsidy.[Footnote 10] However, to protect the privacy of taxpayer
information and enhance tax compliance, the law prohibits disclosures
of such information to identify individuals who may be eligible for the
subsidy, but have not applied.
In a November 2006 report, the HHS Office of Inspector General reported
that legislation is needed to provide SSA and CMS access to income tax
data to help the agencies more effectively identify beneficiaries
potentially eligible for the subsidy.[Footnote 11] While SSA uses
various sources of information to identify individuals' income, it does
not have access to income data that could assist in imputing an
individual's level of assets, which it believes could be provided
through IRS income tax data. SSA estimates individuals' assets because
IRS income tax return and other tax data do not contain asset
information. However, IRS officials told us that its data have many
limitations that could affect their usefulness. For example, IRS
officials said that they have limited data on assets for individuals
whose income is less than $20,000, because these individuals do not
typically have interest income, private pensions, or dividend income
from stocks that could assist SSA in estimating an individual's
potential asset level. Also, the officials said that many people with
low incomes are not required to file taxes, and therefore IRS would
have only limited information on them.[Footnote 12] IRS officials also
explained that tax data could most likely identify individuals who
would not qualify for the subsidy, rather than those who would.
Conversely, the officials stated that tax data might incorrectly
eliminate some people who might qualify for the subsidy, which could
result in SSA not contacting them. Moreover, the IRS officials said
that the data it provides to SSA to determine eligibility could be
almost 2 years old and may not reflect an individual's current income.
For example, for subsidy applications in 2007, the last full year of
tax data the IRS could provide would be for 2005. Given these various
factors, IRS officials stated that summarily sharing private taxpayer
data to identify individuals who could qualify for the subsidy, and the
potential cost of systems changes, would have to be weighed against the
added value of the data. Despite IRS's position on the limitations of
its data on low-income taxpayers, SSA officials believe that IRS data
can still help to better target the eligible population. However, no
effort has been undertaken to determine the extent to which IRS income
data could benefit SSA in this effort, or improve estimates of the
eligible population. Legislation is currently pending before the
Congress to permit IRS to share taxpayer data with SSA to assist the
agency in better identifying individuals who might be eligible for the
subsidy.
Barriers That Limited SSA's Solicitation Efforts:
Although SSA has approved 2.2 million applicants for the subsidy, it
initially faced difficulties in soliciting applications. To solicit
applications, SSA sent its first targeted mailing to the 18.6 million
potentially eligible individuals between May and August 2005. The
mailings included an application for the subsidy and instructions on
how to apply. SSA worked with various focus groups to develop the
application, which included questions about applicants' income and
resources, the value of life insurance policies, and household size.
Appendix II provides the total number of subsidy applications mailed by
state. After the subsidy applications were mailed, a contractor then
made phone calls to 9.1 million beneficiaries who had not responded to
the initial mailing, and SSA made 400,000 follow-up calls to the
beneficiaries who requested SSA assistance. SSA also conducted other
follow-up efforts, including sending follow-up notices to individuals
whom the contractor was unable to contact and to specific subgroups
that it identified as having a high likelihood of qualifying for the
subsidy, such as the disabled; individuals over 79 years of age living
in high-poverty areas; and individuals in Spanish-speaking, Asian-
American, and African-American households. In addition, SSA called over
300,000 Medicare beneficiaries who had not applied, but had previously
qualified for a temporary Medicare drug discount card, and included
information about the subsidy in its 2005 and 2006 annual cost of
living adjustment notices to Social Security beneficiaries and its
annual Medicare Savings Program outreach letters.
SSA's efforts to solicit applications were hindered by various factors,
including individuals' confusion over the difference between the
prescription drug program and the subsidy, the reluctance of some
individuals to share personal financial information, and eligibility
requirements, among other factors. According to SSA field office staff
and state Medicaid and advocacy group officials, many individuals were
confused about the difference between the prescription drug program and
the subsidy, and did not understand that they involved separate
application processes, although the subsidy application and the
decision letters explained that Part D enrollment was a separate
process. Consequently, some individuals thought that once they were
approved for the subsidy, they were automatically enrolled in a
prescription drug plan and vice versa to a lesser extent. SSA field
office staff and advocacy group officials also told us some individuals
were reluctant to apply because they did not want to share their
personal financial information for fear that an inadvertent error on
the application could subject them to prosecution under the
application's perjury clause.[Footnote 13] Though the impact of these
factors has lessened as individuals have become more educated about the
subsidy, concerns remain about eligibility requirements and the overall
complexity of the application. For example, SSA field office staff and
advocacy group officials said that the subsidy's resource test may
render some low-income individuals ineligible because of retirement
savings or the value of other resources. Legislation has been proposed
to increase the resource limit to allow more beneficiaries to qualify
for the subsidy. Advocacy group officials also said that the
application may be too complex for many elderly and disabled
beneficiaries to understand and complete without the assistance of a
third party. SSA headquarters officials told us that they have revised
the subsidy application several times to address such concerns, but
that much of the information that applicants may view as complex is
required by the MMA.
Measuring the Success of SSA's Outreach Efforts is Difficult because of
the Lack of Reliable Data on the Eligible Population:
Although the low-income subsidy participation rate compares somewhat
favorably to those of some low-income programs during similar stages of
implementation, the success of SSA's efforts is uncertain because no
reliable data exist on the total number of individuals potentially
eligible for the subsidy. Using available estimates of the potentially
eligible population, SSA approved between 32 to 39 percent of the
eligible population who were not automatically deemed by CMS for the
subsidy. According to these estimates by CMS, the Congressional Budget
Office, and other entities, there are between about 3.4 million to 4.7
million individuals who are eligible for the subsidy, but have not yet
applied (See table 2). In developing these estimates, however, these
entities faced the same data limitations as SSA in identifying
potentially eligible individuals.
Table 2: Medicare Part D Low-Income Subsidy Estimates of the Eligible
Population Who Must Apply to Receive the Subsidy:
Numbers in millions.
Source of estimate: Congressional Budget Office[B];
Eligible but not automatically approved[A](Column A): 6.6;
SSA subsidy approvals as of as of March 2007 (and estimated
participation rate) Column B): 2.2 (33%);
Eligible but have not yet applied (Column A minus B): 4.4.
Source of estimate: Access to Benefits Coalition[C];
Eligible but not automatically approved[A](Column A): 6.8;
SSA subsidy approvals as of as of March 2007 (and estimated
participation rate) Column B): 2.2 (32%);
Eligible but have not yet applied (Column A minus B): 4.6.
Source of estimate: Rice and Desmond[D];
Eligible but not automatically approved[A](Column A): 6.9;
SSA subsidy approvals as of as of March 2007 (and estimated
participation rate) Column B): 2.2 (32%);
Eligible but have not yet applied (Column A minus B): 4.7.
Source of estimate: Centers for Medicare and Medicaid Services[E];
Eligible but not automatically approved[A](Column A): 5.6;
SSA subsidy approvals as of as of March 2007 (and estimated
participation rate) Column B): 2.2 (39%);
Eligible but have not yet applied (Column A minus B): 3.4.
Sources:
[A] We derived these numbers by subtracting the 7.6 million
beneficiaries that CMS estimated in January 2007 were deemed for the
subsidy, or had comparable coverage from other federal programs, from
the sources' original estimates of all eligible beneficiaries (except
for the Rice and Desmond estimate, which included only undeemed
beneficiaries).
