Medicare Part D
Opportunities Exist for Improving Information Sent to Enrollees and Scheduling the Annual Election Period Gao ID: GAO-09-4 December 12, 2008In Medicare Part D, enrollees in stand-alone prescription drug plans (PDPs) are allowed to switch plans during an annual coordinated election period (AEP) set under law from November 15 to December 31, with new coverage effective January 1. The Centers for Medicare & Medicaid Services (CMS) required that plan sponsors send an Annual Notice of Change (ANOC)--using either its model or a nonmodel format--before the 2008 AEP. Among other things, GAO examined: (1) stakeholders' views of the model ANOC and CMS's efforts to assure its effectiveness, and (2) how the scheduling of the AEP affects the enrollment process for beneficiaries switching PDPs. Among the largest PDP sponsors, we selected eight to interview along with other stakeholders involved in the AEP. We also obtained and analyzed data from CMS.
Sponsors, pharmacists, beneficiary advocates, and counselors GAO interviewed expressed concern that CMS's model ANOC for the 2008 AEP did not effectively communicate drug plan changes to enrollees. They noted that it contained language at a reading level too high for some beneficiaries as well as too much, often irrelevant, information. To help ensure their enrollees understood how plan changes would affect them personally, two study sponsors mailed additional information detailing specific changes in coverage and costs for drugs the beneficiary took in the past year. Despite GAO's previous recommendation that CMS ensure that its Part D materials meet communications guidelines, CMS's process for developing its model ANOC did not include a systematic evaluation of its effectiveness. However, CMS officials reported that they recently initiated an evaluation of their annual Medicare beneficiary materials for the 2010 AEP that will examine reading levels, effectiveness, and length, among other factors. Such an evaluation is important in light of changes CMS has made for the 2009 AEP, which have raised further concerns among stakeholders. It is unclear whether alternative formats for communicating plan changes to beneficiaries will be considered. Although CMS and plan sponsors made improvements to the enrollment process, CMS data showed that about 15 percent of beneficiaries who chose to switch plans in the 2008 AEP were not fully enrolled in their new plan by January 1. Modifications to the enrollment process for the 2008 AEP reduced the time needed to enroll beneficiaries in a new plan to a median of 5 days. However, the volume of applications submitted late in the AEP contributed to beneficiaries being at risk of not having access to their new coverage by January 1. In fact, among the beneficiaries who submitted applications after December 15, 40 percent were not completely processed until after the effective date of their new coverage. As a result, stakeholders reported that beneficiaries, pharmacies, and sponsors faced various operational challenges, including the risk of inaccurate charges and additional administrative burden. Some stakeholders we interviewed for our study said that creating an interval for enrollment processing between the end of the AEP and the effective date of coverage would help ensure that beneficiaries switching plans would have their coverage in place on January 1.
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Report to the Chairman, Committee on Energy and Commerce, House of
Representatives:
United States Government Accountability Office:
GAO:
December 2008:
Medicare Part D:
Opportunities Exist for Improving Information Sent to Enrollees and
Scheduling the Annual Election Period:
GAO-09-4:
GAO Highlights:
Highlights of GAO-09-4, a report to the Chairman, Committee on Energy
and Commerce, House of Representatives.
Why GAO Did This Study:
n Medicare Part D, enrollees in stand-alone prescription drug plans
(PDPs) are allowed to switch plans during an annual coordinated
election period (AEP) set under law from November 15 to December 31,
with new coverage effective January 1. The Centers for Medicare &
Medicaid Services (CMS) required that plan sponsors send an Annual
Notice of Change (ANOC)”using either its model or a nonmodel
format”before the 2008 AEP. Among other things, GAO examined: (1)
stakeholders‘ views of the model ANOC and CMS‘s efforts to assure its
effectiveness, and (2) how the scheduling of the AEP affects the
enrollment process for beneficiaries switching PDPs. Among the largest
PDP sponsors, we selected eight to interview along with other
stakeholders involved in the AEP. We also obtained and analyzed data
from CMS.
What GAO Found:
Sponsors, pharmacists, beneficiary advocates, and counselors GAO
interviewed expressed concern that CMS‘s model ANOC for the 2008 AEP
did not effectively communicate drug plan changes to enrollees. They
noted that it contained language at a reading level too high for some
beneficiaries as well as too much, often irrelevant, information. To
help ensure their enrollees understood how plan changes would affect
them personally, two study sponsors mailed additional information
detailing specific changes in coverage and costs for drugs the
beneficiary took in the past year. Despite GAO‘s previous
recommendation that CMS ensure that its Part D materials meet
communications guidelines, CMS‘s process for developing its model ANOC
did not include a systematic evaluation of its effectiveness. However,
CMS officials reported that they recently initiated an evaluation of
their annual Medicare beneficiary materials for the 2010 AEP that will
examine reading levels, effectiveness, and length, among other factors.
Such an evaluation is important in light of changes CMS has made for
the 2009 AEP, which have raised further concerns among stakeholders. It
is unclear whether alternative formats for communicating plan changes
to beneficiaries will be considered.
Although CMS and plan sponsors made improvements to the enrollment
process, CMS data showed that about 15 percent of beneficiaries who
chose to switch plans in the 2008 AEP were not fully enrolled in their
new plan by January 1. Modifications to the enrollment process for the
2008 AEP reduced the time needed to enroll beneficiaries in a new plan
to a median of 5 days. However, the volume of applications submitted
late in the AEP contributed to beneficiaries being at risk of not
having access to their new coverage by January 1. In fact, among the
beneficiaries who submitted applications after December 15, 40 percent
were not completely processed until after the effective date of their
new coverage. As a result, stakeholders reported that beneficiaries,
pharmacies, and sponsors faced various operational challenges,
including the risk of inaccurate charges and additional administrative
burden. Some stakeholders we interviewed for our study said that
creating an interval for enrollment processing between the end of the
AEP and the effective date of coverage would help ensure that
beneficiaries switching plans would have their coverage in place on
January 1.
Figure: Enrollments Completed during and after the 2008 AEP:
[Refer to PDF for image]
Start of AEP: November 15, 2007.
Date: 11/15/2007;
Number of beneficiaries: 16,656.
Date: 11/26/2007;
Number of beneficiaries: 54,352.
Date: 12/3/2007;
Number of beneficiaries: 148,323.
Date: 12/11/2007;
Number of beneficiaries: 325,003.
Date: 12/17/2007;
Number of beneficiaries: 540,938.
Date: 12/24/2007;
Number of beneficiaries: 688,551.
Date: 12/31/2007;
Number of beneficiaries: 842,190.
Date: 1/1/2008 (Start of new coverage; 85% completed, 15% remain);
Number of beneficiaries: 847,056.
Date: 1/7/2008;
Number of beneficiaries: 917,656.
Date: 1/14/2008;
Number of beneficiaries: 958,356.
Source: GAO analysis of CMS data.
[End of figure]
What GAO Recommends:
To improve the AEP, GAO recommends that CMS strengthen its evaluation
of its model materials by reviewing alternative formats to communicate
plan changes. Additionally, Congress should consider authorizing the
Secretary of Health and Human Services to amend the AEP schedule to
include a processing interval between the end of the AEP and the
effective date of new coverage. In commenting on our draft, CMS stated
that it concurs with our recommendation and will consider reviewing
other ANOC formats.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-4]. For more
information, contact Kathleen King at (202) 512-7114 or kingk@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Sponsors Were Timely in Mailing 2008 ANOCS to Nearly All Beneficiaries
and Most Sponsors Used CMS's Model ANOC:
Stakeholders Raised Concerns about the ANOC's Readability; CMS Did Not
Assess the Effectiveness of Its Model ANOCs:
Despite Improved Procedures, the AEP Schedule Does Not Allow Sufficient
Time to Process All Enrollments:
Conclusions:
Matter for Congressional Consideration:
Recommendation for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Comments from the Centers for Medicare & Medicaid Services:
Appendix II: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: 2008 AEP Materials for Plan Enrollees:
Figures:
Figure 1: Hypothetical Example of a Personalized Mailing on Annual Plan
Changes:
Figure 2: Enrollment Applications Received by PDP Sponsors during 2008
AEP, by Week:
Figure 3: Enrollments Completed During and After the 2008 AEP:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
December 12, 2008:
The Honorable John D. Dingell:
Chairman:
Committee on Energy and Commerce:
House of Representatives:
Dear Mr. Chairman:
The Medicare Prescription Drug, Improvement and Modernization Act of
2003 (MMA) established an outpatient drug benefit, known as Medicare
Part D, that provides prescription drug coverage for beneficiaries who
opt to enroll in the program.[Footnote 1] Congress designed Medicare
Part D to be a market-driven program which promotes competition among
private health plans. Of the roughly 25 million beneficiaries enrolled
in Part D as of January 2008, about 17 million beneficiaries--those in
traditional Medicare--received coverage through stand-alone
prescription drug plans (PDPs).[Footnote 2] PDPs are offered by private
entities, known as drug plan sponsors, that contract with the Centers
for Medicare & Medicaid Services (CMS), the agency that administers the
Medicare program within the Department of Health and Human Services
(HHS). In its administration of Part D, CMS is responsible for
implementing program requirements and overseeing plan sponsors'
compliance with these requirements.
Generally, beneficiaries enrolled in PDPs are only allowed to change
their drug plan during the Part D annual coordinated election period
(AEP).[Footnote 3] As required under federal law, the AEP runs from
November 15 to December 31, with drug coverage under the elected new
plan effective on January 1 of the next year.[Footnote 4] In
considering their options, beneficiaries may have a choice of more than
50 PDPs in the state where they live. Plans differ, for example, in the
particular drugs covered, monthly premiums, or copayments beneficiaries
are responsible for paying.
Beneficiaries may consider changing their PDP plan for a variety of
reasons, including changes in their health and prescription drug needs
or modifications by their plan. Generally, sponsors make changes to
benefits offered by their plans effective at the beginning of each
benefit year.[Footnote 5] After the opportunity to change plans during
the AEP, most beneficiaries enrolled in PDPs are locked into their plan
for the benefit year. Thus, beneficiaries should determine whether
drugs they previously used will continue to be covered, have increased
copayments, or have any new access requirements in the next benefit
year. In light of these types of changes, and without the opportunity
to switch plans until the next AEP, it is important that enrollees
evaluate whether their drug plans will continue to meet their needs. To
this end, it is essential that CMS ensure that information sent to
enrollees by plan sponsors prior to the AEP clearly and effectively
communicates plan changes.
