Medicare Part D Low-Income Subsidy
Progress Made in Approving Applications, but Ability to Identify Remaining Individuals Is Limited Gao ID: GAO-07-858T May 8, 2007To help the elderly and disabled with prescription drug 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). A key element of the prescription drug benefit is the low-income subsidy, or "extra help," available to Medicare beneficiaries with limited income and resources to assist them in paying their premiums and other out-of-pocket costs. To assess Social Security Administration's (SSA) implementation of the Medicare Part D low-income subsidy, GAO was asked to review (1) the progress that SSA has made in identifying and soliciting applications from individuals potentially eligible for the low-income subsidy, and (2) the processes that SSA uses to track its progress in administering the subsidy. This statement is drawn from GAO's ongoing study for the committee on the Medicare Part D low-income subsidy, which is expected to be published at the end of May. To conduct this work, GAO reviewed the law, assessed subsidy data, and interviewed officials from SSA, the Centers for Medicare and Medicaid Services, the Internal Revenue Service, state Medicaid agencies, and advocacy groups.
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 to identify the eligible population. SSA officials had hoped to use Internal Revenue Service (IRS) tax data to identify the eligible population, but the law prohibits the use of such data unless an individual has already applied for the subsidy. Even if SSA could use the data, IRS officials question its usefulness. Instead, SSA used income records and other government data to identify 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 and conducted an outreach campaign of 76,000 events nationwide. However, since the initial campaign ended, SSA has not developed a comprehensive plan to distinctly identify its continuing outreach efforts apart from other agency activities. SSA's efforts were hindered by beneficiaries' confusion about the distinction between applying for the subsidy and signing up for the prescription drug benefit, and the reluctance of some potential applicants to share personal financial information, among other factors. SSA has collected data and established some goals to monitor its progress in administering the subsidy, but still lacks data and measurable goals in some key areas. While SSA tracks various subsidy application processes through its Medicare database, it has not established goals to monitor its performance for all application processes. For example, SSA tracks the time for resolving appeals and the outcomes of its initial redeterminations of subsidy eligibility, but does not measure the amount of time it takes to process individual redetermination decisions. According to SSA officials, implementing the low-income subsidy was manageable overall due to increased funding for the outreach and application processes and did not significantly affect the agency's workload and operations. GAO is considering recommendations for SSA to work with IRS to assess the extent to which taxpayer data could help identify individuals who might qualify for the subsidy, and help improve estimates of the eligible population; and for SSA to develop a plan to guide its continuing outreach efforts and develop key management tools to measure the results of its subsidy application processes.
GAO-07-858T, Medicare Part D Low-Income Subsidy: Progress Made in Approving Applications, but Ability to Identify Remaining Individuals Is Limited
This is the accessible text file for GAO report number GAO-07-858T
entitled 'Medicare Part D Low-Income Subsidy: Progress Made In
Approving Applications, but Ability to Identify Remaining Individuals
Is Limited' which was released on May 8, 2007.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Testimony before the Senate Committee on Finance:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EDT:
Tuesday, May 8, 2007:
Medicare Part D Low-Income Subsidy:
Progress Made in Approving Applications, but Ability to Identify
Remaining Individuals Is Limited:
Statement of Barbara Bovbjerg, Director:
Education, Workforce, and Income Security Issues:
GAO-07-858T:
May 8, 2007:
GAO Highlights:
Highlights of GAO-07-858T, a testimony before the Senate Committee on
Finance
Why GAO Did This Study:
To help the elderly and disabled with prescription drug 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). A key element of the
prescription drug benefit is the low-income subsidy, or ’extra help,“
available to Medicare beneficiaries with limited income and resources
to assist them in paying their premiums and other out-of-pocket costs.
To assess Social Security Administration‘s (SSA) implementation of the
Medicare Part D low-income subsidy, GAO was asked to review (1) the
progress that SSA has made in identifying and soliciting applications
from individuals potentially eligible for the low-income subsidy, and
(2) the processes that SSA uses to track its progress in administering
the subsidy.