[B] Congressional Budget Office (CBO), A Detailed Description of CBO's
Cost Estimate for the Medicare Prescription Drug Benefit, table 8,
Washington, D.C.: July 2004. The data were projected for calendar year
2006. CBO estimated that an overall total of 14.2 million beneficiaries
would be eligible for the subsidy in 2006.
[C] The Access to Benefits Coalition (Pathways to Success, page 1),
Washington, D.C: 2005. The Coalition estimated that an overall total of
14.4 million beneficiaries would be eligible for the subsidy in 2006.
[D] T. Rice and K. Desmond, January 2006. "Who Will Be Denied Medicare
Prescription Drug Subsidies Because of the Asset Test?" The American
Journal of Managed Care. 12 (1), pp.46-54. The authors estimated that a
total of approximately 6.9 million eligible individuals would not be
deemed, as of January 2006.
[E] Reported in CMS Press release, "Medicare Drug Plans Strong and
Growing: Beneficiaries Compared Plans and Continued to Sign Up for
Prescription Drug Coverage, " Washington, D.C: January 30, 2007. CMS
estimated that an overall total of 13.2 million beneficiaries would be
eligible in 2006.
[End of table]
SSA officials said that it is unfair to judge the success of its
outreach efforts for the subsidy in relation to these estimates, given
the limitations in identifying the size of the eligible population. SSA
officials stated that the program has been successful in meeting its
internal outreach goals. The advocacy group officials we interviewed
agreed that SSA has informed all Medicare beneficiaries of the benefit
and provided them with the opportunity to apply, but advocates
questioned the effectiveness of SSA's outreach methods because of the
lack of personal assistance available for elderly and disabled
individuals who may not be connected to a social service organization
and may not be able to go into an SSA field office. Advocacy groups
believe that a more personalized outreach approach, such as door-to-
door contact, is needed to encourage these individuals to apply for the
subsidy. However, SSA officials also stated that door-to-door contact
with individuals would be a resource intensive and costly endeavor for
the agency.
After over 2 years of implementation efforts, however, SSA's estimated
participation rate of 32 to 39 percent of individuals who were not
automatically deemed eligible for the subsidy compares favorably to
those of some other low-income programs at a similar stage of
implementation. SSA's participation rate is around 68 to 74 percent
when the deemed population is included. However, we focused on the
participation rate of the nondeemed population, because this is the
population of individuals who had to sign up for the subsidy and to
whom SSA targeted its outreach efforts. After its second year of
national implementation in 1976, the Food Stamp Program had an
estimated participation rate of 31 percent. During its second year of
implementation in 1975, the SSI program had an estimated participation
rate of 50 percent for those 65 or older. According to SSA officials,
two-thirds of the early elderly participants were automatically
transferred from state government programs to SSI (these individuals
are similar to those deemed eligible for the Part D low-income
subsidy). In both instances, the low-income subsidy participation rate
compares favorably.
SSA's Processes for Determining Applicants' Subsidy Eligibility,
Resolving Appeals, and Redetermining Eligibility Lack Key Tools for
Monitoring Performance:
SSA has established subsidy application processes for determining
applicants' subsidy eligibility, resolving appeals, and redetermining
subsidy eligibility, but has not established some key tools needed to
monitor the performance of all of its processes. For example, while SSA
tracks various information from its subsidy application processes
through its Medicare database and other means, it does not track
information on processing times for redeterminations, and does not
currently have performance goals to monitor the timeliness of appeals
and individual redetermination decisions. To enable agencies to
identify areas in need of improvement, GAO internal control standards
state that agencies should establish and monitor performance measures
and indicators.[Footnote 14] Accordingly, agencies should compare
actual performance data against expected goals and analyze the
differences.
Eligibility Determinations:
To determine individuals' eligibility for the subsidy, SSA largely
relies on an automated process. After an individual applies, income and
resource data provided by the applicant are electronically compared to
income data provided by IRS and other agencies to determine if the
individual meets income and resource requirements. In cases where there
are conflicting data or questions regarding the data, SSA field office
staff follow up with individuals to address such matters. SSA tracks
the number of eligibility determinations it makes, the outcome of those
determinations, and the length of time for completing the
determinations. SSA also tracks data on denials, and periodically
conducts samples to examine the reasons for such actions. Although the
subsidy did not become available until January 2006, SSA began
processing applications in July 2005 to encourage people to take
advantage of the benefit when it became available.
As of March 2007, approximately 6.2 million individuals had applied for
the subsidy. SSA officials noted that the heaviest volumes occurred
when the public outreach campaign was most active. Figure 3 provides
data on the cumulative number of subsidy applicants and approvals from
November 2005, when SSA began tracking the data, to December 2006.
Figure 3: Cumulative Number of Subsidy Applicants and Approvals,
November 2005 to December 2006:
[See PDF for image]
Source: GAO analysis of SSA data.
Note: SSA did not have data available for the months of June, August,
September, and November of 2006.
[End of figure]
Of the approximately 6.2 million individuals who had applied for the
subsidy as of March 2007, SSA approved 2.2 million, denied 2.6 million,
determined that no decision was required for 1.4 million, and had
decisions pending for 80,000 applicants. According to SSA officials,
those requiring no decision were the result of duplicate applications,
applications from individuals automatically qualified for the subsidy,
or canceled applications.[Footnote 15] To identify reasons for subsidy
denials, SSA conducted three separate studies that sampled a total of
1,326 denied claims. These studies showed that most of applicants were
denied due to resources or income that exceeded allowable limits set by
the MMA (fig. 4). SSA officials stated that they plan to conduct a
longitudinal study to examine the reasons for all cases in which
applicants were denied the subsidy.
Figure 4: Reasons for Subsidy Denials Based on SSA's Sampling of Denied
Claims:
[See PDF for image]
Source: GAO analysis of SSA data.
[End of figure]
While SSA has captured data on the length of time it takes to make
eligibility determinations since it began accepting applications for
the subsidy in July 2005, it did not develop the capability to report
the data, and did not establish a performance goal for processing times
until March 2007. As a result, SSA did not have the management
information that it needed to monitor its performance in this area and
identify areas where improvements were needed. SSA has now established
a goal of processing 75 percent of subsidy applications in 60
days.[Footnote 16] In March 2007, SSA provided us with information
showing the percentage of subsidy applications processed within certain
periods of time, ranging from 30 days or less, to over 120
days.[Footnote 17] SSA's data as of mid-March for calendar year 2007
showed that of the approximately 213,000 applications received, SSA had
processed about 94 percent in 60 days or less, compared to nearly 91
percent of the approximately 1.3 million applications within the same
time frame for calendar year 2006.
Appeals:
Individuals may appeal denied subsidy determinations, as well as the
level of the subsidy, by calling SSA's national toll-free number or
calling, writing, or visiting any Social Security field office.
Individuals may also complete an appeals form available on SSA's Web
site and mail it in to SSA. Individuals have the choice of having their
appeal conducted through a telephone hearing or a case file review. To
process appeals, SSA established six Special Appeals Units. SSA tracks
data on the total number of appeals and the time it takes to process
them, the method used to resolve appeals, the reason for appeals, and
the final disposition of appeals. However, SSA does not currently have
a performance goal to assess the timeliness of its appeals decisions,
and lacks the capability to report this information. In follow-up with
SSA officials on their comments on a draft of this report, they told us
that the agency is planning to establish a goal of processing 75
percent of appeals in 60 days, but will have to modify its system to
report this information. SSA officials told us that they have managed
the appeals process by redirecting resources when case-processing times
for appeals exceed 60 days.