To inform enrollees about their benefits for the coming year, CMS
requires that sponsors mail enrollees an Annual Notice of Change (ANOC)
for receipt by October 31. This document describes modifications to the
plan's premium, drug coverage, cost sharing, and other features for the
next benefit year. For the 2008 AEP that began November 15, 2007,
sponsors could either adopt the model ANOC provided by CMS or create a
nonmodel ANOC that included elements required by CMS that describe plan
modifications.[Footnote 6] Nonmodel ANOCs were subject to a longer
review period by CMS. The agency also required that sponsors mail
enrollees an Evidence of Coverage (EOC) document, which details
enrollees' benefits, rights, and responsibilities under a plan, for
receipt by January 31, 2008. For the 2009 AEP starting November 15,
2008, sponsors must use CMS's standardized ANOC and EOC, mailed
together, so that enrollees receive them by October 31, 2008. Sponsors
no longer have the option to use non-model materials.
CMS's schedule provides beneficiaries with at least 2 weeks to review
the ANOC prior to November 15--the first day plans can accept AEP
enrollments. In addition, for the 2008 AEP CMS advised beneficiaries
opting to change plans to do so by December 7--3 weeks prior to the
official December 31 end date for the AEP. CMS recommended that
beneficiaries apply to switch plans by early December to avoid
potential problems in January, such as late or missing membership cards
or inaccurate copayment charges that may result if their applications
were not fully processed prior to January 1, 2008, the effective date
of coverage.
Despite the potential for cost increases or changes in drug coverage
from year to year, the vast majority of enrollees do not switch their
drug plans. In the 2008 AEP, about 1 million beneficiaries initiated a
change from one PDP to another. You expressed concern about how
beneficiaries are notified of plan benefit changes for the AEP. In this
report, we reviewed the notices sent to enrollees as well as the
enrollment process for those opting to switch between drug plans.
Specifically, we examined: (1) sponsors' timeliness in mailing the ANOC
for the 2008 AEP and the use of CMS's model, (2) stakeholders' views of
CMS's model ANOCs and the extent to which the agency assures that they
effectively communicate plan changes to beneficiaries, and (3) how the
scheduling of the AEP affects the enrollment process for beneficiaries
choosing to switch plans.
To address these issues, we obtained information on the practices and
experiences of sponsors, pharmacies, beneficiary advocates, and
Medicare counselors during the 2008 AEP. We interviewed representatives
from eight sponsors, each with 100,000 or more non-dual-eligible PDP
enrollees as of November 2007, which together accounted for about 70
percent of all non-dual-eligible PDP beneficiaries.[Footnote 7]
Additionally, we spoke to associations representing pharmacists,
pharmacy benefit management companies, and health plans. We also
interviewed counselors who assist Medicare beneficiaries through the
State Health Insurance Assistance Programs (SHIPs) in California,
Texas, Florida, and New York, which were among the states with the
largest number of PDP enrollees. Because we used selective samples of
sponsors and SHIPs, our conclusions cannot be generalized to all PDP
sponsors or SHIPs.
We reviewed CMS's 2008 AEP "Readiness Checklist", which contains
sponsor-reported information on compliance with ANOC mailing
requirements, to determine PDP sponsors' timeliness. We also obtained
sample ANOCs from our study sponsors along with templates of any
supplementary documents addressing plan benefit changes that our study
sponsors disseminated between September and December 2007. In addition,
we asked sponsors and other stakeholders about their perspectives on
CMS's 2008 and proposed 2009 AEP requirements, and reviewed their
formal comments submitted to CMS. To learn about CMS's process for
developing and evaluating ANOCs, we interviewed CMS officials
responsible for beneficiary materials related to the AEP. We also
reviewed previous GAO work on CMS's Part D communications and relevant
literature on principles of effective communication with Medicare
beneficiaries. To examine the effect of the AEP schedule on the
enrollment process, we obtained CMS data on PDP beneficiaries who
initiated a switch to another PDP during the 2008 AEP, including
beneficiary application dates, as reported by PDP sponsors, and the CMS
processing dates for enrollees changing plans. To assess the
reliability of these data, we interviewed CMS officials responsible for
the collection and analysis of the data, and we determined that the
data were sufficiently reliable for purposes of this report.
We conducted this performance audit from October 2007 through October
2008 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
Results in Brief:
For the 2008 AEP, PDP sponsors were timely in providing ANOCs to nearly
all enrollees by October 31, 2007. CMS data indicate that 99.8 percent
of the ANOCs for the 2008 AEP were on time. Of the eight sponsors in
our study, six chose to use CMS's model ANOC largely for the
convenience of undergoing a shorter CMS review period. The two
remaining sponsors developed their own, nonmodel notices to
beneficiaries. They found that the flexibility to produce nonmodel
ANOCs allowed them to highlight particular features of their plans
while presenting the required information on plan changes.
Stakeholders expressed concerns regarding the readability of the ANOC
and we found that CMS's process in developing the model ANOC did not
include a systematic evaluation of its effectiveness, which we have
previously demonstrated is needed for Part D materials. GAO's 2006
study recommended that CMS ensure that its written materials follow
commonly recognized communications guidelines. According to our study
sponsors and other stakeholders, CMS's 2008 model ANOC was not
sufficiently concise or beneficiary friendly and contained language at
a reading level too high for some beneficiaries. Additionally,
stakeholders noted that the model ANOC contained too much, often
irrelevant, information that made it difficult for beneficiaries to
determine how changes would affect them personally. To help ensure that
enrollees understood how plan changes would affect their drug coverage
and costs, two sponsors in our study supplemented the 2008 ANOC with
personalized mailings that showed changes in coverage for specific
drugs that the enrollees took in the past year. We found that CMS did
not take steps to formally evaluate the ANOC used for the 2008 or 2009
AEPs for effectiveness in communicating plan changes, citing inadequate
resources and a lack of trained staff. CMS officials recently reported
that on October 1, 2008, they initiated an evaluation of their annual
Medicare beneficiary materials for the 2010 AEP to assess their reading
levels, effectiveness, and length, among other factors. Such an
evaluation is particularly important in light of changes CMS made for
the 2009 AEP, which raised further concerns among stakeholders.
However, it is unclear whether the evaluation will consider potential
benefits of alternative formats for communicating plan changes to
beneficiaries.
Although CMS and plan sponsors made improvements to the enrollment
process, about one in seven of the roughly 1 million beneficiaries who
chose to switch PDPs during the 2008 AEP were not fully enrolled in
their new plan by January 1, 2008, the effective date of coverage. CMS
officials and sponsors reported modifications to the enrollment process
for the 2008 AEP that reduced the time needed to enroll beneficiaries
in a new plan compared to 2007. However, the volume of applications
submitted late in the AEP combined with the processing time required
contributed to about 15 percent of beneficiaries who switched plans
being at risk of not having access to their new coverage on January 1.
Compared to beneficiaries submitting applications earlier in the AEP,
40 percent of the beneficiaries who submitted applications during the
last 2 weeks of December were not completely processed until after the
new benefit year began. Despite a median processing time of 5 days, the
statutorily mandated AEP schedule--November 15 to December 31 with
coverage effective January 1--provided insufficient time in which to
fully process all enrollment applications. As a result, stakeholders
reported inaccurate charges to beneficiaries, pharmacies, and sponsors
as well as additional administrative burden. CMS officials and sponsors
in our study agreed that creating an interval for enrollment processing
between the end of the AEP and the effective date of new coverage would
reduce the risk of these challenges.
To improve the Part D AEP, Congress should consider authorizing the
Secretary of HHS to amend the current AEP schedule to include a
sufficient processing interval to fully enroll beneficiaries prior to
the effective date of their new coverage. We also recommend that the
Acting Administrator of CMS strengthen the agency's evaluation of its
model materials by reviewing alternative formats that include
personalized drug coverage and cost information. We provided a draft of
this report to CMS for its review and comment. In its written comments,
CMS stated that it concurred with our recommendation and will consider
reviewing other ANOC formats.
Background:
The Medicare Part D Program:
In the Medicare Part D program, drug plan sponsors compete to deliver
prescription drug benefits and attract enrollees. Sponsors offer,
through their PDPs, one or more benefit packages that differ in their
levels of premiums, deductibles, cost sharing, and coverage in "the
gap"--the period when beneficiaries would otherwise pay all of the
costs of their drugs. Sponsors must offer plans with standard
prescription drug coverage established under the MMA or actuarially
equivalent prescription drug coverage as approved by CMS, or may opt to
offer plans with supplemental prescription drug coverage.[Footnote 8]
In 2008, only about 10 percent of PDPs--5 of 47--offered the defined
standard coverage.
Each plan must cover a set of drugs--generally known as a formulary--
that meets certain criteria.[Footnote 9] Beyond the minimum formulary
requirements, sponsors have discretion in designing their formularies
and may exclude particular drugs from coverage, thus contributing to
variation in formularies across PDPs. For drugs included on a plan
formulary, sponsors may assign drugs to tiers that correspond to
different levels of cost sharing.[Footnote 10] In general, sponsors
encourage the use of generic medications by putting them on a cost-
sharing tier that imposes the lowest out-of-pocket costs on
beneficiaries.
PDP sponsors are required to implement drug utilization management
programs to reduce cost when medically appropriate. As part of these
programs, sponsors may apply various utilization management
restrictions to specific drugs on their formularies. Utilization
management restrictions may include (1) prior authorization, which
requires the beneficiary to obtain the sponsor's approval before a drug
is covered for that individual; (2) quantity limits, which restrict the
dosage or number of units of a drug provided within a certain period of
time; and (3) step therapy, which requires that a beneficiary try lower-
cost drugs before a sponsor will cover a more costly drug.
2008 Plan Benefit Changes:
From year to year, sponsors can make changes in their plans' benefit
structure including premiums, cost-sharing levels, formularies, and
utilization management restrictions. Prior to the AEP, plan sponsors
must submit to CMS bids for approval in order to implement significant
changes to benefit structures that will go into effect the next benefit
year. As part of this bid negotiation process, CMS reviews formularies
and the design of the plan and benefits offered, including removals of
drugs from formularies, use of utilization management restrictions, and
the application of copayments for drugs.[Footnote 11] Sponsors have
limited opportunities to change benefit structures that may adversely
impact enrollees, including removing particular drugs from formularies
or moving drugs to higher cost-sharing tiers.[Footnote 12]
Changes to plan benefit structures can have significant effects on a
beneficiary's out-of-pocket costs and access to particular drugs. For
example, a 2008 analysis conducted by Avalere Health--a health care
research and consulting firm--showed that average monthly premiums in
the 10 most popular Medicare PDPs increased by 16 percent from 2007 to
2008.[Footnote 13] The analysis also noted that some of the most
popular plans raised their premiums by more than 50 percent.