This statement is drawn from GAO‘s ongoing study for the committee on
the Medicare Part D low-income subsidy, which is expected to be
published at the end of May. To conduct this work, GAO reviewed the
law, assessed subsidy data, and interviewed officials from SSA, the
Centers for Medicare and Medicaid Services, the Internal Revenue
Service, state Medicaid agencies, and advocacy groups.
What GAO Found:
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 to identify the
eligible population. SSA officials had hoped to use Internal Revenue
Service (IRS) tax data to identify the eligible population, but the law
prohibits the use of such data unless an individual has already applied
for the subsidy. Even if SSA could use the data, IRS officials question
its usefulness. Instead, SSA used income records and other government
data to identify 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 and conducted an outreach campaign of
76,000 events nationwide. However, since the initial campaign ended,
SSA has not developed a comprehensive plan to distinctly identify its
continuing outreach efforts apart from other agency activities. SSA‘s
efforts were hindered by beneficiaries‘ confusion about the distinction
between applying for the subsidy and signing up for the prescription
drug benefit, and the reluctance of some potential applicants to share
personal financial information, among other factors.
SSA has collected data and established some goals to monitor its
progress in administering the subsidy, but still lacks data and
measurable goals in some key areas. While SSA tracks various subsidy
application processes through its Medicare database, it has not
established goals to monitor its performance for all application
processes. For example, SSA tracks the time for resolving appeals and
the outcomes of its initial redeterminations of subsidy eligibility,
but does not measure the amount of time it takes to process individual
redetermination decisions. According to SSA officials, implementing the
low-income subsidy was manageable overall due to increased funding for
the outreach and application processes and did not significantly affect
the agency‘s workload and operations.
GAO is considering recommendations for SSA to work with IRS to assess
the extent to which taxpayer data could help identify individuals who
might qualify for the subsidy, and help improve estimates of the
eligible population; and for SSA to develop a plan to guide its
continuing outreach efforts and develop key management tools to measure
the results of its subsidy application processes.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-858T].
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 bovbjergb@gao.gov.
[End of section]
Mr. Chairman and Members of the Committee:
I am pleased to be here to discuss the Social Security Administration's
(SSA) progress in approving individuals for the Medicare Part D low-
income subsidy. 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. 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.[Footnote 1] MMA enabled Medicare beneficiaries to enroll
voluntarily in drug plans sponsored by private companies. The benefit
includes a low-income subsidy, or "extra help," to assist Medicare
beneficiaries with limited income and resources in paying their
premiums and other out-of-pocket costs.
The Department of Health and Human Services (HHS) and its Centers for
Medicare and Medicaid Services (CMS) is largely responsible for
implementing the new drug benefit, called Medicare Part D, and SSA is
responsible for administering the low-income subsidy. Accordingly, SSA
is responsible for notifying individuals of the subsidy's availability,
taking applications, making subsidy eligibility determinations,
resolving appeals, and ensuring continued subsidy eligibility. SSA also
withholds Part D premiums from Social Security benefits for
beneficiaries who select this option. To assess SSA's implementation of
the Part D low-income subsidy, 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 and (2) the
processes that SSA uses to track its progress in administering the
subsidy benefit.
My written statement is drawn from our ongoing work for the committee
on the Part D low-income subsidy, for which we expect to provide you a
report at the end of May. We have provided SSA and the Internal Revenue
Service (IRS) with a draft copy of our report, and agency officials are
in the process of preparing their comments. To conduct our work, we
interviewed and obtained documentation from officials responsible for
implementing the subsidy at SSA headquarters and at eight SSA field
offices in Maryland, Virginia, Pennsylvania, and Texas. We also
obtained and discussed relevant documentation on SSA's outreach efforts
to target the low-income population and methods for obtaining input
from state Medicaid agencies. We reviewed available data on SSA's
processes for making eligibility determinations, resolving appeals, and
making redeterminations, but were unable to verify the reliability of
the data. We interviewed CMS officials and obtained documentation on
the agency's involvement with SSA's outreach efforts. We interviewed
officials at the IRS concerning legal restrictions on its ability to
release tax data to SSA. We 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. We
conducted our work from May 2006 through April 2007 in accordance with
generally accepted government auditing standards.