Regarding data on SSA's appeals process, an SSA sample, conducted in
July 2006, showed that about 80 percent of individuals chose to have a
case file review. According to SSA data on appeals from August 2005 to
February 2007, it received about 79,000 appeals and completed about
76,000. The number of appeals was consistent with SSA's initial
estimate that about 3 percent of denied subsidy applications would be
appealed, based on its experience with other programs. On the basis of
an SSA sample of 781 appeals, SSA reversed its decision for 57 percent
of the cases and upheld its decision for the remaining 43 percent.
SSA data show that the overall volume of appeals received was the
highest from November 2005 and July 2006, declined between August and
November 2006, and rose again between December 2006 and February 2007
(See table 3). During the decline, SSA closed all but one of its
Special Appeals Units by October 2006.
Table 3: SSA Appeals Workloads, August 2005-February 2007:
Month: August 2005;
Number of appeals received: 23;
Number of appeals processed: 19;
Average processing time (in days): 1.6.
Month: September 2005;
Number of appeals received: 422;
Number of appeals processed: 253;
Average processing time (in days): 2.5.
Month: October 2005;
Number of appeals received: 1,981;
Number of appeals processed: 1,366;
Average processing time (in days): 6.1.
Month: November 2005;
Number of appeals received: 7,443;
Number of appeals processed: 2,498;
Average processing time (in days): 11.3.
Month: December 2005;
Number of appeals received: 16,057;
Number of appeals processed: 4,883;
Average processing time (in days): 22.2.
Month: January 2006;
Number of appeals received: 13,023;
Number of appeals processed: 4,543;
Average processing time (in days): 40.0.
Month: February 2006;
Number of appeals received: 10,116;
Number of appeals processed: 8,070;
Average processing time (in days): 46.1.
Month: March 2006;
Number of appeals received: 8,714;
Number of appeals processed: 12,614;
Average processing time (in days): 68.2.
Month: April 2006;
Number of appeals received: 3,305;
Number of appeals processed: 11,611;
Average processing time (in days): 80.1.
Month: May 2006;
Number of appeals received: 3,467;
Number of appeals processed: 10,221;
Average processing time (in days): 88.3.
Month: June 2006;
Number of appeals received: 2,709;
Number of appeals processed: 8,209;
Average processing time (in days): 80.2.
Month: July 2006;
Number of appeals received: 1,913;
Number of appeals processed: 1,795;
Average processing time (in days): 90.5.
Month: August 2006;
Number of appeals received: 983;
Number of appeals processed: 1,276;
Average processing time (in days): 75.8.
Month: September 2006;
Number of appeals received: 613;
Number of appeals processed: 1,836;
Average processing time (in days): 58.7.
Month: October 2006;
Number of appeals received: 226;
Number of appeals processed: 1,261;
Average processing time (in days): 71.9.
Month: November 2006;
Number of appeals received: 689;
Number of appeals processed: 935;
Average processing time (in days): 48.6.
Month: December 2006;
Number of appeals received: 3,014;
Number of appeals processed: 1,254;
Average processing time (in days): 16.3.
Month: January 2007;
Number of appeals received: 2,603;
Number of appeals processed: 1,209;
Average processing time (in days): 25.6.
Month: February 2007;
Number of appeals received: 1,892;
Number of appeals processed: 2,463;
Average processing time (in days): 41.5.
Source: SSA Appeals Workload Summary, as of February 27, 2007.
[End of table]
The time it took SSA to process appeals varied widely, and did not
necessarily decrease when the caseloads grew smaller. For example, SSA
appeals workload data showed that it took SSA an average of 80 days to
resolve approximately 11,600 appeals in April 2006, but took about 90
days to resolve about 1,800 appeals in July 2006. SSA data from
December 2006 through February 2007 also show that the agency's
processing time for resolving appeals has not shown consistent
improvement. For example, it took SSA an average of 16 days to process
1,254 appeals in December 2006, but 42 days to process 2,463 appeals in
February 2007. An SSA July 2006 sample of 781 appeals showed that 63
percent of appeals were filed based on applicants' challenges regarding
an income issue, 24 percent were based on applicants' challenge
regarding a resource issue, and 13 percent were based on other issues,
such as an applicant's failure to respond to SSA requests for
additional data in a timely manner. SSA officials stated that the
agency plans to broaden the sampling effort to better understand the
reasons for appeals.
Redeterminations:
According to the MMA and SSA regulations, all recipients of the low-
income subsidy are required to have a redetermination of their
eligibility within 1 year after SSA first determines their
eligibility.[Footnote 18] Future redeterminations are required to be
conducted at intervals determined by the Commissioner. SSA's
regulations provide that these periodic redeterminations be conducted
based on the likelihood that an individual's situation may change in a
way that affects subsidy eligibility. Additionally, SSA's regulations
provide that unscheduled redeterminations may take place at any time
for individuals who report a change in their circumstances, such as
marriage or divorce. However, there is no specific requirement that
recipients report such changes. SSA tracks various results from the
redeterminations process, such as the number of decisions made, and
number and level of continued subsidies, but does not track the amount
of time needed to complete redetermination decisions.
SSA initiated its first cycle of redeterminations in August 2006, which
included all of the approximately 1.7 million individuals who were
determined to be eligible for the subsidy prior to April 30, 2006. SSA
excluded from the redeterminations process about 562,000 individuals
who were either deceased, automatically deemed eligible for the benefit
by CMS, or whose subsidy benefit had been terminated. As a result, SSA
sent approximately 1.2 million notices to inform individuals that their
continued eligibility status was being reviewed. The notice also
provided individuals with the income and resources data contained in
SSA's files and asked them to notify SSA if the information had
changed. SSA subsequently sent 242,000 forms to beneficiaries who
reported changes to their income or resources, or whom SSA had
identified as having such changes from other sources, to allow them to
indicate changes to the information or dispute it. SSA data show that
as of February 2007, SSA had completed approximately 237,000
redeterminations. About 69,000 individuals remained at the same subsidy
level, another 69,000 had a change in their subsidy level, and 98,000
individuals had their subsidies terminated, based on a change in their
circumstances.
SSA does not track processing time for redetermination decisions and
has not established a performance time target for processing such
actions. SSA officials stated that since the redeterminations process
is conducted within a certain period of time, it is unnecessary to
track the processing time for individual redetermination decisions.
However, as stated previously, GAO internal control standards state
that agencies should establish performance measures for all activities
and compare actual performance against expected goals. Without such
data, SSA will be unable to identify areas in need of improvement.
The Impact of the Subsidy Program Has Been Manageable:
Although the subsidy program affected SSA's workload and operations,
SSA officials said that the additional workload was manageable overall.