In addition to changes in premiums, PDPs made significant changes from
2007 to 2008 in cost sharing and utilization management of formulary
drugs, according to a study sponsored by the Kaiser Family Foundation.
[Footnote 14] For example, the study found that the average copayment
for a 30-day supply of nonpreferred name-brand drugs increased 13
percent from $63.31 in 2007 to $71.31 in 2008. Additionally, it
reported that PDPs increased their use of utilization management
restrictions, such as step therapy and quantity limits, from 25 percent
of a sample of the most commonly prescribed drugs in 2007 to 30 percent
in 2008.[Footnote 15]
Written Communications for Medicare Beneficiaries:
The design of written materials for Medicare beneficiaries is
particularly important in light of evidence that some older individuals
have challenges reading and retaining written information. For example,
studies have found that individuals ages 65 and older were less
proficient than younger adults in locating information in documents and
making health decisions based on what they read.[Footnote 16] Further,
a 2003 national survey of adult literacy showed that 27 percent of
Medicare beneficiaries were unable to understand information in short,
simple texts.[Footnote 17]
Previous GAO work highlights the importance of assuring that Part D
materials, in particular, communicate clearly to this population.
[Footnote 18] Our 2006 study noted that the reading levels of a sample
of Part D materials exceeded the capacity of 40 percent of the seniors
surveyed. Additionally, the Part D materials reviewed in this study did
not include about half of 60 common elements of effective
communication, such as language that is free of jargon and consists of
familiar words in short sentences, sometimes referred to as "plain
language."[Footnote 19] As a result of these findings, we recommended
that CMS ensure that its written materials describe the Part D benefit
in a manner that is consistent with commonly recognized communications
guidelines and is responsive to the reader's needs.
Since the mid-1990s, a group of federal employees from different
agencies and specialties has promoted the use of plain language in
government communications, particularly those that describe federal
benefits and services for the public.[Footnote 20] Documents that
conform to principles of plain language are organized with the reader
in mind and:
* include only the information the reader needs;
* omit unnecessary words and use short sentences of 15 to 20 words;
* avoid technical terms and use simple words and active voice;
* facilitate comprehension using headings, tables, lists, and white
space; and:
* incorporate customer feedback using surveys, focus groups, or
protocol testing.[Footnote 21]
Currently, no formal plain language initiative is in place for federal
executive agencies; however, some agencies have chosen to incorporate
plain language principles in their documents. For example, officials
from CMS's Office of External Affairs indicated that they will conduct
a plain language review of CMS documents if requested by agency staff.
Other consumer research supported the use of information customized to
individuals' preferences and circumstances to reduce the risk that
consumers dismiss the information as irrelevant.[Footnote 22] Under
this approach, consumers are provided with only data that are most
relevant to them, thus making it less likely they will be overwhelmed
by the information communicated. One study noted the importance of
providing streamlined information that helps individuals understand the
consequences of their choices.[Footnote 23]
AEP Materials for Beneficiaries:
CMS requires sponsors to mail all enrollees an ANOC that shows how
various features of their drug plan--such as the premium, coverage,
cost sharing, and formulary--will change for the next benefit year.
[Footnote 24] In addition to the ANOC, sponsors are required to send
beneficiaries other enrollment-related documents, such as the EOC, a
Summary of Benefits (SB), and a comprehensive or abridged formulary.
[Footnote 25] Table 1 describes selected information included in each
of these documents, as prepared by sponsors in our study.
Table 1: 2008 AEP Materials for Plan Enrollees:
Document: Annual Notice of Change (ANOC);
Selection of key information conveyed[A]:
* How plan's monthly premium, prescription drug coverage, and cost
sharing will change;
* What enrollees should do if their drugs are no longer on the
formulary or are in a more expensive cost-sharing tier;
* Information on changes in costs for beneficiaries receiving financial
assistance directly from Medicare to pay for drugs.
Document: Evidence of Coverage (EOC);
Selection of key information conveyed[A]:
* Plan's service area, initial coverage limit, cost sharing under
initial coverage limit, and cost sharing under the coverage gap;
* General exclusions and restrictions (i.e., utilization management
restrictions);
* Description of the right to request coverage determination, and
procedures for requesting a grievance, coverage determination, or
appeal.
Document: Summary of Benefits (SB);
Selection of key information conveyed[A]:
* An introduction and beneficiary information section, which provides
information on who is eligible to join the plan, where enrollees can go
to obtain their prescriptions, and enrollees' protections in the plan;
* A benefit comparison matrix, which summarizes the benefit packages
and premiums across the different plans offered by the sponsor.
Document: Formulary (Abridged or Comprehensive)[B];
Selection of key information conveyed[A]:
* Definition of a formulary and explanation of how to use the document;
* Description of the plan's general utilization management policies and
procedures;
* Chart of covered drugs organized by therapeutic category that
includes drug name, tier placement, and any utilization management
restrictions.
Source: GAO analysis of sample 2008 AEP materials provided by study
sponsors.
Notes: In this report we refer to the ANOC, the EOC, the SB, and an
abridged or comprehensive formulary as AEP materials. However, for the
2008 AEP, plan sponsors had the option to send the EOC to their
enrollees by January 31.
[A] The information selected does not include all of the elements of
the listed documents.
[B] In accordance with CMS guidelines, sponsors may provide
comprehensive or abridged formularies to enrollees and indicate how
enrollees may access a complete formulary.
[End of table]
For the 2008 AEP, sponsors could opt to mail the EOC along with the
ANOC to beneficiaries for receipt by October 31, 2007, or separately
mail the EOC to enrollees for receipt by January 31, 2008. If sponsors
chose to mail EOCs separately, sponsors were required to mail a SB
along with the ANOC. For the 2009 AEP, CMS required plan sponsors to
mail the ANOC, a formulary, and the EOC together for receipt by
enrollees by October 31, 2008.[Footnote 26]
In developing these materials for the 2008 AEP, sponsors could choose
to adopt CMS's model documents or create nonmodel documents that
contained CMS's required elements. Sponsors are required to submit all
AEP materials to CMS for review prior to mailing to enrollees. As a
result, use of model versus nonmodel documents had implications for the
amount of time for CMS review and the time frame for plan sponsors to
mail materials. When sponsors used CMS model documents without
modification, CMS reviewed the materials within 10 days; for documents
considered nonmodel, CMS required a 45-day review period. For the 2009
AEP, CMS required plan sponsors to use a standardized ANOC-EOC with no
modifications to the text permitted.
Sponsors Were Timely in Mailing 2008 ANOCS to Nearly All Beneficiaries
and Most Sponsors Used CMS's Model ANOC:
PDP sponsors reported to CMS that nearly all enrollees received their
ANOCs on time for the 2008 AEP and most of our study sponsors used
CMS's model ANOC. Our analysis of CMS's Readiness Checklist and
information reported from certain sponsors indicated that 99.8 percent
of the approximately 17.2 million PDP beneficiaries enrolled as of
November 1, 2007, received ANOCs from their plan sponsors by the
required October 31 deadline. Of the 35,630 beneficiaries who received
ANOCs late, the majority (21,902) received them by November 15, 2007--
the start of the AEP--and the remainder received them by December 10,
2007.[Footnote 27] Given the limited delays in distributing ANOCs, CMS
did not take enforcement action against any of the sponsors reporting
late mailings for the 2008 AEP.
Six sponsors in our study adopted CMS's model ANOC to inform
beneficiaries of upcoming plan changes rather than develop their own
ANOCs. Five of these six sponsors using the model reported doing so to
qualify for a shorter CMS review period--10 days versus 45 days--and in
some instances to help ensure that they could produce and send their
ANOCs by the October 31 deadline. The remaining two study sponsors
chose to develop nonmodel ANOCs for the 2008 AEP. Although their ANOCs
contained all of CMS's required information elements, we found that
they were substantially different in format from the CMS template and
from each other. For example, these ANOCs contained sponsor-developed
text rather than CMS's model language. Also, information was presented
in a different order and with different section headings than CMS's
model ANOC. These two sponsors told us that in electing to create
nonmodel materials, such as the ANOC, they were able to highlight
unique aspects of their plans. For example, one of the sponsors
included information that one of its plans would begin covering the
cost of administering Part D vaccines for the 2008 benefit year.
Stakeholders Raised Concerns about the ANOC's Readability; CMS Did Not
Assess the Effectiveness of Its Model ANOCs:
Stakeholders have expressed various concerns regarding the readability
of the ANOC and we found that prior to the 2008 and 2009 AEPs CMS did
not systematically evaluate its effectiveness in conveying plan changes
to beneficiaries. Stakeholders in our study noted that, because CMS's
model ANOC was not beneficiary friendly, it was difficult for
individuals to determine how changes would affect them personally. To
help ensure that their enrollees understood the significance of plan
changes, two sponsors in our study mailed supplemental information that
showed changes in coverage and costs for the specific drugs the
enrollee took in the past year. Although CMS used in-house experts when
developing its model ANOC, the agency did not formally assess whether
its 2008 model materials incorporated commonly recognized communication
guidelines to effectively inform beneficiaries about plan changes. CMS
officials recently reported that on October 1, 2008, they initiated an
evaluation of their annual Medicare beneficiary materials--
particularly the combined ANOC-EOC for the 2010 AEP--to assess their
reading level, effectiveness, and length, among other factors. Such an
evaluation is particularly important in light of changes that CMS made
for the 2009 AEP, which raised further concerns among stakeholders.
However, it is unclear whether the evaluation will consider potential
benefits of alternative formats for communicating plan changes to
beneficiaries.