Summary:
In summary, 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. However, the success
of SSA's outreach efforts is uncertain because there are no reliable
data to identify the eligible population. SSA officials had hoped to
use IRS tax data to identify the eligible population, but there are
legal limits on IRS's ability to release such data to SSA unless an
individual has already applied for the subsidy. Even if SSA could use
the data, IRS officials question their usefulness. Instead, SSA used
income records and other government data to identify 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 the Medicare
beneficiaries it identified, and conducted an outreach campaign of
76,000 events nationwide. However, since the initial campaign ended,
SSA has not developed a comprehensive plan specific to its low-income
subsidy outreach activities to guide its continuing efforts. SSA's
efforts were hindered by beneficiaries' confusion about the distinction
between applying for subsidy and signing up for the Medicare
prescription drug benefit, and the reluctance of some potential
applicants to share personal financial information, among other
factors.
SSA has collected data and established some goals to monitor its
progress in administering the subsidy, but still lacks data and
measurable goals in some key areas. While SSA tracks various subsidy
application processes through its Medicare database, it has not
established goals to monitor its performance in all application
processes. For example, SSA tracks the time for resolving appeals and
the outcomes of its initial redeterminations of subsidy eligibility,
but does not measure the amount of time it takes to process individual
redetermination decisions. According to SSA officials, implementing the
low-income subsidy was manageable overall, due to increased funding for
its MMA start up costs, and did not significantly affect the agency's
workload and operations.
We are considering recommendations for SSA to work with IRS to assess
the extent to which taxpayer data could help identify individuals who
might qualify for the subsidy, and help improve estimates of the
eligible population; and for SSA to develop a plan to guide its
continuing outreach efforts and develop key management tools to measure
the results of its subsidy application processes.
Background:
All Medicare beneficiaries entitled to benefits under Medicare Part A
or enrolled in Part B are eligible to enroll in Medicare Part
D.[Footnote 2] Medicare beneficiaries who qualify for full coverage
under their state's Medicaid program,[Footnote 3] as well as Medicare
beneficiaries who qualify for more limited Medicaid coverage,
Supplemental Security Income (SSI), or state Medicare Savings
Programs[Footnote 4] are automatically enrolled in a prescription drug
plan by CMS,[Footnote 5] automatically qualify for the full subsidy of
their premium and deductible, and do not need to file an application.
They are referred to as "deemed."
Other Medicare beneficiaries who do not automatically qualify for the
subsidy (i.e., who are not deemed) must apply and meet the income and
resource requirements. These beneficiaries generally qualify if they
have incomes below 150 percent of the federal poverty level and have
limited resources. Generally, in 2007, individuals qualify if they have
an income of less than $15,315 and have resources of less than $11,710;
couples qualify if they have a combined income of $20,535 and resources
of $23,410.[Footnote 6] The amount of the subsidy for premiums,
deductibles, copayments, and catastrophic coverage varies, depending on
income and resources. Subsidy benefits are provided to these
individuals on a sliding scale, depending on their income and
resources.
Individuals generally apply for the benefit directly through SSA,
although they may also apply through their state Medicaid office. The
agency that receives an application, whether SSA or a state Medicaid
agency, is responsible for making initial subsidy determinations and
deciding appeals and redeterminations. Those 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. Under the MMA, beneficiaries may also apply
for the subsidy through their state Medicaid office. However, according
to state Medicaid officials we spoke with, they encouraged
beneficiaries to apply for the subsidy through SSA whenever possible.
As of March 2007, only the Colorado and Kansas state Medicaid agencies
had made Part D subsidy determinations.
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, and the activities for
other MMA responsibilities for fiscal years 2004 and 2005, but later
extended the appropriation to fiscal year 2006. Since January 2006, SSA
officials told us that the agency has had to draw on its overall
administrative appropriation to support its Part D activities.