SSA hired a total of 2,200 field office staff to assist with subsidy
applications, as well as an additional 500 headquarters staff to
support its MMA activities. SSA officials stated that the agency's
major activities for implementing low-income subsidy activities for
fiscal year 2004 included preparing public information materials for
the subsidy, systems development, and developing internal training
materials for staff. Officials also stated that major subsidy work
activities for fiscal year 2005 included hiring the approximately 2,200
field office staff, processing subsidy applications, and establishing
Special Appeals Units. For fiscal year 2006, SSA provided us with data
showing that staff spent the equivalent of approximately 2,190 work
years on low-income subsidy activities, with almost 50 percent of the
time used to process subsidy applications. These activities included
processing subsidy applications and resolving appeals, and developing
business process planning and systems development for the
redeterminations process.
SSA officials stated that the agency's new responsibilities under the
subsidy program have not adversely affected its other workloads. In
fact, SSA officials pointed out that the processing times for other
workloads improved in fiscal years 2005 and 2006. For example, SSA
exceeded its goal of paying 83 percent of initial claims for retirement
and survivor benefits at the earliest point due, or 14 days after an
applicant filed a claim--the actual performance was approximately 85
and 87 percent, respectively. Additionally, SSA exceeded its goal of
paying 75 percent of SSI claims for the elderly before their payment
was due, or no more than 14 days after an applicant filed a claim--the
actual performance was approximately 85 and 88 percent, respectively.
Although SSA can track expenditures for implementing its various MMA
responsibilities overall, it cannot track expenditures related
specifically to low-income subsidy activities or other specific
sublevel MMA activities. For example, SSA cannot calculate the total
amount of the $500 million congressional appropriation it received for
MMA start-up costs that was spent on the subsidy program versus its
other MMA responsibilities. Although SSA could not provide
documentation of the total amount of its subsidy-related expenditures,
it estimates that its costs related to the subsidy program are about
$175 million annually, based on workload samples. However, SSA is
planning to develop a tracking mechanism to more accurately capture the
data.
SSA officials attribute the light impact of the subsidy program to
various factors, including the automation of the subsidy application
process and the $500 million congressional appropriation it received
for administrative start-up costs to implement its MMA
responsibilities. SSA officials also told us that they were able to
manage the other workloads because the peak increases in subsidy
applications and inquiries were short-lived, allowing SSA's operations
to return to a more normal operating level after handling these peak
work volumes. SSA officials stated that they expect small increases in
its low-income subsidy workload during future prescription drug plan
open seasons, which typically have been held from November to December.
SSA's spending on its Medicare activities peaked in fiscal year 2005
(see table 4) as supported by the $500 million congressional
appropriation for MMA start-up activities; more recent increases in
such spending could cause pressure on SSA's other workloads in the
future. The amount of SSA's administrative costs covered by the
Medicare Trust Funds increased by about 37 percent between fiscal year
2003 and estimated spending in fiscal year 2008. The minimal impact of
the subsidy workload and other MMA activities through fiscal year 2006
was due, in part, to the $500 million separately appropriated by the
Congress. Now that the additional $500 million is exhausted, SSA's MMA
responsibilities must compete with all other workloads for resources
within the overall administrative appropriation limits. If the cost of
SSA's Medicare workload increases, as it has done recently, SSA's other
workloads may experience pressure if the overall administrative
appropriation does not increase proportionately.
Table 4: SSA's Outlays Covered by the Medicare Trust Funds, Fiscal
Years 2003-2008:
Dollars in millions.
Fiscal year: 2003;
Outlays, not including the $500 million congressional appropriation:
$1,214.6;
Outlays from the $500 million congressional appropriation: $0;
Total outlays: $1,214.6;
Percentage increase in total outlays since fiscal year 2003: -.
Fiscal year: 2004;
Outlays, not including the $500 million congressional appropriation:
1,184.0;
Outlays from the $500 million congressional appropriation: 53.9;
Total outlays: 1,237.9;
Percentage increase in total outlays since fiscal year 2003: 1.9 %.
Fiscal year: 2005;
Outlays, not including the $500 million congressional appropriation:
1,364.4;
Outlays from the $500 million congressional appropriation: 346.5;
Total outlays: 1,710.9;
Percentage increase in total outlays since fiscal year 2003: 40.9 %.
Fiscal year: 2006;
Outlays, not including the $500 million congressional appropriation:
1,568.8;
Outlays from the $500 million congressional appropriation: 111.4;
Total outlays: 1,680.2;
Percentage increase in total outlays since fiscal year 2003: 38.3 %.
Fiscal year: 2007 (estimate);
Outlays, not including the $500 million congressional appropriation:
1,600.1;
Outlays from the $500 million congressional appropriation: 0;
Total outlays: 1,600.1;
Percentage increase in total outlays since fiscal year 2003: 31.7 %.
Fiscal year: 2008 (request);
Outlays, not including the $500 million congressional appropriation:
1,661.5;
Outlays from the $500 million congressional appropriation: 0;
Total outlays: 1,661.5;
Percentage increase in total outlays since fiscal year 2003: 36.8 %.
Totals;
Outlays, not including the $500 million congressional appropriation:
$8,593.4;
Outlays from the $500 million congressional appropriation: $ 511.8[A];
Total outlays: $9,105.2[B];
Percentage increase in total outlays since fiscal year 2003: -.
Source: Social Security Administration, "Budget Justification for
Appropriations Committees," fiscal years 2005, 2006, 2007, and 2008.
Note: The $500 million appropriation for MMA start-up costs was
available for fiscal years 2004 to 2006 only.
[A] SSA officials stated that outlays appear to exceed the $500 million
appropriation due to the funds being outlayed, recovered, and then
outlayed again in subsequent years.
[B] The increase in Medicare spending occurred despite the transfer of
the Medicare appeals processing function from SSA to CMS in 2005.
[End of table]
Conclusions:
SSA has made progress in approving individuals for the low-income
subsidy, but has not established specific performance goals and
measures for its outreach activities. Without such goals and measures,
SSA will not have a means to assess the effectiveness of its efforts,
or to identify areas that require improvement as it moves forward.
Having such goals and measures takes on heightened importance now since
SSA is conducting outreach efforts on a more limited basis. Although no
reliable data currently exist on the population of individuals who
might qualify for the subsidy, SSA does not need such data to establish
specific performance goals and measures to assess its outreach efforts.
For example, SSA could set specific goals and measures to assess the
effectiveness if its outreach efforts for subpopulations where there is
an underrepresentation of subsidy applications. Monitoring the progress
of such efforts could help SSA to identify areas where increased
outreach efforts are needed.
Assessing the performance of outreach efforts can also help SSA to make
more efficient use of staff resources by directing them to areas where
increased outreach efforts are needed to encourage applications among
underrepresented segments of the eligible population. While advocacy
groups have called for a more personalized outreach approach, such as
door-to-door contact, to encourage additional enrollments among
Medicare beneficiaries, it may be difficult for SSA to conduct such
efforts, given its resource limitations. Also, it is unclear how much
more outreach is needed, given the lack of reliable data on the
eligible population. The extent of additional outreach efforts will
also depend on SSA's ability to more precisely identify remaining
individuals eligible for the subsidy. However, it is not clear to what
extent additional taxpayer data from IRS could help SSA to better
target individuals potentially eligible for the subsidy. Until an
effort is undertaken to better determine the size of the population
that is eligible for the subsidy, it will be difficult for SSA and
others to assess its progress in approving individuals for the subsidy.
Finally, while SSA has considerable data on its subsidy application
processes, it lacks systematic performance indicators to compare
results to expected goals. Without processing time data for
redetermination decisions, and performance measures for all subsidy
application processes, SSA will not have the information that it needs
to assess the quality of the services it provides or to identify areas
of improvement. The importance of identifying people who could benefit
from the subsidy, coupled with ensuring a timely and reliable process
for deciding initial determinations, hearing appeals, and making
redeterminations, is essential to the success of the low-income
subsidy.
Recommendations for Executive Action:
To improve SSA's outreach efforts and its ability to measure the
effectiveness of the Medicare Part D low-income subsidy application
processes, we recommend that the Commissioner of Social Security:
² establish specific performance goals and measures for SSA's outreach
activities to provide the agency with a means to assess their
effectiveness in soliciting applications from additional individuals
who qualify for the subsidy, but have not yet applied, and:
² direct staff to begin collecting data on the processing time for
individual redetermination decisions, and establish performance
standards for processing time for the appeals and redetermination
decisions.
We also recommend that the Commissioners of SSA and IRS work together
to assess the extent to which IRS tax data may help SSA to better
target individuals who might qualify for the subsidy, possibly aiding
SSA in better targeting its outreach efforts. This effort could also
aid in developing more precise estimates of the eligible population and
help to better inform the Congress on legislative proposals to allow
IRS to share tax data with SSA to assist the agency with its outreach
efforts.
Agency Comments:
We obtained written comments on a draft of this report from the
Commissioners of SSA and IRS. SSA agreed in theory with our
recommendation to develop a comprehensive plan, with specific
performance goals and measures, to detail the agency's strategy for
encouraging individuals who qualify for the subsidy to apply. In its
response and in a follow-up discussion, SSA stated that it believes
that its National Strategic Communications Plan serves as a
comprehensive plan for its outreach efforts agencywide, but stated that
it would not be able to implement specific goals and measures due to
the lack of reliable data on the eligible population. We agree that
SSA's National Strategic Communications Plan serves as a comprehensive
plan for describing the agency's outreach efforts, and revised our
recommendation accordingly. However, we do not believe that data on the
potentially eligible subsidy population, while useful, are needed for
SSA to establish specific performance goals and measures to assess the
effectiveness of its outreach efforts.
SSA disagreed with our recommendation to begin collecting data on the
processing time for redetermination decisions, and establish
performance standards for processing times for appeals and individual
redetermination decisions. SSA stated that it monitors the time for
completing the overall redetermination cycle, which provides adequate
management controls for operational data. On the basis of GAO's
internal control standards, we believe that SSA should measure the time
for processing individual redetermination decisions because it could
provide the agency with information on the efficiency of processing
such decisions. While SSA stated that it had established a performance
standard for assessing the timeliness of appeals, in a follow-up
discussion with agency officials after receiving their comments, they
told us that the goal did not currently exist, but that the agency is
planning to establish a goal of processing 75 percents of appeals in 60
days. SSA officials added that the agency would have to conduct
additional programming to produce management information for this data.
SSA agreed with our recommendation for the agency to work with IRS to
assess the extent to which IRS tax data may help SSA to better identify
individuals who might qualify for the subsidy. SSA stated that it has
begun discussions with IRS to evaluate how such a study might be
designed. IRS also agreed with this recommendation and stated that it
is willing to work with SSA in conducting such a study. IRS emphasized,
however, that current law prohibits the agency from sharing tax
information, other than in statistical form, before an individual
applies for the subsidy. IRS also discussed various limitations that
could affect the usefulness of its tax data. For example, IRS stated
that its data may only be useful in screening out individuals who do
not qualify for the subsidy. In view of this, we adjusted our
recommendation to reflect that the study may assist SSA in better
targeting individuals who might qualify for the subsidy, rather than
identifying this population.
SSA's comments are reproduced in appendix III, and IRS comments are
reproduced in appendix IV. Technical comments provided by each of these
agencies have been included in the report as appropriate.
As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after its issue date. At that time, we will send copies of this report
to the Commissioner of SSA, the Secretary of HHS, the Commissioner of
IRS, and other interested parties. Copies will also be made available
at no charge on GAO's Web site at http://www.gao.gov.
If you have questions concerning this report, please call me on (202)
512-7215. Contact points for our Offices of Congressional Relations and
Public Affairs, respectively, are Gloria Jarmon, who may be reached on
(202) 512-4470, and Paul Anderson, who may be reached on (202) 512-
4800.
Signed by:
Barbara D. Bovbjerg:
Director, Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
To assess the Social Security Administration's (SSA) implementation of
the Medicare Part D low-income subsidy, we reviewed the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) to
understand SSA's responsibilities under the law. We also reviewed
various policies and regulations SSA established to carry out its new
responsibilities, as well as guidance provided to field office staff to
assist them in answering questions about the subsidy and taking subsidy
applications. We obtained information on SSA's implementation
activities from SSA officials in the agency's headquarters in
Baltimore, Maryland, and in two regional offices, and from management
and staff in eight SSA field office locations in Texas, Maryland,
Virginia, and Pennsylvania. We selected SSA offices in those states
because of the large number of subsidy applications that had been
mailed to individuals who were potentially eligible for the subsidy. In
addition, we selected SSA offices in Pennsylvania and Texas in
particular because they had counties (Philadelphia County in
Pennsylvania and Dallas and Fort Worth Counties in Texas) that had the
most low-income subsidy applicants as of June 2006. To understand state
Medicaid agencies' responsibilities for administering the subsidy, we
reviewed regulations provided to these agencies from the Department of
Health and Human Service's (HHS) Centers for Medicare and Medicaid
Services (CMS). In addition, we discussed views on SSA's implementation
actions and feedback that had been received from clients on the subsidy
with state Medicaid agency officials in Colorado, Kansas, Utah,
Pennsylvania, and Texas. We selected state Medicaid offices in
Colorado, Kansas, Pennsylvania, and Utah because they had established
processes to make low-income subsidy determinations. We also selected
the Colorado and Kansas state Medicaid agencies because we wanted to
gain the perspectives of state officials that had made low-income
subsidy determinations. We visited the Texas state Medicaid agency to
gain the perspective of a state that had not yet set up such a process,
but had plans to do so in the future. We also interviewed state Health
Insurance program officials in Pennsylvania and Texas, and officials
from six advocacy groups, including the Access to Benefits Coalition,
the Health Assistance Partnership of Families USA, and the Henry J.
Kaiser Family Foundation. To obtain a contextual framework of concerns
surrounding the subsidy and issues that could affect its
implementation, we reviewed reports from GAO, the Congressional
Research Service, the Office of Inspector General of HHS, and various
reports from advocacy groups representing the elderly and disabled,
whom the subsidy was primarily designed to benefit.
To assess SSA's progress in identifying individuals potentially
eligible for the subsidy, we discussed the methodology the agency used
to target this population with SSA Medicare Task Force officials
responsible for implementing the subsidy program; we also discussed
with them the agency's overall outreach strategy and obtained and
reviewed supporting documentation. In particular, we discussed in
detail how SSA developed the approximately 18.6 million population of
individuals to whom it targeted its original mass mailing of subsidy
material, as well as how it more narrowly targeted groups within that
population. We reviewed SSA's target population by looking at the
number of total Medicare recipients and estimates of the total eligible
population developed by the Congressional Budget Office, CMS, and
others. We also met with Internal Revenue Service (IRS) officials to
discuss the data restriction, and concerns officials would have if the
law were changed to grant SSA access to IRS data for better targeting
outreach efforts. To understand SSA's efforts to solicit subsidy
applications, we discussed with SSA officials the process used to
develop subsidy outreach materials and cognitive tests that had been
conducted to ensure that the materials were written at an appropriate
educational level for the target population. We discussed SSA's
outreach methodology with officials from CMS, state Medicaid agencies,
and various advocacy groups. Additionally, we discussed and obtained
supporting documentation of training provided to field office staff on
the subsidy and discussed with staff the usefulness of the training.
To review SSA's subsidy application processes--making eligibility
determinations, resolving appeals, and redetermining individuals'
continued subsidy eligibility--we reviewed the laws and regulations
relating to each of these processes and SSA's strategic plan for
relevant performance goals and measures. Specifically for the subsidy
eligibility determinations process, we reviewed monthly data on the
total number of subsidy determinations. For applicants that had been
denied the subsidy, we obtained and reviewed available data on the
reasons for the decisions. We requested SSA data on the timeliness of
the eligibility determinations, but were told that while SSA captured
the data in its Medicare Applications System, it had only recently
developed the business requirement to report the data. Regarding SSA's
appeals resolution process, we reviewed three SSA studies on samples of
appeals identifying the reasons for the appeals and the final
disposition of the appeal. We also reviewed SSA data on the total
number of appeals filed and the length of time for resolving them.
Regarding the redeterminations process, we reviewed data on the number
of determinations conducted during the first cycle in 2006 and the
statistics on the results. We discussed with SSA officials the actions
that it planned to take to provide information on these processes, as
well as SSA's plans for developing performance goals and measures for
these processes. On the basis of electronic data provided to us, we
were generally able to verify some data on the processing time for
eligibility determinations. However, we did not have all of the
information needed to verify the validity of other data.
To determine the impact that subsidy work activities had on SSA
operations, we discussed the issue with SSA headquarters officials and
field office managers and staff. In particular, we obtained and
reviewed SSA estimates of the resources the agency would need to
implement the low-income subsidy and discussed with SSA officials the
mechanisms for assessing the program's impact. We also coordinated with
another GAO team that is reviewing how SSA spent the $500 million
appropriation for implementing all of the agency's responsibilities
under the MMA. In addition, we reviewed SSA's methods for tracking
financial expenditures and staff time dedicated to Part D activities.
We also discussed with SSA the implications of possible budget
restrictions and reductions in carrying out its Part D work. Finally,
we reviewed SSA budget documents and spending on the Medicare Trust
Fund from fiscal year 2003 to fiscal year 2008.
We conducted our work between May 2006 and April 2007 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Subsidy Application Mailings by State, May 27, 2005-August
10, 2005:
State: Alabama;
Number of mailings: 343,448.
State: Alaska;
Number of mailings: 27,384.
State: Arizona;
Number of mailings: 363,084.
State: Arkansas;
Number of mailings: 237,524.
State: California;
Number of mailings: 1,614,086.
State: Colorado;
Number of mailings: 249,901.
State: Connecticut;
Number of mailings: 212,346.
State: Delaware;
Number of mailings: 54,086.
State: District of Columbia;
Number of mailings: 29,282.
State: Florida;
Number of mailings: 1,434,108.
State: Georgia;
Number of mailings: 479,699.
State: Hawaii;
Number of mailings: 99,611.
State: Idaho;
Number of mailings: 89,457.
State: Illinois;
Number of mailings: 769,394.
State: Indiana;
Number of mailings: 426,956.
State: Iowa;
Number of mailings: 251,207.
State: Kansas;
Number of mailings: 195,899.
State: Kentucky;
Number of mailings: 325,571.
State: Louisiana;
Number of mailings: 290,073.
State: Maine;
Number of mailings: 115,475.
State: Maryland;
Number of mailings: 332,418.
State: Massachusetts;
Number of mailings: 398,717.
State: Michigan;
Number of mailings: 658,889.
State: Minnesota;
Number of mailings: 312,476.
State: Mississippi;
Number of mailings: 186,890.
State: Missouri;
Number of mailings: 439,898.
State: Montana;
Number of mailings: 75,544.
State: Nebraska;
Number of mailings: 125,809.
State: Nevada;
Number of mailings: 137,367.
State: New Hampshire;
Number of mailings: 87,690.
State: New Jersey;
Number of mailings: 500,519.
State: New Mexico;
Number of mailings: 122,958.
State: New York;
Number of mailings: 1,136,243.
State: North Carolina;
Number of mailings: 637,564.
State: North Dakota;
Number of mailings: 53,037.
State: Ohio;
Number of mailings: 872,963.
State: Oklahoma;
Number of mailings: 265,009.
State: Oregon;
Number of mailings: 250,344.
State: Pennsylvania;
Number of mailings: 994,908.
State: Rhode Island;
Number of mailings: 75,955.
State: South Carolina;
Number of mailings: 315,913.
State: South Dakota;
Number of mailings: 64,853.
State: Tennessee;
Number of mailings: 381,972.
State: Texas;
Number of mailings: 1,069,524.
State: Utah;
Number of mailings: 96,433.
State: Vermont;
Number of mailings: 48,985.
State: Virginia;
Number of mailings: 469,428.
State: Washington;
Number of mailings: 362,295.
State: West Virginia;
Number of mailings: 176,397.
State: Wisconsin;
Number of mailings: 382,047.
State: Wyoming;
Number of mailings: 34,698.
Total:
Number of mailings: 18,676,334.
Source: Social Security Administration.
[End of table]
[End of section]
Appendix III: Comments from the Social Security Administration:
Social Security:
The Commissioner:
May 10, 2007:
Barbara D. Bovbjerg, Director:
Education, Workforce, and Income Security Issues:
U.S. Government Accountability Office:
441 G St., NW:
Washington, D.C. 20548:
Dear Ms. Bovbjerg:
Thank you for the opportunity to review and comment on the draft
report, "Medicare Part D Low-Income Subsidy: Additional Efforts Would
Help Social Security Improve Enrollment and Measure Program Effects"
(GAO-07-555).
Enclosed are our detailed comments to the draft report recommendations
along with suggested technical revisions.
If you have any questions, please contact Ms. Candace Skurnik,
Director, Audit Management and Liaison Staff, at (410) 965-4636.
Sincerely,
Signed by:
Michael J. Astrue:
Enclosure:
Social Security Administration:
Baltimore MD 21235-0001:
Comments On The Government Accountability Office (GAO) Draft Report.
"Medicare Part D Low-Income Subsidy: Additional Efforts Would Help
Social Security Improve Enrollment And Measure Program Effects" (GAO-
07-555):
Thank you for the opportunity to review and comment on the draft
report. We would like to offer some general comments regarding the
report. We would suggest changing the title of the report to "Medicare
Part D Low Income Subsidy: Additional Efforts Would Help Social
Security Improve Filing and Measure Program Effects." The term
"enrollment" is used in the Part D program to describe enrollment in
prescription drug plans. The Social Security Administration (SSA) does
not enroll Medicare beneficiaries in plans and the use of the phrase
could lead to a misconception on the part of the reader. This term is
used throughout the report to describe "filing" for the low-income
subsidy.
We also need to question the statement that the early subsidy filings
compare "somewhat less favorably to the first year of the Supplemental
Security Income (SSI) program." In looking at the SSI participation
rate, one has to separate the newly enrolled from the cases transferred
from the States. Please refer to Menefee, John A., Bea Edwards, and
Sylvester J. Schieber (1981), "Analysis of Nonparticipation in the SSI
Program, " Social Security Bulletin 44(6): 3-21. Their data are from
the Survey of Low-Income Aged and Disabled (SLIAD), which was conducted
by SSA in 1973 and 1974 around the time of SSI program implementation.
They produced estimates of participation rates in 1974 of 55 percent
for the aged and 54 percent for the disabled. They state:
"Basic SSI participation rates reflect the presence of large numbers of
transferred welfare cases. Automatic transfers from the old State-
managed public assistance programs accounted for two-thirds of the aged
and nearly three-fourths of the disability cases at the end of SSI's
first year of operation . Less than one-third of the combined SSI
caseload consisted of new (nontransferred) recipients in late 1974."
(p.6; Table 1):
The cover page and page 33 do not provide SSA's current goal for
processing subsidy applications. An interim goal of "50 percent of
subsidy applications in 60 days" was used to develop the systems
requirements for management information. The goal for calendar year
2007, established in March, is to process "75 percent of the subsidy
applications in 60 days."
Our comments on the draft report recommendations, along with technical
revisions are as follows:
Recommendation 1:
SSA should develop a comprehensive plan, with specific performance
goals and measures, to detail SSA's outreach strategy for enrolling
additional individuals who qualify for the subsidy.
Comment:
We agree in theory. The recommendation indicated SSA would have a basis
for developing specific goals and measures for its outreach strategy.
However, the "Conclusions" on page 28, 2nd paragraph of the report
include the following: "Also it is unclear how much more outreach is
needed, given the lack of reliable data on the eligible population. The
extent of additional outreach efforts will also depend on SSA's ability
to more precisely identify remaining individuals eligible for the
subsidy." Therefore, we would not be able to implement specific goals
and measures at this time due to the lack of reliable data on the
eligible population.
We will continue our outreach efforts to identify individuals
potentially eligible for the subsidy and solicit applications from
them. The subsidy outreach was incorporated in our ongoing general
outreach activities. This includes on a national level, working closely
with national organizations, preparing new and updated Medicare
Modernization Act (MMA) outreach products and placing educational/
informational updates and articles in websites, bulletins, programs and
newsletters. On a local field office (FO) level, it means continuing to
work with local community organizations and advocacy groups to find
beneficiaries who may be eligible for the extra help and assist them in
applying. It also means that when a Medicare beneficiary contacts a FO
or our 800 number for other Social Security business, we discuss with
them the potential eligibility for extra help.
In addition, from May to June 2007, SSA will mail notice to
approximately 6 million low-income Medicare beneficiaries informing
them about the Medicare Savings Programs and the extra help (such a
mailing is made every year). We are also continuing to mail
approximately 100,000 applications each month to beneficiaries
attaining initial Medicare eligibility after screening them to
determine that their income is below 150 percent of the Federal Poverty
Level. As in past years, SSA has incorporated its message on extra help
in its Cost-Of-Living Adjustment letters sent each December to over 50
million beneficiaries.
Since GAO met with SSA officials in March, SSA has announced a new
strategy in our continuing efforts to inform the public about extra
help. The theme, "Show Someone You Love How Much You Care," is designed
to inform relatives and caregivers - the sons, daughters, grandchildren
and family friends about the "extra help" program. This new strategy is
being launched this week for Mother's Day. SSA employees across the
country are visiting their local community centers, grocery stores,
flower shops, restaurants and places of worship in a focused effort to
inform the public about "extra help." SSA also plans to publicize this
in the local media. The outreach effort will continue throughout the
year, with a second series of targeted events scheduled for Father's
Day. For both Mother's and Father's Day, themed brochures will be
distributed.
Recommendation 2:
SSA should direct staff to begin collecting data on the processing time
for redetermination decisions and establish performance standards for
processing time for the appeals and redetermination process.
Comment:
We disagree. As noted in the report, SSA monitors the time for
completing the overall redetermination cycle which provides adequate
management controls for operational data. The approach that SSA has
adopted with MMA is consistent with our approach in managing the
redetermination process for the SSI program. Since these MMA
redeterminations are done during a short time frame (from August to
December of each year), the decision was made not to invest limited
systems resources to develop such data.
SSA has also established the same performance goal for appeals as for
initial determinations, which is to process 75 percent of the appeals
in 60 days.
Recommendation 3:
The Commissioners of SSA and the Internal Revenue Service (IRS) should
work together to assess the extent to which IRS tax data may help SSA
to better identify individuals who might qualify for the subsidy,
possibly aiding SSA in better targeting outreach efforts.
Comment:
We agree. We have already been in discussions with IRS to evaluate how
such a study might be designed.
[End of section]
Appendix IV: Comments from the Internal Revenue Service:
Department Of The Treasury:
Internal Revenue Service:
Washington, D.C. 20224:
Commissioner:
May 18, 2007:
Ms. Barbara D. Bovbjerg:
Director, Education, Workforce, and Income Security Issues:
United States Government Accountability Office:
Washington, DC 20548:
Dear Ms. Bovbjerg:
Thank you for the opportunity to respond to your draft report entitled
"Medicare Part D Low-Income Subsidy, Additional Efforts Would Help
Social Security Improve Enrollment and Measure Program Effects" (GAO-
07-555).
Your report offers two primary recommendations. The first
recommendation is directed solely to the Social Security Administration
(SSA). The second recommendation encourages the Commissioners of the
SSA and the Internal Revenue Service (IRS) to work together to assess
the extent to which IRS tax data may help the SSA better identify
individuals who might qualify for the subsidy.
While the IRS is in agreement that a test should be performed to assist
the SSA in identifying individuals who might qualify for the Medicare
Part D low-income subsidy, we recommend changes to the wording of the
report. The final report should emphasize that current law prohibits
disclosures to identify those who may be eligible but have not applied
for the low-income subsidy. In addition, it should indicate that
Internal Revenue Code section 6103 restrictions are intentional and
designed to protect taxpayer privacy and enhance tax compliance. Any
exception to the general rule of confidentiality must be carefully
weighed against its potential negative impact on taxpayers'
expectations of privacy. We request that the final report reflect IRS
concerns regarding the usefulness (the business case) of using tax
information to identify those who may be eligible. These points were
made in GAO testimony for the Senate Finance Committee regarding the
report, and we request that the final report reflect the language used
in the testimony. Finally, we also ask that the report include the
additional points raised by the IRS in commenting on the proposed
testimony.
A detailed response to the recommendation is enclosed. If you have any
questions, please call Carolyn Tavenner, Assistant Deputy Commissioner
for Operations Support, Internal Revenue Service, at (202) 622-7602.
Sincerely,
Signed by:
Kevin M. Brown:
Acting Commissioner:
Enclosure:
Recommendation:
We also recommend that the Commissioners of SSA and IRS work together
to assess the extent to which IRS tax data may help SSA to better
identify individuals who might qualify for the subsidy, possibly aiding
SSA in better targeting its outreach efforts. This effort could also
aid in developing more precise estimates of the eligible population and
help to better inform the Congress on legislative proposals to allow
IRS to share tax data with SSA to assist the agency with its outreach
efforts.
Response:
The IRS agrees that a test should be conducted and is willing to work
with the SSA in that effort, with the understanding that present law
prohibits the IRS from sharing tax information (other than in
statistical form) as part of the test.
While this test may help determine the value of the IRS data in
assisting the SSA with this initiative, we believe that the data may be
useful only in screening out ineligible individuals. We estimate that
tax data will only screen out a few hundred thousand of the millions
who are potentially eligible, and could potentially screen out
potential eligibles. If the results of the test are not sufficiently
positive to warrant another exception to the general rule of
confidentiality, then we recommend that no legislative disclosure
exception to IRC 6103 should be pursued.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Barbara D. Bovbjerg (202) 512-7215 or bovbjergb@gao.gov:
Acknowledgments:
The following team members made key contributions to this report: Blake
Ainsworth, Assistant Director; Jeff Bernstein; Kyle Browning; Susannah
Compton; Mary Crenshaw; Rosamond Katz; Sheila McCoy; Lisa Reynolds;
Vanessa Taylor; and Paul Wright.
[End of section]
Related GAO Products:
Medicare Part D: Challenges in Enrolling New Dual-Eligible
Beneficiaries. GAO-07-272. Washington, D.C.: May 4, 2007.
Prescription Drugs: An Overview of Approaches to Negotiate Drug Prices
Used by Other Countries and U.S. Private Payers and Federal Programs.
GAO-07-358T. Washington, D.C.: January 11, 2007.
Medicare Part D: Prescription Drug Plan Sponsor Call Center Responses
Were Prompt, but Not Consistently Accurate and Complete. GAO-06-710.
Washington, D.C.: June 30, 2006.
Medicare: Communications to Beneficiaries on the Prescription Drug
Benefit Could Be Improved. GAO-06-654. Washington, D.C.: May 3, 2006.
Social Security Administration: Medicare Part D Subsidies. GAO-06-344R.
Washington, D.C.: January 13, 2006.
Medicare: Contingency Plans to Address Potential Problems with the
Transition of Dual-Eligible Beneficiaries from Medicaid to Medicare
Drug Coverage. GAO-06-278R. Washington, D.C.: December 16, 2005.
Medicare: CMS's Beneficiary Education and Outreach Efforts for the
Medicare Prescription Drug Prescription Drug Discount Card and
Transitional Assistance Program. GAO-06-139R. Washington, D.C.:
November 18, 2005.
Medicare: CMS's Implementation and Oversight of the Medicare
Prescription Drug Discount Card and Transitional Assistance Program.
GAO-06-78R. Washington, D.C.: October 28, 2005.
Retiree Health Benefits: Options for Employment-Based Prescription Drug
Benefits under the Medicare Modernization Act. GAO-05-205. Washington,
D.C.: February 14, 2005.
Medicare Savings Programs: Results of Social Security Administration's
2002 Outreach to Low-Income Beneficiaries. GAO-04-363. Washington,
D.C.: March 26, 2004.
(130580):
FOOTNOTES
[1] Pub. L. 108-173.
[2] Medicare is a health insurance program for people 65 years of age
or older, people under age 65 who meet certain disability requirements,
and people of all ages with end-stage renal disease (permanent kidney
failure requiring dialysis or a kidney transplant). There are currently
over 43 million Medicare beneficiaries.
[3] In addition to Part D, MMA gave SSA various new responsibilities,
which include, among others, (1) outreach regarding the Drug Discount
Card that was temporarily effective before the prescription drug plans
and the subsidy program took effect, (2) implementing Medicare Part B
income-based premiums for beneficiaries with income above a stipulated
level, and (3) premium withholding for Medicare Part C (e.g., Medicare
Advantage plans).
[4] Generally, individuals who meet certain criteria and who are
eligible for Social Security or Railroad Retirement benefits
automatically receive Hospital Insurance, known as part A, which helps
pay for hospital stays, related post hospital care, home health
services, and hospice care, and typically does not require a premium.
Medicare also offers optional insurance under Supplementary Medical
Insurance (Part B) to cover doctor's services and outpatient care, and
requires a premium.
[5] Medicaid is a federal and state program that helps pay medical
costs for certain low-income people, such as those who are 65 and
older, the blind, the disabled, and members of families with dependent
children or qualified pregnant women or children.
[6] Medicare Savings Programs are offered by state Medicaid agencies to
assist people with limited income and resources with their Medicare
premiums and, in some cases, may also pay Medicare Part A and Part B
deductibles and coinsurance.
[7] Countable resources include such things as savings, investments,
and real estate (other than an individual's primary residence).
Countable resources do not include such things as a car, a burial plot
or limited funds set aside for burial expenses, or certain other
personal possessions.
[8] CMS was required to automatically enroll in a Part D plan those
full-benefit dual eligibles who failed to do so themselves. For
purposes of ensuring a smooth transition to Part D coverage, CMS
notified those individuals that they would be enrolled in a particular
plan effective on a specified date, but provided them an opportunity to
select a different plan or to indicate that they did not wish to be
enrolled in a plan. If individuals did not indicate that they would
select their own plan or opt out of Part D coverage within the time
allotted in the notice, the plan selection made by CMS became
effective.
[9] The deadline applied to all individuals who were first eligible to
enroll in a Part D plan on or prior to January 31, 2006. Additional
rules regarding enrollment periods are set forth in CMS regulations, 42
C.F.R. § 423.38.
[10] Under 26 U.S.C. § 6103(1)(7)(C), IRS may only provide tax return
information to SSA for purposes of, and to the extent necessary in,
determining the eligibility for, or the correct amount of, benefits
provided through the subsidy program. In signing the application form,
individuals acknowledge that SSA will compare the information reported
by them on the form to information supplied by federal, state, and
local government agencies, including IRS.
[11] Department of Health and Human Services, Office of Inspector
General, Identifying Beneficiaries Eligible for the Medicare Part D Low-
Income Subsidy. OEI-03-06-00120. Washington, D.C.: Nov. 17, 2006.
[12] Individuals' income, filing status, and age generally determine
whether they must file an income tax return. For example, in 2006,
single individuals 65 or older were not required to file tax returns if
their income was less than $9,700, whereas a married couple 65 or
older, filing jointly, was not required to file tax returns if their
combined income was less than $18,900.
[13] The perjury clause states that an individual could face
imprisonment or other penalties for making a false or misleading
statement about information provided on the subsidy application.
[14] GAO, Internal Control Standards: Internal Control Management and
Evaluation Tool, GAO-01-1008G. Washington, D.C.: August 2001.
[15] Canceled applications included applications that were withdrawn by
the applicant or applications that were canceled by SSA because the
applicant was not eligible for Medicare, as required to qualify for the
subsidy.
[16] The processing time includes a built-in 20-day delay as part of
the predecisional process and the 10-14 days that it takes to receive
IRS data.
[17] SSA measured the processing time for eligibility determinations
from the date of the subsidy application or the date that the applicant
became eligible for Medicare, whichever was later.
[18] This does not include individuals who continue to be deemed or
automatically eligible for the subsidy. Individuals who report certain
changes to SSA regarding their benefit status are also excluded from
the initial redetermination process since they are redetermined as a
result of the change.
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