Stakeholders Expressed Concern about the Readability of CMS Model ANOC:
Five sponsors and other stakeholders in our study noted that CMS's
model materials for the 2008 AEP were not sufficiently concise or
beneficiary friendly and felt that the language in the model ANOC was
at a reading level too high for some beneficiaries. One sponsor--
concerned about the reading level of the documents and the complexity
of the language used--noted that the model ANOC contained some
sentences with more than 40 words[Footnote 28]. According to another
sponsor, the inclusion of excess information that did not contribute to
understanding the benefit made it more likely that beneficiaries would
become overwhelmed and less likely to find the information they need.
Another sponsor stated that beneficiaries generally do not read the
ANOC because it is a confusing document that lacks more basic
information on plan changes and simpler language. Additionally, one
study sponsor pointed out that the CMS model materials were not reader
friendly or concise; it preferred to create its own simplified
materials that use plain language and easy-to-read graphics and
layouts. Similarly, stakeholders that assisted individuals during the
AEP told us that some beneficiaries found the ANOC overwhelming and had
difficulty processing the large amounts of information provided. Health
care researchers, advocates, and SHIP counselors we spoke with
concluded that much of the information contained in the model ANOC was
too general in nature or irrelevant to the reader, making it hard for
beneficiaries to determine how changes would affect them personally.
To help ensure that enrollees understood their plan changes, two
sponsors in our study provided additional information to beneficiaries
that showed how coverage of their specific drugs would change in the
next benefit year. For the 2008 AEP, these sponsors reported
supplementing their use of the CMS model ANOC with additional
personalized mailings distributed prior to and during the AEP. Using
their pharmacy claims database, these sponsors reported producing
documents that indicated whether the particular medications each
beneficiary used in 2007 would continue to be covered in 2008. The
documents also showed any changes in cost sharing and utilization
management restrictions to be applied to these drugs in the new benefit
year. These personalized mailings went to approximately 3.6 million of
the 7.3 million PDP enrollees served by our study sponsors. Figure 1
shows a hypothetical example that we created of a sponsor's mailing
containing personalized information on changes for the next benefit
year.
Figure 1: Hypothetical Example of a Personalized Mailing on Annual Plan
Changes:
[Refer to PDF for image]
Purple Heart Healthcare:
Mr. John Doe:
123 Main Street:
Newtown, KS 12345:
Dear Mr. Doe:
This letter is a follow-up to the annual notice of change we sent you
in October, 2007. To ease your transition to the new 2008 Medicare Part
D benefit, we want to inform you of the following changes in 2008 based
on a record of your claims paid in 2007. You do not need to take any
action if you wish to remain in your current plan.
Changes To Your Plan‘s Premium: If you remain in your current plan,
your monthly premium for 2008 will be $24.50. In 2007 it was $22.25.
Changes Affecting Your Drug Coverage:
Changes to your plan for 2008 will affect your drug coverage as shown
here:
This section of the document lists the drugs the beneficiary has used
through the Part D benefit and indicates upcoming plan charges that
will impact those drugs.
All of my 2007 prescriptions: Warfarin Sodium;
2007 Coverage? Yes;
New 2008 Coverage? Yes;
New 2008 Limitations? No;
New 2008 Tier Changes? No change.
All of my 2007 prescriptions: Azopt;
2007 Coverage? Yes;
New 2008 Coverage? Yes;
New 2008 Limitations? No;
New 2008 Tier Changes? Cost increase.
All of my 2007 prescriptions: Omerprazole;
2007 Coverage? Yes;
New 2008 Coverage? Yes;
New 2008 Limitations? No;
New 2008 Tier Changes? No change.
All of my 2007 prescriptions: Fosamax Plus D;
2007 Coverage? Yes;
New 2008 Coverage? Yes;
New 2008 Limitations? No;
New 2008 Tier Changes? No change.
All of my 2007 prescriptions: Norvasc;
2007 Coverage? Yes;
New 2008 Coverage? Yes;
New 2008 Limitations? Yes: Quantity limit;
New 2008 Tier Changes? Cost Increase.
You have the option to switch to another Part D plan during the Annual
Election Period (AEP), which runs from November 15 to December 31,
2007. For more information on other plans available in your area, call
1-800-MEDICARE or visit www.medicare.gov.
If you have any questions about these changes, please call us at 1-800-
XXX-XXXX between 8 AM and 9 PM EST, Monday through Saturday.
Sincerely,
Purple Heart Healthcare, INC.
Source: GAO analysis of literature from two plan sponsors.
Note: This hypothetical notice contains features from both sponsors'
mailings to their enrollees.
[End of figure]
One of the two sponsors reported including personalized drug
information as a separate communication to beneficiaries shortly after
the ANOC was sent. This sponsor sent these personalized mailings only
to those beneficiaries whose drugs would undergo coverage changes for
the upcoming year. Sponsor staff told us they created personalized
mailings because they made substantial modifications to their
formularies for 2008 and they wanted to make certain that beneficiaries
were aware of these changes.
Similarly, the other sponsor reported that it wanted to ensure that
beneficiaries would not be surprised by drug benefit changes effective
in January and thus felt that it was important to provide more
information than required by CMS. This sponsor inserted personalized
information on upcoming plan changes in its monthly Explanation of
Benefits (EOB) sent to beneficiaries in October, November, and December
2007.[Footnote 29] The sponsor reported that it sought to communicate
information in a succinct format to enable beneficiaries to focus only
on the plan changes relevant to them, individually, without having to
examine the longer plan formulary document. Additionally, this sponsor
had conducted focus groups to identify the specific information
elements, such as individual drug coverage and cost changes,
beneficiaries look for when reviewing their plan notices. Sponsor staff
noted that they chose to supplement the EOB with this information
because industry research indicated that readership of the EOB is high--
90 to 95 percent.
CMS Has Not Assessed Effectiveness of ANOCs, Which May Be More Critical
in Light of Changes to 2009 AEP Materials:
Agency officials told us that they had not systematically evaluated the
effectiveness of the agency's ANOCs or incorporated beneficiary
feedback or the principles of plain language. Instead, in developing
the 2008 model, CMS officials said the agency relied on in-house
expertise gained through the development of other Medicare materials.
They reported making slight wording modifications to the draft 2008
ANOC based on comments from the agency's Office of External Affairs,
but said that plain language review was not part of the document
clearance process. CMS officials said they recognize the need to
incorporate feedback from beneficiaries and increase the use of
commonly recognized elements of plain language in their documents.
However, they cited a lack of adequate in-house resources to conduct
consumer testing. Additionally, a CMS official cited an insufficient
number of staff to meet additional requests for plain language review.
After the release of standardized materials for the 2009 AEP, a CMS
official reported that the agency had awarded a contract for an
evaluation of its annual Medicare beneficiary materials--particularly
the combined ANOC-EOC--which CMS required sponsors to send to
beneficiaries in a single mailing for the 2009 AEP.[Footnote 30] The
official also noted that this assessment began on October 1, 2008, and
is to be completed by February 2009. According to the contract and CMS
officials, this evaluation will redesign and standardize beneficiary
materials including the ANOC-EOC to provide more understandable
information to beneficiaries.[Footnote 31] CMS officials indicated that
the redesigned ANOC-EOC should be completed for the 2010 AEP.
This effort by CMS is particularly important in light of changes that
CMS has made for the 2009 AEP, which raised further concerns among
stakeholders. One such change requires that sponsors use only a
standardized ANOC, rather than giving sponsors the option of creating
their own. In adopting this standardized document, sponsors may insert
plan-specific information where appropriate, but cannot otherwise
modify the language. According to CMS, this standardization is
consistent with the materials for the Federal Employees Health Benefits
Program (FEHBP). Additionally, the agency expects the required use of a
standardized ANOC to reduce misinformation on plan changes because this
document was more likely to contain errors than other documents
submitted to CMS for review. CMS also expects this change to speed its
review of materials by eliminating the 45-day review of nonmodel
materials. When sponsors use CMS standardized documents without
modification they are available for use 5 days after submission to CMS.
While one sponsor and two beneficiary advocates supported greater
standardization, six of the eight sponsors expressed concerns that the
2009 ANOC requirements will render notices to beneficiaries less
effective in communicating plan changes. In formal written comments to
CMS and in interviews on the proposed changes for the 2009 AEP, some
study sponsors noted that the mandatory use of CMS's standardized
documents requires the use of language already considered to be at a
reading level that is too high for some beneficiaries. Additionally,
two sponsors told us that, in the past, they have conducted focus
groups with their enrollees on the clarity of their materials. They
pointed out that the requirement to use only standardized materials
prevents them from developing an ANOC that incorporates enrollees'
feedback and provides information in a way that they believe would
enhance beneficiaries' comprehension of plan changes.
Some of these concerns may be addressed in CMS's forthcoming evaluation
of the combined ANOC-EOC. The contract includes the development of
beneficiary materials at an appropriate reading level and that
incorporates plain language principles. Additionally, a CMS official
said that the evaluation will involve in depth interviews with
consumers in an effort to develop more effective beneficiary materials
for PDP enrollees. The interviews will include special populations such
as dual eligibles.
Another change CMS implemented for the 2009 AEP was a requirement that
the EOC be sent to beneficiaries with the ANOC in a single mailing. For
the 2008 AEP, sponsors had the option to mail a short Summary of
Benefits (SB) with the ANOC in October and follow this with the more
detailed EOC in January. For the 2009 AEP, CMS requires all sponsors to
mail to beneficiaries the ANOC and EOC together for receipt by October
31; the SB will be available to beneficiaries only upon request.
According to CMS, this change gives beneficiaries comprehensive
information on their current plan in advance of the AEP. Furthermore,
CMS considers the EOC a resource document that beneficiaries will keep
and refer to as appropriate.
Sponsors, advocates, and SHIPs expressed concern that sending the ANOC
and EOC as one mailing results in a lengthy document that could confuse
some beneficiaries and deter others from reading the materials. Because
CMS's new set of required materials replaces the abbreviated SB
(approximately 4 pages in length) with the more detailed EOC (that
could be more than 100 pages in length), the size of sponsors' mailings
for the AEP could grow from about 51 pages in 2008 to about 86 pages in
the 2009 AEP.[Footnote 32] One sponsor noted that beneficiaries want
information about changes that affect them significantly, such as
changes to their formulary or cost-sharing responsibility. Another
sponsor cited the importance of highlighting changes to step therapy
and prior authorization for beneficiaries. These sponsors expressed
concern that the long combined ANOC-EOC may not be useful for
beneficiaries in understanding such changes.