Progress Has Been Made in Approving Subsidy Applicants, despite
Barriers, but Measuring Success Is Difficult:
SSA has approved 2.2 million applicants for the subsidy as of March
2007, despite some barriers, but measuring their success is difficult
because no reliable data are available to identify the eligible
population. SSA officials told us that their outreach goal was to
inform all individuals potentially eligible for the subsidy and provide
them an opportunity to apply for the benefit. Because the agency lacked
access to reliable data that might help target their outreach efforts
more narrowly, SSA used income records and other government data to
identify a broad group of potentially eligible individuals. Outreach
efforts were further limited by several barriers to soliciting
applications. Since its initial outreach campaign, SSA has not
developed a comprehensive plan to identify its continued outreach
efforts apart from other activities.
SSA's Initial Outreach Efforts Were Extensive, but Outreach Has since
Decreased:
SSA conducted its initial outreach campaign from May 2005 to August
2006, but has decreased its efforts since then. SSA sent targeted
mailings, which included an application for the subsidy and
instructions on how to apply, to the 18.6 million individuals it had
identified as potentially eligible. 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. SSA also conducted other
follow up efforts, including sending 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 79 years of age and older living in
high-poverty areas; and individuals in Spanish-speaking, Asian-
American, and African-American households.
The outreach efforts also included over 76,000 events conducted in
collaboration with federal, state, and local partners, such as CMS,
state Medicaid agencies, state health insurance programs, and advocacy
groups for Medicare beneficiaries. Events were held at senior citizen
centers, public housing authorities, churches, and other venues. As
figure 1 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 1: 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 the initial campaign has ended, SSA is continuing to solicit
applications. For example, SSA has conducted various activities to
inform individuals in rural and homeless communities about the subsidy,
and is planning to launch a new strategy this week for Mother's Day to
inform relatives and caregivers--the sons, daughters, grandchildren and
family friends---about the subsidy. SSA has incorporated its strategy
for continuing outreach efforts for the subsidy into its National
Communications Plan. However, it has not developed a comprehensive plan
that specifically identifies those efforts separate from other agency
activities. As a result, SSA has a limited basis for assessing its
progress and identifying areas that require improvement.
Multiple Barriers Impeded SSA's Outreach Efforts:
Data Issues Limited SSA's Efforts to Identify the Eligible Population:
SSA did not have access to data that might have helped to narrowly
target the eligible population. Because of the lack of reliable data
for identifying the entire population, SSA broadly targeted 18.6
million individuals who might be eligible for the subsidy. SSA
identified the target population by using income data from various
government sources to screen out Medicare beneficiaries whose income
made them ineligible for the Part D subsidy.[Footnote 7] SSA realized
that using these data sources would result in an overestimate of the
number of individuals who might qualify for the subsidy, because the
data provided limited information on individuals' resources or nonwage
income. SSA officials said they took this approach to ensure that all
Medicare beneficiaries who were identified as 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 likely to be eligible for the
subsidy by using tax data from IRS on individuals' wage, interest, and
pension income. Current law permits SSA to obtain income and resource
data from IRS to assist in verifying income and resource data provided
on subsidy applications.[Footnote 8] The law, however, prohibits IRS
from sharing such data with SSA to assist with outreach efforts.
According to SSA officials, such data would allow SSA to identify
individuals to target for more direct outreach and to estimate how many
individuals qualify for the subsidy. In November 2006, 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
9]
SSA officials believe IRS income tax data could provide access to
information on individuals' income and resources. However, IRS
officials told us that its data have many limitations. For example, IRS
officials said that they have limited data on resources 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 resource level. Also, the officials said that many people
with low incomes do not have incomes high enough to require them to
file taxes, and therefore, IRS might not have information on
them.[Footnote 10] IRS also explained that its tax data would most
likely identify individuals that would not qualify for the subsidy,
rather than individuals that would qualify. Moreover, the IRS officials
said that the data it would provide to SSA to determine eligibility
could be almost 2 years old. For example, for subsidy applications
filed in early 2007, the last full year of tax data the IRS could
provide would be for 2005. Given these 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.
No effort has been undertaken to determine the extent to which IRS data
could help SSA 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.
Other Barriers Have Limited SSA's Solicitation Efforts:
SSA's efforts to solicit applications were hindered by beneficiaries'
confusion about applying for subsidy and the drug benefit. According to
SSA field office staff and state Medicaid and advocacy group officials,
many individuals were confused about the difference between the
prescription drug benefit and the subsidy, and did not understand that
they involved separate application processes. Consequently, some
individuals thought that once they were approved for the subsidy, they
were also automatically enrolled in a prescription drug plan.
Additionally, 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 11]
Though individuals have become more educated about the subsidy,
concerns remain about eligibility requirements and the overall
complexity of the application. SSA field office staff and advocacy
group officials have concerns that the eligibility requirements set by
the MMA may be a barrier. For example, they 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. Advocacy group officials
have 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 they
worked with various focus groups to develop the subsidy application and
that they have revised the 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:
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 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, about 3.4 million to 4.7 million individuals are eligible for
the subsidy, but have not yet enrolled (See table 1.) In developing
these estimates, however, these entities faced the same data
limitations as SSA in identifying potentially eligible individuals.
Table 1: 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 enrolled[A] (Column A): 6.6;
SSA subsidy approvals as of as of March 2007 (Column B): 2.2(33%);
Eligible but not yet enrolled/ current participation rate (Column A
minus B): 4.4.
Source of estimate: Access to Benefits Coalition[C];
Eligible but not automatically enrolled[A] (Column A): 6.8;
SSA subsidy approvals as of as of March 2007 (Column B): 2.2(32%);
Eligible but not yet enrolled/ current participation rate (Column A
minus B): 4.6.
Source of estimate: Rice and Desmond[D];
Eligible but not automatically enrolled[A] (Column A): 6.9;
SSA subsidy approvals as of as of March 2007 (Column B): 2.2(32%);
Eligible but not yet enrolled/current participation rate (Column A
minus B): 4.7.
Source of estimate: Centers for Medicare and Medicaid Services[E];
Eligible but not automatically enrolled[A] (Column A): 5.6;
SSA subsidy approvals as of as of March 2007 (Column B): 2.2(39%);
Eligible but not yet enrolled/current participation rate (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, July
2004, Washington, D.C. 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),
2005, Washington, D.C. The coalition estimated that an overall total of
14.4 million beneficiaries would be eligible for the subsidy in 2006.
[D] Rice, T. and Desmond, K. 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, January 2006. The authors
estimated that a total of approximately 6.9 million eligible
individuals would not be dual eligible beneficiaries, 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, "January 30, 2007, Washington, D.C. CMS
estimated that an overall total of 13.2 million beneficiaries were
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 the estimates of the
total eligible population, given the limitations in identifying it. SSA
officials stated that their efforts have been successful in meeting
their outreach goals. In fact, after almost 2 years of implementation
efforts, SSA's participation rate compares favorably to that of the
Food Stamp Program, which had a participation rate of 31 percent after
its second year of implementation. The low-income subsidy participation
rate compares less favorably, however, to that of the Supplemental
Security Income program, which had a participation rate of
approximately 50 percent among the aged a year after the program began.
SSA officials noted that the SSI participation rate included
individuals who were automatically transferred from state government
programs to SSI, which is somewhat similar to the "deemed" population
that was automatically transferred to the low-income subsidy.
Some of SSA's Application Processes and Operations Lack Key Tools for
Monitoring Performance:
SSA has collected data and established some goals to monitor its
progress in implementing and administering the subsidy benefit, but
still lacks data and measurable goals in some key areas. 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 12] Accordingly, agencies should
compare actual performance data against expected goals and analyze the
differences.
SSA Monitors Performance on Applications Processes, but Lacks Data and
Goals on Others:
Determinations:
SSA monitors various aspects of its determination process, such as the
number of applications received and their outcomes and length of
processing, but did not establish a performance goal for processing
times until March 2007. SSA largely relies on an automated process to
determine individuals' eligibility for the subsidy. 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. SSA field office staff follow
up with individuals in cases where there are conflicting data or
questions. SSA tracks the number of eligibility determinations, the
outcome of those determinations, and the length of time for completing
the determinations. SSA also tracks denials and periodically samples
denied claims to examine the reasons for such actions.