According to the contract and CMS officials, the evaluation of
beneficiary materials including the ANOC-EOC requires the development
of shorter documents. However, it is unclear whether the evaluation
will include an examination of alternatives such as the use of specific
information tailored to the individual--an approach favored by
communications researchers. It is also unclear whether the evaluation
will include an assessment of the decision to combine the ANOC and EOC
mailings despite concerns expressed in comments to CMS on the draft
2009 call letter.
Despite Improved Procedures, the AEP Schedule Does Not Allow Sufficient
Time to Process All Enrollments:
Despite improved AEP enrollment procedures, one in seven of the
approximately 1 million beneficiaries choosing to switch PDPs were not
fully enrolled in their new plan by January 1. CMS and sponsors made
modifications to the enrollment process that resulted in a median
processing time of 5 days for applications submitted throughout the
2008 AEP. However, the statutorily mandated AEP schedule--November 15
to December 31 with coverage effective January 1--lacks sufficient time
in which to fully process enrollment applications. As a result,
stakeholders reported inaccurate charges, additional administrative
burden, and inconveniences for the beneficiary following the 2008 AEP.
CMS officials and sponsors in our study agreed that creating an
interval for enrollment processing between the end of the AEP and the
effective date of new coverage would reduce the risk of these
challenges.
CMS and Sponsors Improved Procedures to Reduce Enrollment Processing
Time:
For the 2008 AEP, CMS and sponsors implemented changes to expedite
enrollment processing in order to avoid difficulties encountered the
previous year.[Footnote 33] To be fully enrolled in a new plan a
beneficiary must submit a complete application, eligibility must be
verified by sponsors and CMS, billing codes must be assigned and
disseminated, adjustments must be made to premium amounts and any
relevant subsidies, and the beneficiary must receive documentation of
new coverage, in the form of either a confirmation letter or a new
membership card. The complete processing of an enrollment application
requires data exchanges among not only CMS, sponsors, and pharmacies,
but also the Social Security Administration (SSA), state Medicaid
programs for certain beneficiaries, and various CMS contractors.
[Footnote 34] The multiple data exchanges among partners that are
necessary for processing a beneficiary's change in plans occur
sequentially over a period of time.[Footnote 35]
A previous study by GAO on Part D complaints and grievances found that
63 percent of the complaints received by CMS over an 18-month period
cited problems related to processing beneficiary enrollments and
disenrollments.[Footnote 36] We noted that CMS received numerous
complaints about late or missing membership cards, incorrect
enrollments and disenrollments, inaccurate premiums, involuntary
switching, and problems regarding cost-sharing amounts. To address
concerns, CMS continually works with its partners through work groups,
task forces, and coalitions to improve program quality and improve Part
D processes.
The changes CMS implemented for the 2008 AEP reduced the time needed
for processing enrollments by at least 14 days, compared to the
previous year. CMS achieved this reduction by requiring sponsors to:
* transmit new enrollment information to CMS "as early as possible" or,
at most, within 7 days instead of the 14 days permitted during the 2007
AEP;
* contact beneficiaries regarding missing information within 10 days of
receipt versus 21 days as previously required; and:
* provide beneficiaries with information on their enrollment in a new
plan from CMS's earliest notification, which is likely to be the weekly
report, rather than waiting for CMS's monthly report as previously
permitted.
In addition, CMS improved the process by requiring sponsors to assign
billing codes to new enrollments earlier in the process.[Footnote 37]
Pharmacies need these codes in order to identify and charge the
appropriate plan and collect the correct copayment amounts from
beneficiaries. Previously, sponsors assigned this information at
various times and in separate transactions that sometimes followed
CMS's confirmation of a beneficiary's Part D eligibility by as much as
14 days, delaying availability of billing codes at the pharmacy. In
contrast, for the 2008 AEP, the agency required sponsors to submit the
billing codes for each beneficiary simultaneously with the initial
enrollment transaction. Since 2006, CMS has required sponsors to
include this information on the acknowledgement and confirmation
letters sent to beneficiaries informing them of the effective date of
their new coverage. These letters could be used by pharmacists to
verify coverage prior to the beneficiaries' receipt of their new plan
membership cards. Streamlining the assignment of the billing codes
significantly decreased the time to complete enrollment processing and
increased overall program efficiency.
Four sponsors in our study also took steps to complete AEP enrollments
and transmit the billing codes to their claims systems prior to
receiving the weekly report from CMS confirming eligibility.[Footnote
38] Two sponsors went further to expedite enrollments by establishing
processes to independently obtain information needed to complete an
application or verify enrollees' eligibility for Part D. Because these
sponsors did not wait for CMS to confirm eligibility via their weekly
or monthly reports, they were able to provide pharmacies with
information regarding a beneficiary's new coverage more quickly.
Additional time-saving modifications to the enrollment process
identified by CMS officials and sponsors in our study included:
* use of customer service representatives to complete telephone
enrollments, conduct the preliminary eligibility check required by CMS,
and ask the caller pertinent questions;
* more detailed beneficiary information provided by CMS to sponsors in
the initial eligibility query;[Footnote 39]
* more detailed information provided to pharmacies by CMS and sponsors
during the query used to obtain billing information for beneficiaries
without membership cards or other documentation of coverage;[Footnote
40]
* increased staffing during December to manage the volume of late-month
enrollments; and:
* automation of certain tasks to reduce processing time.
Not All Beneficiaries Switching Plans Were Fully Enrolled Before Their
New Coverage Began:
Despite these improvements, we found that 15 percent of the
approximately 1 million beneficiaries choosing to switch plans during
the 2008 AEP were at risk of not having access to their new coverage on
January 1, 2008. Reasons for these delayed enrollments included the
volume of late-December applications combined with the processing time
required to fully enroll a beneficiary in a new plan, and the AEP
schedule that accepts enrollments through December 31 with coverage
effective the next day.[Footnote 41] To prevent problems in January
resulting from these delays, in 2007 CMS sponsored a media campaign and
distributed guidance to its partners to encourage beneficiaries to
submit their 2008 AEP applications by December 7, 2007. Despite this
effort, CMS weekly report data revealed that 50 percent of the
applications to change PDPs were received after December 10.
Furthermore, sponsors received 5 percent of enrollment applications for
beneficiaries during the last 2 days of the AEP. Figure 2 shows the
distribution of enrollment applications received during the 2008 AEP.
Figure 2: Enrollment Applications Received by PDP Sponsors during 2008
AEP, by Week:
[Refer to PDF for image]
This figure is a vertical bar graph depicting the following data:
Enrollment Applications Received by PDP Sponsors during 2008 AEP, by
Week:
CMS weeks: 1;
Number of applications: 132,561.
CMS weeks: 2;
Number of applications: 54,246.
CMS weeks: 3;
Number of applications: 101,409.
CMS weeks: 4;
Number of applications: 169,785.
CMS weeks: 5;
Number of applications: 222,211 (50% of all applications were received
after December 10).
CMS weeks: 6;
Number of applications: 142,200.
CMS weeks: 7;
Number of applications: 108,987 (15% of all applications were received
after December 25).
CMS weeks: 8;
Number of applications: 54,121 (5% of all applications were received on
December 30 and 31).
Source: GAO analysis of CMS data.
Note: The weeks shown reflect enrollment application dates by week
reported by sponsors to CMS throughout the AEP. The first and last
weeks of the 2008 AEP covered less than 7 days; week 1 includes data
from November 15 through November 17 and week 8 includes data from
December 30 to December 31.
[End of figure]
CMS data also show that the time needed to fully process an enrollment
application varied over the course of the AEP. Overall, the median
processing time was 5 days. However, in week 1 of the AEP the median
processing time was 20 days and in week 5 the median was 3 days.
Of the applications received after December 15--which accounted for
nearly one third of all 2008 AEP applications--40 percent were not
processed until after January 1. On average, applications received in
late December took 3 days longer to process than applications received
earlier in the month. Not until January 11--2 weeks into the new
coverage year, did CMS and its partners complete the processing of 97
percent of the applications of beneficiaries choosing to switch PDPs
during the 2008 AEP.[Footnote 42] Figure 3 shows when enrollment
processing for the 2008 AEP was completed.
Figure 3: Enrollments Completed During and After the 2008 AEP:
[Refer to PDF for image]
Enrollments Completed during and after the 2008 AEP:
Start of AEP: November 15, 2007.
Date: 11/15/2007;
Number of beneficiaries: 16,656.
Date: 11/26/2007;
Number of beneficiaries: 54,352.
Date: 12/3/2007;
Number of beneficiaries: 148,323.
Date: 12/11/2007;
Number of beneficiaries: 325,003.
Date: 12/17/2007;
Number of beneficiaries: 540,938.
Date: 12/24/2007;
Number of beneficiaries: 688,551.
Date: 12/31/2007;
Number of beneficiaries: 842,190.
Date: 1/1/2008 (Start of new coverage; 85% completed, 15% remain);
Number of beneficiaries: 847,056.
Date: 1/7/2008;
Number of beneficiaries: 917,656.
Date: 1/14/2008;
Number of beneficiaries: 958,356.
Source: GAO analysis of CMS data.
[End of figure]
The capacity to process late December enrollments also varied across
sponsors. We found that larger sponsors were quicker in processing
enrollments received after December 15. Thus, sponsors with more than 3
million PDP beneficiaries were able to process 81 percent of late
December applications prior to the effective date of new coverage. In
contrast, sponsors with less than 100,000 PDP enrollees were able to
process 48 percent of applications before the new year. Regardless of
sponsor size, the AEP schedule provided insufficient time in which to
fully process all enrollment applications.
The inability of CMS and sponsors to complete all the steps in the
enrollment process prior to the effective date of new coverage for
beneficiaries choosing to switch plans created a number of challenges.
One consequence is the heightened risk of inaccurate charges or payment
amounts for beneficiaries, pharmacies, and sponsors. Following the 2008
AEP, beneficiary advocates, SHIPS, and pharmacists reported that some
individuals were charged the wrong copayment or deductible, especially
those who had applied for a low-income subsidy-
-which must be authorized by SSA--to reduce their cost-sharing levels.
Two pharmacy associations reported that if new coverage could not be
verified, their members risked filling a prescription for which they
would not get reimbursed or the beneficiary would need to pay for a
temporary supply of the medication while coverage issues were resolved.
Pharmacy association representatives also reported delayed receipt of
payment from sponsors related to prescriptions filled when a
beneficiary's enrollment status changed. In addition, stakeholders told
us about significant payment inaccuracies that took time to resolve.
[Footnote 43]
Additional administrative burden was another consequence of the
incomplete processing of all AEP enrollments prior to January 1,
according to several stakeholders we interviewed. Until beneficiaries
switching plans received documentation of their new coverage from the
sponsor on a membership card or letter, pharmacies had to use
alternative means to locate the updated enrollment and billing
information in order to fill a prescription and submit a claim
correctly. CMS guidance requires pharmacists to complete electronic
inquiries and, if necessary, phone calls to try to identify the
beneficiary's correct enrollment status and billing codes if that
information is not in the claims system. Pharmacy associations reported
that this procedure was overly complex and required extensive staff
time. Sponsors and pharmacy associations said that claims filed under a
beneficiary's old plan had to be reversed retroactively and charged to
the correct plan, requiring additional time and resources. Stakeholders
we interviewed noted that beneficiaries lack a single point of contact
to resolve enrollment issues promptly and might need to follow up with
multiple sources including their plan, CMS, SSA, and the prescribing
physician.
Stakeholders Favor Changes to the AEP Schedule to Better Manage Plan
Switching:
CMS, sponsors, pharmacy associations, SHIPS, and beneficiary advocates
recognize that the current AEP schedule--November 15 through December
31--is problematic. Some stakeholders we interviewed in our study said
that creating an interval for enrollment processing between the end of
the AEP and the effective date of coverage would help ensure that
coverage for a beneficiary switching plans would be in place on January
1. Additional time for enrollment processing would also help
beneficiaries receive their new membership information prior to the
effective date of coverage. In addition, we recently reported that such
an interval may address some challenges that result from premium
withholdings from Medicare beneficiaries' Social Security checks.
[Footnote 44] Requiring a "quiet period" is standard practice in
private health insurance and other federal health programs, allowing
sponsors time to process applications and provide enrollees appropriate
information about their new coverage prior to its effective date. For
example, in Medicare Part B,[Footnote 45] open enrollment is followed
by a 3-month processing interval that extends from March 31 to July 1.
Similarly, in the FEHBP, enrollment is followed by approximately a 3-
week processing interval that extends from the second Monday in
December to January 1.
More than half the sponsors interviewed supported the creation of an
enrollment processing interval. CMS officials and two sponsors
recommended ending enrollment in mid December, while two other sponsors
suggested ending the AEP on November 30. Stakeholders also noted that
some of the difficulties associated with an AEP schedule that includes
the end-of-the-year holidays could be avoided with an earlier end date.
Several sponsors recommended an earlier start date to address concerns
they have regarding CMS's guidance prohibiting sponsors from processing
applications submitted between the receipt of the ANOC (October 31) and
the beginning of the AEP (November 15). Although CMS officials told us
they expected beneficiaries to use this time to become informed about
their choices, sponsors reported that this waiting period was
inconvenient for those beneficiaries who were prepared to make an
enrollment change. Similarly, SHIP counselors pointed out that they too
must wait until November 15 to forward beneficiaries' completed
applications. SHIP counselors in one state reported that the need to
double check enrollment applications completed prior to November 15
limited the number of Part D beneficiaries they were able to assist
during the AEP. However, stakeholders noted that starting the AEP
earlier would have implications for the preceding AEP deadlines.
Conclusions:
Effective written communication about plan changes helps beneficiaries
determine whether their current PDP will continue to meet their needs
and may reduce the risk of surprises at the pharmacy when beneficiaries
fill their prescriptions in the new benefit year. From a program
perspective, beneficiaries must be sufficiently aware of plan changes
in order to fully use their ability to switch plans to foster the
competition that Congress intended in designing the Part D program. To
this end, CMS designed a model ANOC to provide a consistent format for
the information sent to beneficiaries about upcoming plan changes.
Sponsors as well as advocates have voiced concerns that the model
lacked the attributes--particularly simplicity and personalization--
that researchers say are needed for beneficiaries to understand and act
on the information provided. Although CMS told us that they recently
initiated an evaluation of its annual notification materials, it is
unclear whether alternative formats for the ANOC-EOC will be
considered. Based on our findings as well as research on the need to
make information relevant to the reader, CMS's evaluation should
consider alternative models that incorporate a beneficiary's personal
drug information. Such an alternative may be more effective in
highlighting key changes in drug costs and coverage for plan enrollees.
Two sponsors in our study supplemented the 2008 ANOC by mailing
additional information on specific drug coverage and cost changes to
nearly 3.6 million enrollees, thus demonstrating the feasibility of
providing such personalized information to their members.
Although CMS and sponsors implemented improvements to better manage the
2008 AEP enrollment process, their efforts are hampered by a schedule
that lacks a sufficient interval in which to complete processing
beneficiary enrollment changes prior to the effective date of new
coverage. Under the current mandated schedule, it is not possible to
guarantee that beneficiaries choosing to switch plans late in December
are fully enrolled in their new plans with pharmacists having
sufficient evidence of the new coverage by January 1. In addition,
sponsors and pharmacies reported excessive administrative complexity
and diminished program efficiency as a result of the nearly 15 percent
of enrollments still in process in January. Stakeholders agree that
modifying the schedule and creating an interval between the end of the
AEP and the effective date of coverage would minimize these challenges
as well as mitigate issues related to low-income subsidies and premium
withholding from beneficiaries' Social Security checks. Establishing a
processing interval would be consistent with the open enrollment
periods in Medicare Part B, the FEHBP, and commercial insurance and
create a more streamlined program to better serve beneficiaries.
Matter for Congressional Consideration:
To improve the Part D enrollment process, Congress should consider
authorizing the Secretary of HHS to amend the current AEP schedule to
include a sufficient processing interval to fully enroll beneficiaries
prior to the effective date of their new coverage.
Recommendation for Executive Action:
To ensure that beneficiaries are informed effectively of plan changes,
we recommend that the Acting Administrator of CMS strengthen the
agency's evaluation of the ANOC-EOC by reviewing alternative formats
that include personalized drug coverage and cost information.
Agency Comments and Our Evaluation:
We provided CMS with a draft of this report for their review and
comment. The agency provided written comments, which have been
reprinted in appendix I. It also provided technical comments that we
incorporated as appropriate.
CMS concurred with our recommendation and agreed that beneficiaries
need plan benefit information that is easy to read and understand. The
agency noted that its process for developing the model ANOC and the EOC
included a review of other programs' model materials such as those used
in the FEHBP, as well as restructuring the model to eliminate
duplication and increase readability. CMS pointed out that, in
preparation for the 2010 AEP, it has engaged a contractor to evaluate
and improve the required notification materials sent to beneficiaries.
CMS expects this evaluation to further address issues of length and
readability. The contractor will obtain input from beneficiaries as
part of its effort to redesign the ANOC for the 2010 AEP.
Citing the near perfect timeliness rate for plans' 2008 AEP ANOC
mailing, CMS asserted that beneficiaries had the information they
needed to make informed decisions about their plan options. However, we
remain concerned that despite this timeliness, the volume and
complexity of documents exceeding 100 pages continue to pose challenges
for some beneficiaries. While CMS's effort to evaluate the ANOC-EOC is
an important, worthwhile step, such a review would benefit by a focus
on streamlining as opposed to maximizing the amount of information that
beneficiaries receive. Beyond the current evaluation, CMS should
continue its efforts to improve the understandability of its AEP
materials by testing more concise formats with beneficiaries. As we
note in this report, a single-page, customized model that shows each
beneficiary's drug use and any upcoming changes in coverage and costs
may more clearly communicate the essential information Part D
beneficiaries need to be adequately informed.
CMS acknowledged the challenges inherent in the current AEP schedule.
The agency reiterated its strategies for ensuring that beneficiaries
are able to access their new plan benefits while their enrollment is
still being processed. For example, CMS highlighted its consistent
efforts to encourage beneficiaries to submit their enrollment
applications by early December. However, as we discuss in this report,
one consequence of this approach is a reduction in the amount of time
beneficiaries have to consider and enroll in an alternative plan that
could better meet their needs.
We are sending copies of this report to the Administrator of CMS,
committees, and others. The report also is available at no charge on
the GAO Web site at [hyperlink, http://www.gao.gov/].
If you or your staff have any questions about this report, please
contact me at (202) 512-7114 or kingk@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix II.
Sincerely,
Signed by:
Kathleen M. King:
Director, Health Care:
[End of section]
Appendix I: Comments from the Centers for Medicare & Medicaid Services:
Department Of Health & Human Services:
Office Of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
December 2, 2008:
Kathleen M. King:
Director, Health Care
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. King:
Enclosed are the Department's comments on the U.S. Government
Accountability Office's (GAO) draft report entitled: "Medicare part D:
Opportunities Exist for Improving Information Sent to Enrollees and
Scheduling the Annual Election Period" (GAO 09-04).
The Department appreciates the opportunity to comment on this draft
report before its publication.
Sincerely,
Signed by:
Jennifer R. Luong, for:
Vincent J. Ventimiglia, Jr.
Assistant Secretary for Legislation:
Attachment:
Department Of Health & Human Services:
Centers for Medicare and Medicaid Services:
200 Independence Avenue, SW:
Washington, DC 20201:
Date: December 2, 2008:
To: Vincent J. Ventimiglia. Jr.
Assistant Secretary for Legislation:
Department of Health and Human Services:
From: [Signed by] Kerry Weems:
Acting Administrator:
Subject: Government Accountability Office (GAO) Draft Report: "Medicare
Part D: Opportunities Exist for Improving Information Sent to Enrollees
and Scheduling the Annual Election Period" (GAO-09-4)
Thank you for the opportunity to review and comment on the GAO Draft
Report, "Medicare Part D: Opportunities Exist for Improving Information
Sent to Enrollees and Scheduling the Annual Election Period" (GAO-09-
4). The Centers for Medicare & Medicaid Services (CMS) reiterates its
commitment to ensuring that Medicare beneficiaries arc provided timely
and accurate information about the Medicare Prescription Drug Benefit
Program and appreciates the GAO's interest in assessing the model
Annual Notice of Change (ANOC) for the 2008 Annual Election Period
(AEP) that is provided to enrollees in stand-alone Medicare
Prescription Drug Plans (PDPs).
We concur with GAO's recommendation and agree that beneficiaries need
information that is easy to read and understand. While, the ANOC is a
standardized document. the standardization relates to the structure of
the document and is not intended to prevent plans from providing useful
information to beneficiaries. In fact. plans are provided with the
opportunity to provide plan-specific information within designated
areas of the ANOC. We would also like to clarify that although consumer
research and testing of model documents was limited, there was a
careful and thoughtful process in developing the model ANOC and the
Evidence of Coverage (EOC). This development process included the
review of other existing models such as those used in the Federal
Employees Health Benefits Program, as well as restructuring several
models to eliminate duplication and increase readability to better
ensure understanding of the benefits and services offered.
While we acknowledge that additional communications research could
assist in modifying model documents, we do believe these documents
clearly convey key information needed to help beneficiaries understand
their health care benefits and future changes. Given the complex nature
of the Medicare Program, the ultimate goal is to ensure that
beneficiaries are provided with all of the information they need to
fully understand their health care options in an easy-to-read and
understandable way.
To this end. we have already taken steps to ensure that beneficiary
notification materials for 2010 will be easier to understand and
include the information necessary for beneficiaries to make an informed
decision. CMS has procured a contractor to evaluate the effectiveness
of the ANOC and to assist in redesigning the document. This process
will include conducting intensive beneficiary interviews to help ensure
content is understandable and plan-specific benefit information is
adequately disclosed.
The draft GAO report indicates that stakeholders suggested the model
ANOC contains too much. and sometimes irrelevant, information. We would
emphasize that CMS does have a formal process through which health
plans, beneficiary advocacy groups, and trade organizations may comment
on the draft ANOC prior to the document's final release. CMS carefully
considers those comments, and many are incorporated into the final
model ANOC.
The draft GAO report also implies that as a consequence of problems
with the ANOC/EOC beneficiaries did not have the information needed to
review their coverage during the open enrollment period. Given that
99.8 percent of the ANOCs were mailed timely, we believe that
beneficiaries had the information in time to make an informed decision
about their health care options. In addition, it was stated that the
new rules for the combined ANOC/EOC do not provide for beneficiary
protection. We disagree since the new requirement provides additional
protection for beneficiaries to receive comprehensive information prior
to the annual election period.
The report highlights the need to reduce enrollment delays and the
impact on beneficiaries when a new coverage year begins. As noted in
the report, the statute requires that enrollments received as late as
December 31 be effective the following January 1. CMS recognizes that
this presents challenges for plans and beneficiaries. Therefore, in the
2006 AEP we took steps to ensure that our model acknowledgement and
confirmation letters included the necessary billing information so that
beneficiaries could access services even while their enrollment was
still being processed by the plan. To help mitigate this issue, we have
consistently encouraged beneficiaries to submit their enrollment
applications by early December instead of waiting until later in the
month. In addition, in a November 13, 2008 HPMS memorandum, we reminded
plans that we expect them to frequently submit batch tiles for
enrollment and disenrollment. rather than waiting until the end of the
month.
The CMS will continue to work closely with Congress, GAO, beneficiary
advocacy groups, and other interested parties to ensure that
beneficiaries have complete and accurate information.
Below is CMS' response on the draft report's recommendation as well as
technical comments.
GAO Recommendation:
To ensure that beneficiaries are informed effectively of plan changes,
GAO recommends CMS strengthen the agency's evaluation of the model ANOC-
EOC by reviewing alternative formats that include personalized drug
coverage and cost information.
We concur with the GAO's recommendation of the model ANOC-EOC and will
consider reviewing alternative formats that include personalized drug
coverage and cost information. We have undertaken several efforts to
address some of the concerns, such as readability. effectiveness, and
the length of documents. Over the past year, we have conducted a
comprehensive examination of our informational materials, which
included the ANOC and the EOC. As a result, we have incorporated plain
language to assist in readability. In addition, the ANOC/EOC was
restructured to ensure that important information was included at the
beginning of the document to make is easier to use. Finally, by
combining and standardizing the ANOC/EOC. the length of the documents
was reduced and unnecessary information was eliminated. Recognizing
that these documents communicate the most crucial and comprehensive
benefit and plan information to beneficiaries, we have efforts underway
to make additional changes for the 2010 plan year.
For calendar year 2010. CMS has procured a contractor to ensure that
annual beneficiary notification materials are being redesigned and
standardized to provide better and more comprehensive information to
beneficiaries. Specifically, this redesign has an overarching goal to
provide information so that Medicare beneficiaries are confident and
informed with regard to their health care options. In considering
alternative formats that would include personalized drug coverage and
cost information, we will do the following:
* Develop and target the content of beneficiary notification materials
at appropriate language and reading levels, and reduce the length of
the existing models;
* Conduct intensive beneficiary interviews to ensure these materials
meet beneficiaries' information needs;
* Ensure that materials include information for special populations
such as dual-eligible beneficiaries;
* Ensure that the materials conform to CMS' regulations and guidance;
and;
* Ensure that benefit information (for example, drug changes) are
adequately explained.
[End of section]
Appendix II: GAO Contact and Staff Acknowledgments:
GAO Contact:
Kathleen King, (202) 512-7114 or kingk@gao.gov:
Acknowledgments:
In addition to the contact named above, Rosamond Katz, Assistant
Director; Jennie Apter; Ramsey Asaly; Anne Hopewell; JoAnn Martinez-
Shriver; Jessica Smith; and Hemi Tewarson made major contributions to
this report.
[End of section]
Related GAO Products:
Medicare Part D: Complaint Rates Are Declining, but Operational and
Oversight Challenges Remain. [hyperlink,
http://www.gao.gov/products/GAO-08-719]. Washington, D.C.: June 27,
2008.
Medicare Part D Low-Income Subsidy: SSA Continues to Approve
Applicants, but Millions of Individuals Have Not Yet Applied.
[hyperlink, http://www.gao.gov/products/GAO-08-812T]. Washington, D.C.:
May 22, 2008.
Medicare Part D: Plan Sponsors' Processing and CMS Monitoring of Drug
Coverage Requests Could Be Improved. [hyperlink,
http://www.gao.gov/products/GAO-08-47]. Washington, D.C.: January 22,
2008.
Medicare Part D Low-Income Subsidy: Additional Efforts Would Help
Social Security Improve Outreach and Measure Program Effects.
[hyperlink, http://www.gao.gov/products/GAO-07-555]. Washington, D.C.:
May 31, 2007.
Retiree Health Benefits: Majority of Sponsors Continued to Offer
Prescription Drug Coverage and Chose the Retiree Drug Subsidy.
[hyperlink, http://www.gao.gov/products/GAO-07-572]. Washington, D.C.:
May 31, 2007.
Medicare Part D: Challenges in Enrolling New Dual-Eligible
Beneficiaries. [hyperlink, http://www.gao.gov/products/GAO-07-272].
Washington, D.C.: May 4, 2007.
Medicare Part D: Prescription Drug Plan Sponsor Call Center Responses
Were Prompt, but Not Consistently Accurate and Complete. [hyperlink,
http://www.gao.gov/products/GAO-06-710]. Washington, D.C.: June 30,
2006.
[End of section]
Footnotes:
[1] Pub. L. No. 108-173, § 101, 117 Stat. 2066, 2071-2152 (2003)
(codified, as amended, at 42 U.S.C. §§ 1395w-101--1395w-152).
[2] Part D drug coverage also may be provided through Medicare
Advantage (MA) plans. MA plans are Medicare's private health plan
option, providing coverage of benefits beyond prescription drugs. As of
January 2008, about 8 million beneficiaries were enrolled in MA plans
that provide drug coverage.
[3] Some beneficiaries may change PDPs at other times throughout the
year during special enrollment periods approved by CMS. For example,
beneficiaries may enroll in a new plan if they move to areas not served
by their plan. Beneficiaries who are eligible for both Medicare and
Medicaid--a joint federal-state program that covers certain low-income
individuals--known as full-benefit dual-eligibles may change drug plans
throughout the year. Dual-eligible beneficiaries generally qualify for
low-income subsidies that cover premiums and most of their out-of-
pocket costs for Part D drugs. If CMS assigned a dual-eligible
beneficiary to a PDP and that PDP, based on its bid for the ensuing
year, would impose a premium on the beneficiary, CMS will reassign the
beneficiary during the AEP to a different PDP in which the beneficiary
will have no premium liability. In 2008, CMS reassigned about 2 million
dual-eligible beneficiaries.
[4] 42 U.S.C. §§ 1395w-21(e)(3), (f)(3), 1395w-101(b).
[5] Each year, plan sponsors must submit bids, including any changes to
formularies and plan benefit designs, to CMS. Sponsors must receive
approval from CMS prior to implementing these changes for the next
benefit year.
[6] Required elements include how the monthly premium will change, how
drug coverage and cost sharing will change, what to do if a drug the
beneficiary uses will no longer be on the formulary or will have higher
cost sharing, and how to change plans.
[7] We excluded dual-eligible beneficiaries from our analysis because
full-benefit dual-eligibles have the opportunity to change their Part D
plans throughout the year. We also excluded beneficiaries enrolled in
MA drug plans because, in addition to changes made during the AEP,
these beneficiaries may change their plans once between January 1 and
March 31 each year. In addition, we excluded beneficiaries enrolled in
PDPs that are sponsored by employer or union groups.
[8] Pub. L. No. 108-173, § 101, 117 Stat. 2066, 2075-2081 (2003)
(codified, as amended, at 42 U.S.C. § 1395w-102). Sponsors may only
offer plans with a supplemental prescription drug benefit, defined as
when the total value of the coverage exceeds the standard prescription
drug benefit, in areas where sponsors also offer plans with the
standard prescription drug benefit. In 2008, the defined standard
prescription drug benefit includes a $275 deductible, 25 percent
coinsurance--the percentage of the costs that a beneficiary is
responsible for--up to an initial benefit limit of $2,510 when the gap
in coverage begins, and catastrophic coverage after $5,726.25 in total
Part D drug costs.
[9] Under federal law, formularies must include drugs within each
therapeutic category and class of covered Part D drugs. CMS generally
requires sponsors to cover at least two Part D drugs in each category
and class, subject to approved exceptions or when there is only one
drug in the particular category or class. According to CMS guidelines,
for six designated drug categories, plan formularies must include "all
or substantially all" drugs within these categories: antidepressants,
antipsychotics, anticonvulsants, anticancer drugs, immunosuppressants,
and HIV/AIDS drugs.
[10] Formulary tiers are groups of drugs with different pricing levels.
For example, a plan may have a tier for generic drugs that have the
same active-ingredient formula as brand-name drugs, but usually cost
less, and other tiers for higher-cost drugs. Tiers with higher cost-
sharing include preferred brand-name drugs, which are deemed by the
sponsor to be the first choice of drug provided; and nonpreferred
drugs, which are covered by the plan but will cost the enrollee more
than a preferred drug. Additionally, under CMS guidance, sponsors are
permitted to set apart relatively expensive drugs on a specialty tier
and charge more for these drugs than they typically do for preferred
and nonpreferred drugs.
[11] CMS approves Part D plans based on certain criteria including the
offering of qualified prescription drug coverage and the sufficiency of
actuarial determinations. CMS will not approve a bid if the agency
determines that benefits offered--including the formulary and tiered
formulary structure or utilization management restrictions--would be
likely to substantially discourage enrollment by certain Part D
beneficiaries.
[12] For example, sponsors may only change the therapeutic categories
and classes in a formulary at the beginning of each benefit year,
except to account for new uses and drugs newly approved for coverage
under the Part D program. In addition, sponsors may not remove Part D
drugs from their formularies or change their cost-sharing tiers between
November 15 and March 1 of each benefit year, unless the drug has been
determined unsafe or has been removed from the market by the
manufacturer. After March 1, sponsors may replace a brand-name drug
with a generic drug, remove a drug from a formulary, or increase cost
sharing for particular drugs only if the sponsor provides 60 days
notice to all affected parties, including CMS, enrollees, physicians,
and pharmacies and CMS approves the change. In these circumstances, the
sponsor may not alter coverage of the drug for affected enrollees for
the remainder of the plan year.
[13] See Avalere Analysis Shows 16 Percent Increase for Enrollees in
Top 10 Medicare Drug Plans, June 4, 2008, for weighted enrollment
analysis of CMS enrollment data, available on Avalere Health Web site,
http://www.avalerehealth.org/wm/show.php?c=1&id=781 accessed on August
28, 2008.
[14] J. Hoadley, E. Hargrave, et al, Medicare Prescription Drug Plans
in 2008 and Key Changes Since 2006: Summary of Findings, The Henry J.
Kaiser Family Foundation (Washington, D.C.: April 2008).
[15] The Kaiser study analyzed data from CMS on a sample of 169 drugs
selected to include the most commonly prescribed drugs and all
alternative medications in some of the drug classes most commonly used
by Medicare beneficiaries. The use of step therapy tripled from 4
percent of the sample drugs in 2007 to 12 percent in 2008.
[16] See C. A. Paulsen and C. Bransfield, Readability, Heuristic and
Usability Evaluation of the Medicare Prescription Drug Plan Materials,
American Institutes for Research (Concord, Mass: March 2006) and J.
Hibbard, J. Greene, and M. Tusler, An Assessment of Beneficiary
Knowledge of Medicare Coverage Options and the Prescription Drug
Benefit (Washington, D.C.:May 2006).
[17] M. Kutner, E. Greenberg, et al, The Health Literacy of America's
Adults: Results from the 2003 National Assessment of Adult Literacy
(September 2006).
[18] GAO, Medicare: Communications to Beneficiaries on the Prescription
Drug Benefit Could Be Improved, [hyperlink,
http://www.gao.gov/products/GAO-06-654] (Washington, D.C.: May 3,
2006).
[19] Plain language (also called Plain English) is defined as
communication the audience can understand the first time they read it.
Material is considered to be written in plain language if the audience
can find what they need, understand what they find, and use the
information to meet their needs.
[20] The Plain Language Action and Information Network is a group of
federal employees that promotes the principles of plain language in
government materials as a strategy for saving money and improving
government efficiency. See [hyperlink, http://www.plainlanguage.gov].
[21] Federal Plain Language Guidelines: Improving Communications from
the Federal Government to the Public, accessed from [hyperlink,
http://www.www.plainlanguage.gov/howto/guidelines/reader-friendly.cfm]
on October 22, 2008.
[22] D. Shaller, Consumers in Health Care: The Burden of Choice,
California HealthCare Foundation (Oakland, Calif: October 2005).
[23] J. Hibbard, J. Greene, et al, An Assessment of Beneficiary
Knowledge of Medicare Coverage Options and the Prescription Drug
Benefit (Washington, D.C.: May 2006).
[24] In its call letter to plan sponsors for benefit year 2008, CMS
required sponsors to send an ANOC to enrollees by October 31, 2007. For
AEP enrollment requests received prior to November 15 plan sponsors
must submit all transactions to CMS on November 15 with an "application
date" of November 15 of the current year, according to CMS guidance.
[25] Under federal law, plan sponsors are required to disclose to
Medicare beneficiaries certain information about the PDPs when they
enroll and on at least an annual basis. This information must include a
description of the plan's service area, benefits (including premiums
and cost sharing), access, out-of-network coverage, formulary
(including tiers and utilization management restrictions), plan
grievance and appeals procedures, and quality assurance programs. Under
regulations effective September 18, 2008, CMS is requiring plan
sponsors to provide this information to enrollees at least 15 days
prior to each year's AEP. 73 Fed. Reg. 54208, 54222 (Sept. 18, 2008).
[26] In its call letter to plan sponsors for benefit year 2009, CMS
requires plan sponsors to combine the ANOC and EOC in one mailing to
enrollees for receipt by October 31, 2008.
[27] An additional 57,000 ANOCs were received after the October 31
deadline by beneficiaries in one employer-sponsored PDP. However,
according to a CMS official, the agency does not consider these ANOCs
late because the timeliness of ANOC delivery was out of the control of
these sponsors and was dependent on negotiations with employer groups.
[28] Such sentence lengths are inconsistent with established elements
of effective communication such as clear language and short sentences
ranging from 15 to 20 words. See Federal Plain Language Guidelines:
Improving Communications from the Federal Government to the Public,
accessed from [hyperlink, http://www.plainlanguage.gov] on August 13,
2008.
[29] The EOB mailing is a required monthly statement that shows a
beneficiary's use of Part D drugs since the beginning of that benefit
year. Sponsors are required to mail these statements to beneficiaries
every month in which beneficiaries access their drug benefits.
[30] For the 2008 AEP, sponsors had the option to mail a short Summary
of Benefits (SB) with the ANOC for receipt by October 31, with the more
detailed EOC to follow. For the 2009 AEP, CMS requires all sponsors to
mail the ANOC and EOC together for receipt by October 31; the SB will
be available to beneficiaries only upon request.
[31] In addition to reviewing annual beneficiary notification
materials, the contractor's responsibilities include an enrollment/
disenrollment analysis among Medicare Advantage (MA) plans, an analysis
of how MA plans and benefit packages have changed over time from 2006-
2012, and an analysis of enrollees with certain chronic diseases to
evaluate cost-sharing scenarios and impacts for those in MA and fee-
for-service arrangements. For the initial year of this contract, the
agency estimates that the contractor will be reimbursed $894,088.
[32] This estimation of the increased number of pages that must be sent
to beneficiaries for the 2009 AEP is based on a comparison of the
number of pages that one sponsor sent for the 2008 AEP (the ANOC, a
formulary, and a SB) versus the documents that could be sent, as
required for the 2009 AEP (the ANOC, a formulary, and the EOC).
[33] Of 630,000 complaints filed over an 18-month period, most related
to problems processing beneficiaries' enrollments and disenrollment
requests. See GAO, Medicare Part D: Complaint Rates Are Declining, but
Operational and Oversight Challenges Remain, [hyperlink,
http://www.gao.gov/products/GAO-08-719] (Washington, D.C.: June 27,
2008).
[34] SSA is responsible for withholding Part D premiums from
beneficiaries' monthly Social Security payments if they selected that
payment method. State Medicaid offices determine which individuals are
dually eligible for Medicare and Medicaid and eligible for help with
paying for their premium and copayments. CMS also partners with various
companies to manage different aspects of Part D.
[35] CMS's April 2008 Transmission Overview lists 73 different data
exchanges between CMS and MA and PDPs.
[36] See GAO, Complaint Rates are Declining, but Operational and
Oversight Challenges Remain, [hyperlink,
http://www.gao.gov/products/GAO-08-719] (Washington, D.C.: June 27,
2008).
[37] Part D billing codes are used by pharmacies in order to identify a
beneficiary's correct plan and benefit package and include four primary
payer data elements known collectively as the 4RX data.
[38] CMS sends weekly Transaction Reply Reports (TRR) to plan sponsors
listing the status of all the transactions CMS processed for the plan
that week. The TRR includes a final disposition code for each
transaction. Once a sponsor receives an affirmative enrollment on the
TRR report, it sends a confirmation letter to beneficiaries notifying
them that their enrollment is complete. The monthly TRR aggregates the
disposition of all transactions processed for a plan in the preceding
month.
[39] Sponsors submit an electronic file called a Batch Eligibility
Query to CMS to verify members' Medicare eligibility prior to accepting
an application for Part D.
[40] If a beneficiary does not have documentation of his or her Part D
enrollment, the beneficiary's pharmacist can submit an electronic
request known as an E1 Query to CMS to verify the beneficiary's
coverage and billing codes.
[41] Of those beneficiaries whose AEP enrollments were completed after
January 1, 2008, 85 percent had submitted their enrollment applications
after December 15, 2007.
[42] The remaining 3 percent of AEP enrollments were completed by June
2008. GAO did not examine the specific reasons why these applications
were delayed.
[43] At the time of this study, CMS officials reported that the plan-
to-plan reconciliation process in place during the 2008 AEP was not
timely and that the agency was testing automated reconciliation
software for use in 2009.
[44] GAO has previously reported that in 2006 slightly more than a half
million Medicare beneficiaries who chose to have their Medicare Part C
& D premium deducted from their Social Security benefit experienced
problems due, in part, to the limited processing window established by
SSA and driven by Treasury's timetable. GAO also reported that the AEP
does not end in time for all enrollment changes affecting premium
withholding to be processed, resulting in a delay of several months
before the correct premiums are withheld from a beneficiary's Social
Security payment. See GAO, Schedule and Timing Issues Complicate
Withholding Premiums for Medicare Parts C and D from Social Security
Payments, [hyperlink, http://www.gao.gov/products/GAO-08-816R]
(Washington, D.C.: July 15, 2008).
[45] Medicare Part B typically covers outpatient health care expenses
including physicians' fees.
[End of section]
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