As of March 2007, approximately 6.2 million individuals had applied for
the subsidy. SSA received the heaviest volume of applications when the
public outreach campaign was the most active. Figure 2 provides data on
the cumulative number of subsidy applicants and approvals from November
2005, when SSA began tracking the data, to December 2006.
Figure 2: 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]
While SSA has captured data on the length of time it takes to make
eligibility determinations, it did not develop the capability to report
the data, and did not establish a performance goal for processing times
until March 2007. SSA has now established a goal of processing 75
percent of subsidy applications in 60 days.[Footnote 13] 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, and had
decisions pending for 80,000 applicants. SSA officials determined that
no decision was required for 1.4 million because they were duplicate
applications, applications from individuals automatically qualified for
the subsidy, or canceled applications.[Footnote 14] To identify reasons
for subsidy denials, SSA conducted three separate studies that sampled
a total of 1,326 denied claims. These studies showed that 47 percent of
applicants were denied due to resources and 44 percent because of
income that exceeded allowable limits set by the MMA. SSA officials
stated that they plan to conduct a longitudinal study to examine the
reasons for all denied claims.
Appeals:
SSA tracks data on the total number of appeals, the reason for appeals,
the time it takes to process them, the method used to resolve them, and
their final disposition. Individuals may appeal denied claims, as well
as the level of the subsidy, by calling SSA's national toll-free
number, submitting the request in writing, or visiting any Social
Security field office. Individuals may also complete an appeals form
available on SSA's Web site and mail it to SSA. Individuals have the
choice of having their appeal conducted through a telephone hearing or
a case file review. According to SSA, about 79,000, or 3 percent of
denied subsidy applications were appealed from August 2005 to February
2007. SSA completed about 76,000 appeals in that time frame. 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 between November 2005 and July 2006, declined between August
and November 2006, and rose again between December 2006 and February
2007. During the decline, SSA closed all but one of its six Special
Appeals Units by October 2006. Further, the time it took SSA to process
appeals varied widely, and did not necessarily decrease when the
caseloads grew smaller.
Redeterminations:
SSA tracks various results from the redeterminations process, such as
the number of decisions made, and number and level of continued
subsidies. However, SSA does not track processing time for
redetermination decisions and has not established a performance time
target for processing such actions. According to the MMA and SSA
regulations, all recipients of the subsidy are required to have their
eligibility redetermined within 1 year after SSA first determines their
eligibility.[Footnote 15] Future redeterminations are required to be
conducted at intervals determined by the Commissioner. SSA's
regulations provide that these periodic redeterminations be 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. 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.
SSA initiated its first cycle of redeterminations in August 2006, which
including 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. 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 Has Monitored Some Aspects of the Subsidy Program's Impact on SSA's
Workload, and Increased Funding Helped SSA Manage the Increased
Workload:
SSA has monitored some aspects of the increased workload and found that
implementing the low-income subsidy was manageable overall, due to
increased funding for its MMA startup costs. Although the subsidy
program affected SSA's workload and operations, SSA officials told us
that implementing the subsidy did not significantly affect the agency's
workload and operations. 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
attribute the light impact of the subsidy program to various factors,
including the automation of the subsidy application process and the
$500 million appropriation it received for administrative startup costs
to implement its MMA responsibilities. SSA officials pointed out that
as they implemented the subsidy, the processing times for other
workloads improved. Officials explained 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 are typically held from November to December.
Although SSA can track expenditures for implementing its various MMA
responsibilities overall, it cannot track expenditures related
specifically to low-income subsidy activities. For example, SSA cannot
calculate how much of the $500 million appropriation it received for
MMA startup costs 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 administering the subsidy are about $175 million
annually, based on workload samples. However, SSA is planning to
develop a tracking mechanism to more accurately capture the data.
Recent increases in SSA's administrative resources may have also been a
factor in limiting the impact of the subsidy program workload. The
amount of SSA's administrative costs covered by the Medicare Trust
Funds is projected to increase by about 37 percent between fiscal year
2003 and fiscal year 2008. This increase occurred despite the transfer
of the Medicare appeals processing function from SSA to CMS in 2005.
While this increase has helped SSA to carry out its various Medicare
responsibilities (such as taking applications for Medicare benefits and
withholding Medicare premiums, among others), it may have also helped
to cushion the impact of the subsidy program.
Conclusions:
Reaching the millions of people who are forgoing the government's help
in paying for their prescription drug benefit remains a significant
challenge. Using the $500 million appropriation for its MMA start up
costs, SSA was able to initiate the Part D subsidy and sign up 2
million people for the subsidy without adversely affecting SSA's
overall operations. However, while it is not clear how to reach the
remaining eligible people, the momentum of the initial outreach
campaign should not be lost. The barriers to identifying eligible
people and convincing them to sign up remain. For some, the subsidy
application is complicated, which is due in part to the low-income
subsidy eligibility requirements. Further, no one has yet studied
whether or not IRS data can help identification efforts. While advocacy
groups have called for a more personalized outreach approach to
encourage additional enrollments, it may be unrealistic to expect SSA
to conduct such efforts, given its resource limitations. Both a better
understanding of who is eligible and a plan for continued outreach
could help SSA make efficient use of limited staff resources by
targeting outreach more narrowly to the eligible population.
Further, a timely and reliable process for deciding initial
determinations, hearing appeals, and making redeterminations is
essential to effective management of the subsidy. SSA has focused on
developing and improving the processes for serving its customers in a
timely manner. As SSA moves forward, it may need better information to
ensure that the subsidy program serves its target population as
efficiently and effectively as possible.
We are considering recommendations for SSA to work with IRS to assess
the extent to which taxpayer data could help identify individuals who
might qualify for the subsidy, and help improve estimates of the
eligible population; and for SSA to develop a plan to guide its
continuing outreach efforts and develop key management tools to measure
the results of its subsidy application processes.
Mr. Chairman, this completes my prepared statement. I would be happy to
respond to any questions you or other members of the committee may have
at this time.
GAO Contacts and Staff Acknowledgments:
For further information regarding this testimony, please contact
Barbara D. Bovbjerg, Director, Education, Workforce, and Income
Security Issues, on (202) 512-7215. Blake Ainsworth, Jeff Bernstein,
Mary Crenshaw, Lara L. Laufer, Sheila McCoy, Kate France Smiles,
Charles Willson, and Paul Wright, also contributed to this statement.
FOOTNOTES
[1] Pub. L. 108-173.
[2] Individuals who are eligible for Medicare 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 monthly premium. Medicare also
offers optional insurance under Supplementary Medical Insurance (Part
B) to cover doctor's services and outpatient care, and requires a
premium.
[3] 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. Prior to the
effective date of Part D, Medicaid provided coverage for outpatient
prescription drug costs for persons eligible for that program.
[4] 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 Part A and Part B deductibles
and coinsurance.
[5] The automatic enrollment in the Part D prescription drug benefit
only applies if beneficiaries do not enroll on their own.
[6] The resource limits are based on three times the resource limit of
the SSI program for subsidy beneficiaries that qualify for the full
subsidy in 2006, with subsequent limits updated each year based on the
Consumer Price Index (CPI); for beneficiaries that qualify for less
than the full subsidy, the resource limits are based on specific dollar
amounts set in the MMA, which are updated each year based on the CPI.
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.
[7] SSA obtained income data from its earnings records, as well as 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.
[8] 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 the IRS.
[9] 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.
[10] 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, and married couples 65 or older
filing jointly were not required to file tax returns if their combined
income was less than $18,900.
[11] 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.
[12] GAO, Internal Control Standards: Internal Control Management and
Evaluation Tool, GAO-01-1008G (Washington, D.C.: August 2001).
[13] 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
verification data from IRS.
[14] 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.
[15] This does not include individuals who continue to be deemed or
automatically eligible for the subsidy. Individuals who report 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.
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site (www.gao.gov). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site.
To have GAO e-mail you a list of newly posted products every afternoon,
go to www.gao.gov and select "Subscribe to Updates."
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400:
U.S. Government Accountability Office, 441 G Street NW, Room 7125
Washington, D.C. 20548:
Public Affairs:
Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800:
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548:
