Medicare Part D Low-Income Subsidy: Additional Efforts Would Help
Social Security Improve Outreach and Measure Program Effects
(31-MAY-07, GAO-07-555).
Congress passed the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA), which created a Part D
outpatient prescription drug benefit that enables Medicare
beneficiaries to enroll in competing private drug coverage plans.
The benefit also offers a subsidy administered by the Social
Security Administration (SSA) to assist certain low-income
Medicare beneficiaries with out-of-pocket costs. GAO was asked to
review (1) SSA's progress in identifying and soliciting
applications from individuals potentially eligible for the
subsidy; (2) SSA's processes for making eligibility
determinations, resolving appeals, and redetermining
beneficiaries' eligibility; and (3) how the subsidy has affected
SSA's workload and operations. To conduct this study, GAO
reviewed the law, assessed subsidy data, and interviewed SSA and
other officials.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-555
ACCNO: A70087
TITLE: Medicare Part D Low-Income Subsidy: Additional Efforts
Would Help Social Security Improve Outreach and Measure Program
Effects
DATE: 05/31/2007
SUBJECT: Appeals
Appeals process
Beneficiaries
Disadvantaged persons
Eligibility determinations
Health care programs
Internal controls
Medicare
Prescription drugs
Strategic planning
Subsidies
Medicare Part D
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GAO-07-555
* [1]Results in Brief
* [2]Background
* [3]Eligibility for the Medicare Part D Low-Income Subsidy
* [4]Applying for the Subsidy
* [5]SSA Has Made Progress in Approving Subsidy Applicants, despi
* [6]SSA Approved 2.2 Million Subsidy Applicants, despite Barrier
* [7]Barriers That Limited SSA's Efforts in Identifying the
Eligi
* [8]Barriers That Limited SSA's Solicitation Efforts
* [9]Measuring the Success of SSA's Outreach Efforts is Difficult
* [10]SSA's Processes for Determining Applicants' Subsidy Eligibil
* [11]Eligibility Determinations
* [12]Appeals
* [13]Redeterminations
* [14]The Impact of the Subsidy Program Has Been Manageable
* [15]Conclusions
* [16]Recommendations for Executive Action
* [17]Agency Comments
* [18]GAO Contact
* [19]Acknowledgments
* [20]GAO's Mission
* [21]Obtaining Copies of GAO Reports and Testimony
* [22]Order by Mail or Phone
* [23]To Report Fraud, Waste, and Abuse in Federal Programs
* [24]Congressional Relations
* [25]Public Affairs
Report to the Committee on Finance, U.S. Senate
United States Government Accountability Office
GAO
May 2007
MEDICARE PART D LOW-INCOME SUBSIDY
Additional Efforts Would Help Social Security Improve Outreach and Measure
Program Effects
GAO-07-555
Contents
Letter 1
Results in Brief 3
Background 5
SSA Has Made Progress in Approving Subsidy Applicants, despite Barriers
That Hindered Its Outreach Efforts, but Measuring Its Success Is Difficult
13
SSA's Processes for Determining Applicants' Subsidy Eligibility, Resolving
Appeals, and Redetermining Eligibility Lack Key Tools for Monitoring
Performance 20
The Impact of the Subsidy Program Has Been Manageable 27
Conclusions 29
Recommendations for Executive Action 30
Agency Comments 31
Appendix I Objectives, Scope, and Methodology 33
Appendix II Subsidy Application Mailings by State, May 27, 2005-August 10,
2005 36
Appendix III Comments from the Social Security Administration 38
Appendix IV Comments from the Internal Revenue Service 42
Appendix V GAO Contact and Staff Acknowledgments 44
Related GAO Products 45
Tables
Table 1: Part D Low-Income Subsidy Eligibility and Benefits, by
Beneficiary Group, 2007 10
Table 2: Medicare Part D Low-Income Subsidy Estimates of the Eligible
Population Who Must Apply to Receive the Subsidy 19
Table 3: SSA Appeals Workloads, August 2005-February 2007 25
Table 4: SSA's Outlays Covered by the Medicare Trust Funds, Fiscal Years
2003-2008 29
Figures
Figure 1: Flow of Low-Income Subsidy Information 7
Figure 2: Total Number of SSA Outreach Events from May 2005 to August 2006
14
Figure 3: Cumulative Number of Subsidy Applicants and Approvals, November
2005 to December 2006 22
Figure 4: Reasons for Subsidy Denials Based on SSA's Sampling of Denied
Claims 23
Abbreviations
CMS Centers for Medicare and Medicaid Services
FPL federal poverty level
HHS Department of Health and Human Services
IRS Internal Revenue Service
MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003
PDP prescription drug plan
SSA Social Security Administration
SSI Supplemental Security Income
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
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separately.
United States Government Accountability Office
Washington, DC 20548
May 31, 2007
The Honorable Max Baucus
Chairman
The Honorable Charles E. Grassley
Ranking Member
Committee on Finance
United States Senate
High prescription drug costs can have a detrimental effect on low-income
seniors and the disabled, who are more likely than others to suffer from
chronic medical problems requiring prescription drugs. According to recent
studies, such high costs may cause some elderly patients to forgo or
restrict their use of prescription drugs. To help the elderly and disabled
with these costs, the Congress passed the Medicare Prescription Drug,
Improvement, and Modernization Act (MMA) of 2003, which created a
voluntary outpatient prescription drug benefit (Medicare Part D).1 The
benefit, which became available in January 2006, enables Medicare
beneficiaries to enroll in drug plans sponsored by private companies. A
key element of the prescription drug benefit is the low-income subsidy, or
"extra help," available to Medicare beneficiaries with limited incomes and
resources to assist them in paying their premiums and other out-of-pockets
costs.
While the MMA assigned the majority of the responsibilities for
implementing Medicare Part D prescription drug program to the Department
of Health and Human Services and its Centers for Medicare and Medicaid
Services (CMS), it charged the Social Security Administration (SSA) with
administering the low-income subsidy. In this capacity, SSA is responsible
for conducting outreach efforts to identify and notify individuals of the
availability of the subsidy, making subsidy eligibility determinations,
resolving appeals, and conducting redeterminations of beneficiaries'
continued subsidy eligibility. SSA is also responsible for withholding
Part D premiums from monthly Social Security benefits for beneficiaries
who select this option. You asked us to review (1) the progress that SSA
has made in identifying and soliciting applications from individuals
potentially eligible for the low-income subsidy; (2) the processes that
SSA uses to make eligibility determinations, resolve appeals, and conduct
redeterminations for the subsidy; and (3) the impact that the subsidy had
on SSA's workload and other operations.
1Pub. L. 108-173.
To conduct our work, we interviewed and obtained documentation from SSA
headquarters officials responsible for implementing the low-income
subsidy. We also obtained and discussed relevant documentation on SSA's
outreach strategy, efforts to target outreach for the low-income
population, and methods for obtaining input from state Medicaid agencies
in Colorado, Kansas, Pennsylvania, Texas, and Utah. We interviewed
officials in the Colorado, Kansas, Pennsylvania, and Utah state Medicaid
agencies because they had established processes to make low-income subsidy
determinations. We visited the Texas state Medicaid agency to gain the
perspective of a state that had not yet set up such a process, but had
plans to so in the future. We reviewed available documentation on SSA's
processes for making eligibility determinations, resolving appeals, and
making redeterminations. While we were generally able to verify some data
on the processing time for eligibility determinations, based on electronic
data provided to us, we did not have all the information needed to verify
the validity of other data. We also interviewed SSA management and staff
in eight SSA field offices in Maryland, Virginia, Pennsylvania, and Texas
to obtain their views on the implementation, as well as client feedback
they received regarding the subsidy application process. We selected SSA
offices in those states because of the large number of subsidy
applications that had been mailed to individuals potentially eligible for
the subsidy. We visited SSA offices in Pennsylvania and Texas in
particular because counties in these states had the most applicants for
the subsidy as of June 2006. We interviewed CMS officials and obtained
available documentation on the agency's involvement with SSA's outreach
efforts. We also interviewed officials at the Internal Revenue Service
(IRS) concerning legal restrictions on its ability to release tax data to
SSA for the purposes of determining the population eligible for the
subsidy and their concerns if these restrictions were lifted. We also met
with various advocacy groups that represent low-income and disabled
beneficiaries to obtain their perspectives on SSA's implementation of the
low-income subsidy. In addition, we interviewed officials in the five
state Medicaid offices discussed earlier and two state health insurance
programs (Pennsylvania and Texas) to obtain information on their efforts
in assisting clients in applying for the subsidy and their perspectives on
SSA's implementation efforts. We conducted our work from May 2006 through
April 2007 in accordance with generally accepted government auditing
standards. Appendix I provides a more detailed description of our scope
and methodology.
Results in Brief
SSA approved approximately 2.2 million Medicare beneficiaries for the
low-income subsidy as of March 2007 despite barriers that limited its
ability to identify individuals who were eligible for the subsidy and
solicit applications from them; however, the success of SSA's outreach
efforts is uncertain because there are no reliable data on the eligible
population. Because of the lack of reliable data on the eligible
population, SSA identified 18.6 million Medicare beneficiaries who might
qualify for the subsidy, which was considered an overestimate of the
eligible population. SSA mailed low-income subsidy information and
applications to these Medicare beneficiaries to ensure that everyone who
might qualify for the subsidy was notified of the benefit and had an
opportunity to apply for it. SSA developed the 18.6 million estimate by
using its benefit records and data from other government sources. SSA
officials had hoped to use Internal Revenue Service (IRS) tax data to
identify the eligible population, but the law prohibits the use of the
data unless an individual has already applied for the subsidy. SSA
followed this mailing with phone calls and additional targeted mailings.
Further, SSA conducted an outreach campaign of 76,000 events held
nationwide. Since the initial campaign ended, however, SSA has not
developed specific performance goals and measures to assess the progress
of its outreach efforts. Besides being hindered by barriers to identifying
individuals potentially eligible for the subsidy, SSA's solicitation
efforts were hindered by beneficiaries' confusion about the difference
between the subsidy and the Medicare Part D prescription drug plan, and
the reluctance of some individuals to share personal financial
information, among other factors. The early subsidy participation rate
compares favorably to those of some other low-income programs, but the
extent to which SSA has been successful in signing up the eligible
population is unknown because there are no reliable data on the size of
the target population.
SSA has established application processes for determining low-income
subsidy eligibility, reviewing appeals and conducting redeterminations;
however, it has not established some key management tools to monitor the
progress of all of its efforts. GAO internal controls standards state that
establishing performance measures that compare actual performance against
expected goals is needed to monitor the effectiveness of a program. To
assess its low-income subsidy eligibility process, SSA has tracked the
progress of the approximately 6.2 million subsidy determinations since it
began processing applications in July 2005, but did not have goals for
measuring the processing time for these applications until March 2007.
SSA's goal is now to process 75 percent of the subsidy applications in 60
days. In three separate studies since October 2005, SSA has sampled 10
percent of its appeals to determine the reasons for them. SSA has also
tracked the amount of time for resolving appeals since August 2005. SSA
data showed that in July 2006, the agency took 91 days to decide 1,795
appeals, while in February 2007, SSA took 42 days to decide 2,463 appeals.
Although SSA tracks processing time for appeals, it currently has no
performance goal to assess the timeliness of appeals decisions, and lacks
the capability to report the information. Agency officials told us,
however, that SSA plans to establish a goal of processing 75 percent of
appeals in 60 days--similar to its goal for processing subsidy
applications--but will have to modify its system to produce performance
information. Further, while SSA tracked the status of 1.2 million
redeterminations of subsidy eligibility, SSA does not measure the amount
of time it takes to process individual redetermination decisions and has
no plans to develop such information because officials stated that
measuring the time for completing the overall redeterminations cycle
provides adequate information.
SSA's implementation of the low-income subsidy did affect the agency's
workload and operations, but according to SSA officials, the additional
work has been manageable overall because of the increased funding the
agency received to carry out MMA start-up activities and other factors.
SSA hired 2,200 field office staff and 500 headquarters staff to handle
the new subsidy workload, as well as to carry out other activities for the
program. In 2006, SSA staff spent the equivalent of 2,190 work years on
the low-income subsidy activities, with about 50 percent of the time spent
on subsidy applications. SSA currently estimates the amount of time that
staff spend on low-income subsidy activities through periodic sampling.
However, SSA is working to implement a new tracking mechanism by 2010 to
more accurately capture all program data, including data related to the
MMA. While there were periods of high subsidy application activity, SSA
officials told us that subsidy program activities did not have an adverse
impact on other SSA workloads. For example, in fiscal years 2005 and 2006,
SSA exceeded its goal of making timely payments on initial retirement and
survivor claims. The officials attributed the minimal impact of Part D to
several factors, including the highly automated subsidy application
process and the $500 million congressional appropriation that SSA spent on
MMA start-up costs. SSA estimates that its costs for low-income subsidy
activities are $175 million annually.
This report contains recommendations to the SSA Commissioner that are
intended to help the agency better assess its subsidy outreach efforts,
and the results of its appeals and redetermination processes. The report
also contains a recommendation to the Commissioners of SSA and IRS for the
agencies to work together to assess the extent to which IRS data could
help SSA to better target individuals who might qualify for the subsidy,
and to develop more precise estimates of the eligible population. In its
comments on a draft of this report, SSA generally agreed with our
recommendation to develop a comprehensive plan with specific goals and
measures to direct and monitor the performance of its outreach efforts. In
its comments and a follow-up discussion, SSA officials told us that they
believed that the agency's National Strategic Communications Plan served
as a comprehensive plan for its outreach strategy, and shared their
concerns about setting specific goals and measures for outreach efforts in
the absence of reliable data on the population of individuals who might
qualify for the subsidy. SSA disagreed with our recommendation to begin
collecting data on the processing time for individual redetermination
decisions, and establish performance goals for assessing the timeliness of
individual redetermination and appeals decisions, and explained the basis
for its position. SSA and IRS agreed with our recommendation that the two
agencies work together to assess the extent to which IRS tax data may help
SSA to better identify individuals who might qualify for the subsidy.
However, IRS pointed out various limitations that might affect the
usefulness of the data, and stated that its data can only help SSA to
better target the individuals who may qualify for the subsidy. See
appendix III for a copy of SSA's comments, and appendix IV for a copy of
IRS's comments. SSA and IRS also provided a number of technical comments,
which we incorporated as appropriate.
Background
The enactment of the MMA in December 2003 added a voluntary outpatient
prescription drug benefit to the Medicare program, known as Medicare Part
D.2 Prior to this, the Medicare program did not generally pay for
outpatient drugs. The new Medicare Part D drug benefit, which became
available in January 2006, enables Medicare beneficiaries to select among
private drug plans sponsored by private companies. Beneficiaries who elect
to enroll in a Part D plan are responsible for a monthly premium, which
varies by the individual plan selected. A key element of the prescription
drug benefit is the low-income subsidy, or "extra help," available to
low-income elderly and disabled individuals to assist them in paying their
premiums, deductibles, and co-payments. Without the subsidy, individuals
enrolled in Part D would have to pay greater out-of-pocket costs for their
prescription medications.
2Medicare is a health insurance program for people 65 years of age or
older, people under age 65 who meet certain disability requirements, and
people of all ages with end-stage renal disease (permanent kidney failure
requiring dialysis or a kidney transplant). There are currently over 43
million Medicare beneficiaries.
While the Department of Health and Human Services' CMS has responsibility
for implementing the Part D prescription drug benefit, SSA is responsible
for administering the subsidy.3 The MMA requires that SSA solicit and
process subsidy applications to determine applicants' eligibility, resolve
appeals for applicants dissatisfied with their subsidy determinations, and
periodically redetermine individuals' continued eligibility. SSA transmits
information on its approved subsidy determinations and individuals'
subsidy levels to CMS, which in turn transmits the information to the
appropriate drug plan. CMS provides information to SSA and to prescription
drug plans for individuals who automatically qualify for the subsidy and
the Part D prescription drug benefit, based on information it receives
from state Medicaid agencies on individuals' eligibility for Medicaid and
from SSA on individuals who receive Supplemental Security Income (SSI).
SSA also withholds premium payments from the monthly Social Security
checks of individuals who elect this payment option; otherwise,
individuals make direct payments to their selected prescription drug plan.
Figure 1 shows the flow of information among SSA, CMS, state Medicaid
agencies, prescription drug plans, pharmacies, and beneficiaries.
3In addition to Part D, MMA gave SSA various new responsibilities, which
include, among others, (1) outreach regarding the Drug Discount Card that
was temporarily effective before the prescription drug plans and the
subsidy program took effect, (2) implementing Medicare Part B income-based
premiums for beneficiaries with income above a stipulated level, and (3)
premium withholding for Medicare Part C (e.g., Medicare Advantage plans).
Figure 1: Flow of Low-Income Subsidy Information
To implement the new responsibilities under the MMA, SSA established a
Medicare Planning and Implementation Task Force in December 2003. The
objectives of the task force included determining the affected population;
the number of staff, locations, and material resources needed; and
agreeing on specific responsibilities with other federal government
agencies. Under the MMA, the Congress provided SSA with a $500 million
appropriation from the Federal Hospital Insurance Trust Fund and the
Federal Supplementary Medical Insurance Trust Fund to pay for the
initiation of SSA's Part D responsibilities for fiscal years 2004 and
2005, but later extended the appropriation to fiscal year 2006. The
appropriation was exhausted in fiscal year 2006, and MMA spending is now
subject to SSA's overall spending ceiling under the Limitation on
Administrative Expenses appropriation.
Eligibility for the Medicare Part D Low-Income Subsidy
All Medicare beneficiaries entitled to benefits under Medicare Part A or
enrolled in Part B are eligible to enroll in Medicare Part D.4 Some
Medicare beneficiaries automatically qualify for the low-income subsidy,
while others are required to apply for it and must meet the eligibility
requirements established under the MMA. Those eligible for the subsidy
generally fall into three broad categories (table 1 describes the Part D
low-income subsidy associated with each category, as well as the costs for
Medicare beneficiaries who do not qualify for the subsidy).
o Full-benefit dual eligibles: These are low-income Medicare
beneficiaries who qualify for full coverage under their state's
Medicaid program,5 which, prior to the effective date of Part D,
provided coverage for their outpatient prescription drug costs.
These individuals are automatically enrolled by CMS in the Part D
prescription drug program. They automatically qualify for the full
subsidy and do not need to file an application. These
beneficiaries are referred to as "deemed."
4Generally, individuals who meet certain criteria and who are eligible for
Social Security or Railroad Retirement benefits automatically receive
Hospital Insurance, known as part A, which helps pay for hospital stays,
related post hospital care, home health services, and hospice care, and
typically does not require a premium. Medicare also offers optional
insurance under Supplementary Medical Insurance (Part B) to cover doctor's
services and outpatient care, and requires a premium.
5Medicaid is a federal and state program that helps pay medical costs for
certain low-income people, such as those who are 65 and older, the blind,
the disabled, and members of families with dependent children or qualified
pregnant women or children.
o Partial-benefit dual eligibles: These are Medicare
beneficiaries who qualify for more limited Medicaid
coverage, SSI, or state Medicare Savings Programs.6
Similar to full-benefit dual eligibles, they are
automatically enrolled in a Part D prescription drug
plan by CMS. They also automatically qualify for the
full subsidy and do not need to file an application.
They are also referred to as "deemed."
o Other Medicare beneficiaries: Medicare
beneficiaries who are not deemed eligible must apply
and meet the income and resource requirements to
receive the subsidy. These beneficiaries generally
qualify if they have incomes below 150 percent of the
federal poverty level and have limited resources.7 In
addition to applying for the subsidy, these
individuals must also apply to enroll in the Part D
prescription drug plan. Low-income subsidy benefits
are provided to these individuals on a sliding scale,
depending on their income and resources.
^6Medicare Savings Programs are offered by state Medicaid agencies to assist
people with limited income and resources with their Medicare premiums and, in
some cases, may also pay Medicare Part A and Part B deductibles and coinsurance.
^7Countable resources include such things as savings, investments, and real
estate (other than an individual�s primary residence). Countable resources do
not include such things as a car, a burial plot or limited funds set aside for
burial expenses, or certain other personal possessions.
Table 1: Part D Low-Income Subsidy Eligibility and Benefits, by
Beneficiary Group, 2007
Monthly
premium
Type of and annual
beneficiary Incomea Resourcesb deductible Co-pay
Full-benefit dual At or below Not 0 premium $1/generic and
eligiblesc, d 100 percent of applicablee and 0 $3.10/brand name
the federal deductible drug; no co-pay
poverty level, after $3,850 in
(FPL) (at or annual
below $10,210 out-of-pocket
for drug spending; no
individuals or co-pay if
$13,690 for institutionalized
couples)
Above 100 Not 0 premium $2.15/generic and
percent of FPL applicablee and 0 $5.35/brand name
(above $10,210 deductible drug; no co-pay
for after $3,850 in
individuals or annual
above $13,690 out-of-pocket
for couples) drug spending; no
co-pay if
institutionalized
Partial-benefit Varies Not 0 premium $2.15/generic and
dual eligiblesf according to applicablee and 0 $5.35/brand name
(participants in type of deductible drug; no co-pay
a Medicare beneficiary. after $3,850 in
Savings Program For Medicare annual
or Supplemental Savings out-of-pocket
Security Income Program and drug spending
(SSI) SSI
beneficiariesd ) beneficiaries,
income levels
are set by
income
eligibility
requirements
for those
programs.
Other Below 135 Below $7,620 0 premium $2.15/generic and
subsidy-eligible percent of FPL for and 0 $5.35/brand name
beneficiaries (less than individuals deductible drug; no co-pay
$13,784 for or $12,190 after $3,850 in
individuals or for couples annual
$18,482 for out-of-pocket
couples) drug spending
Between 0 premium 15 percent co-pay
$7,620 and and $53 between $54 and
$11,710 for deductible $3,850 in annual
individuals, out of pocket
or between spending;
$12,190 and $2.15/generic and
$23,410 for $5.35/brand name
couples drug after $3,850
in annual
out-of-pocket
drug spending
Between 135 Below Sliding 15 percent co-pay
and 149 $11,710 for scale between $54 and
percent of FPL individuals premium $3,850 in annual
(between or $23,410 based on out-of-pocket
$13,784 and for couples income and spending;
$15,315 for $53 $2.15/generic and
individuals or deductible $5.35/brand name
between drug after $3,850
$18,482 and in annual out-of
$20,535 for pocket drug
couples) spending
Medicare 150 percent of $11,710 or Variable 25 percent co-pay
beneficiaries who FPL or more more for premium, between $266 and
are not eligible (above $15,315 individuals based on $2,400 in annual
for the subsidyg for or $23,410 plan out-of-pocket
individuals or or more for chosen, an spending; no
above $20,535 couples average of benefit between
for couples) $32 per $2,400 and
month; $3,850; 5 percent
$265 coinsurance or
deductible $2.15/generic and
$5.35/brand name
drug after $3,850
in annual
out-of-pocket
drug spendingh
Source: GAO analysis of the MMA, as well as CMS and SSA regulations and
guidance.
aThe income limits shown above are those that apply to individuals with no
dependents. If household members rely on the Medicare beneficiary or the
spouse of the beneficiary for support, SSA uses the federal poverty levels
based on household size. Also, if an applicant lives in Alaska or Hawaii,
SSA applies the slightly higher poverty levels applicable to those states.
bThese resource limits include $1,500 per person burial expenses for the
individual and the spouse if there is one, and they live together.
cThese individuals receive full Medicaid benefits. For all beneficiaries
eligible for the full subsidy, premiums are 0 for those prescription drug
plans that offer basic coverage at or below the standard Part D premium.
Beneficiaries may be eligible for the full subsidy amount, but still pay
some portion of their premium if they enroll in a plan whose premium is
above the appropriate threshold. In 2007 the National Average Part D
Benchmark Premium is $27.35.
dBoth of these groups are deemed eligible for the subsidy and are
automatically signed up for it. Persons in the "other subsidy-eligible
beneficiaries" group must apply to receive the subsidy.
eThe MMA does not impose a resource test when determining whether
individuals in these deemed groups qualify for the low-income subsidy.
These beneficiaries, however, may be subject to a resource test in order
to qualify for Medicaid or other benefit programs.
fMedicare Savings Program participants include Qualified Medicare
Beneficiaries, Specified Low-Income Medicare Beneficiaries, and Qualifying
Individuals.
gThis group includes all nondeemed individuals who do not meet either the
income or resource test, or both.
hThis is the standard benefit package under Part D. Actual cost-sharing
arrangements may vary by plan.
When Part D became available in January 2006, the prescription drug
coverage provided under Medicaid for the estimated 6.2 million dual
eligibles was transferred to Medicare Part D. To ensure that these
individuals did not have a lapse in their drug coverage when the Part D
benefit took effect in January 2006, CMS automatically enrolled them in a
randomly selected Part D drug plan that was within established low-income
subsidy benchmarks. 8 For the initial enrollment period, CMS also
automatically enrolled beneficiaries who were identified as eligible for
the low-income subsidy, but had not selected a prescription drug plan by
the May 15, 2006, deadline.9 In January 2007, approximately 630,000 dual
eligibles, who were automatically receiving the subsidy in 2006, lost
their deemed status. These were people who lost their Medicaid, Medicare
Savings Plan, or SSI coverage at some point during the year. To continue
their subsidy eligibility, these individuals needed to apply for the
subsidy or regain their deemed status. According to SSA, by mid-March
2007, approximately 100,000 of these beneficiaries had applied and been
approved for the subsidy.
8CMS was required to automatically enroll in a Part D plan those
full-benefit dual eligibles who failed to do so themselves. For purposes
of ensuring a smooth transition to Part D coverage, CMS notified those
individuals that they would be enrolled in a particular plan effective on
a specified date, but provided them an opportunity to select a different
plan or to indicate that they did not wish to be enrolled in a plan. If
individuals did not indicate that they would select their own plan or opt
out of Part D coverage within the time allotted in the notice, the plan
selection made by CMS became effective.
9The deadline applied to all individuals who were first eligible to enroll
in a Part D plan on or prior to January 31, 2006. Additional rules
regarding enrollment periods are set forth in CMS regulations, 42 C.F.R. S
423.38.
Applying for the Subsidy
Medicare beneficiaries who do not automatically qualify for the Part D
low-income subsidy can apply for the benefit directly through SSA or
through their state Medicaid office. Individuals who apply through SSA may
submit their subsidy application using SSA's paper application or an
Internet application form. Applicants may also have their information
entered electronically by visiting an SSA field office or by calling SSA's
toll-free phone line. On the basis of applicant's income and resource
information, SSA issues a letter to inform the applicant of whether or not
he or she has been approved for the subsidy. SSA sends a predecisional
notice to applicants who appear to be ineligible for the subsidy based on
the income and resource information they provided, and allows them 20 days
to provide other information for the agency to consider. If applicants do
not provide such information within the required time frame, SSA sends a
final letter to inform them that they do not qualify for the subsidy. If
an individual applies for the subsidy through SSA, SSA is responsible for
resolving any subsequent appeals, and for redetermining the applicant's
continued subsidy eligibility.
As required by the MMA, beneficiaries may also apply for the subsidy
through their state Medicaid office. However, according to state Medicaid
officials we spoke with, they have encouraged beneficiaries to apply for
the subsidy through SSA whenever possible. To prepare for those
beneficiaries that request to have their subsidy applications processed by
a state office, state Medicaid officials we spoke to said that they
modified their Medicare Savings Program or Medicaid applications, when
appropriate, to collect the necessary information for subsidy
determinations. As of March 2007, only the Colorado and Kansas state
Medicaid agencies have made Part D subsidy determinations. When state
Medicaid agencies make subsidy determinations for individuals, they are
also responsible for subsequent appeals and redetermination decisions.
SSA Has Made Progress in Approving Subsidy Applicants, despite Barriers That
Hindered Its Outreach Efforts, but Measuring Its Success Is Difficult
SSA approved 2.2 million subsidy applicants as of March 2007, despite
factors that limited its efforts to identify the eligible population and
solicit applications; however, measuring the success of its efforts is
difficult because there are no reliable data on the size of the eligible
population. To compensate for the lack of reliable data on the eligible
population, SSA used data from a variety of federal sources to initially
target its outreach effort to approximately 18.6 million potentially
eligible Medicare beneficiaries, which it believed to be an overestimate
of the potentially eligible population. To solicit applications from the
approximately 18.6 million Medicare beneficiaries, SSA launched an
outreach effort that included mass mailings and a public campaign of over
76,000 events held nationwide. Though individuals' reluctance to share
personal financial information and other factors that initially hindered
SSA's solicitation efforts have lessened, various advocacy groups are
concerned that eligibility requirements and a complicated application may
discourage potential applicants. While advocacy group and state Medicaid
agency officials we interviewed believe that SSA has made some contact
with all Medicare beneficiaries eligible for the subsidy, they say that
more personalized assistance, such as door to door contact, is needed.
While SSA provides various personalized services to assist individuals in
completing their subsidy applications, agency officials told us that SSA
does not have the resources to go door to door to make contacts. We found
that the subsidy program's participation rate compares favorably to those
of other low-income programs at similar stages of implementation. However,
because no reliable data exist on the population of potential eligibles,
it is unclear how effective SSA's outreach efforts have been.
SSA Approved 2.2 Million Subsidy Applicants, despite Barriers Limiting Its
Ability to Identify the Eligible Population and Solicit Applications
Although SSA faced barriers in identifying the population eligible for the
subsidy and soliciting applications from individuals, it had approved 2.2
million subsidy applicants as of March 2007. SSA conducted its initial
outreach campaign from May 2005 to August 2006 to educate individuals
about the subsidy and to help them apply for it. SSA officials told us
that their outreach goals were to (1) ensure that as many individuals
potentially eligible for the subsidy were informed of the benefit, (2)
ensure that all potentially eligible Medicare beneficiaries had an
opportunity to apply for the benefit, and (3) solicit 5 million subsidy
applications over fiscal years 2005 and 2006 (SSA actually received 5.5
million applications during this time period). To accomplish these goals,
SSA launched an outreach campaign that included over 76,000 events
conducted in collaboration with various federal, state, and local
partners, such as state Medicaid agencies, state health insurance
programs, and various advocacy groups for Medicare beneficiaries. SSA
carried out the campaign by requiring each of its field offices to conduct
a certain number of outreach events. These events were held at senior
citizen centers, public housing authorities, churches, pharmacies, and
other venues. As figure 2 shows, the number of outreach events has
declined significantly, from a high of 12,150 in July 2005 to 230 at the
completion of the campaign in August 2006.
Figure 2: Total Number of SSA Outreach Events from May 2005 to August 2006
Although SSA's initial outreach campaign has ended, SSA is continuing to
conduct outreach efforts to solicit applications from individuals
potentially eligible for the subsidy. For example, SSA has conducted
various activities to increase subsidy applications from individuals in
rural and homeless communities. SSA also recently launched a new strategy
during the week of Mother's Day to inform relatives and caregivers about
the subsidy, and is planning a similar effort during Father's Day.
Additionally, SSA is targeting approximately 630,000 dual eligibles who
lost their automatic eligibility for the subsidy to help them apply for
the subsidy. While SSA has incorporated its strategy for continuing
subsidy outreach efforts into its National Strategic Communications Plan,
the plan does not contain specific performance goals and measures. As a
result, SSA has no basis for assessing its progress and identifying areas
that require improvement.
Barriers That Limited SSA's Efforts in Identifying the Eligible Population
SSA initially targeted 18.6 million individuals who might be eligible for
the subsidy, which was an overestimate of the eligible population. SSA
took this approach because there were no reliable data on the size of the
eligible population. SSA developed the targeted population to which to
mail the subsidy applications by screening out Medicare beneficiaries
whose income made them ineligible for the Part D subsidy using income data
from its benefit records, as well as income data from the Office of
Personnel Management, the Department of Veterans Affairs, the Railroad
Retirement Board, and the Office of Child Support Enforcement of the
Department of Health and Human Services (HHS). SSA realized that using
these data sources would result in an overestimate of the number of
individuals who might qualify for the subsidy. While the data provided
information on individuals' income, it provided limited information on
individuals' assets or nonwage income, which is needed to determine
eligibility for the subsidy. Because of the lack of such information, SSA
proceeded with a more generalized targeting of Medicare beneficiaries to
ensure that all individuals who were potentially eligible for the subsidy
were made aware of the benefit and had an opportunity to apply for it. SSA
officials said that they would have preferred to specifically target
Medicare beneficiaries who were more likely to be eligible for the subsidy
by using tax data from IRS on individuals' wage, interest, and pension
income, which would be needed to determine individuals' level of income
and assets. Without such data, SSA can neither estimate how many
individuals might qualify for the subsidy nor identify individuals to
target for more direct outreach. The officials said that their prior
experience with other low-income-based programs had shown that more
targeted outreach efforts helped to elicit a higher response rate. Current
law permits SSA to obtain income and asset data from IRS to assist in
verifying income and asset data provided by individuals who have applied
for the subsidy.10 However, to protect the privacy of taxpayer information
and enhance tax compliance, the law prohibits disclosures of such
information to identify individuals who may be eligible for the subsidy,
but have not applied.
In a November 2006 report, the HHS Office of Inspector General reported
that legislation is needed to provide SSA and CMS access to income tax
data to help the agencies more effectively identify beneficiaries
potentially eligible for the subsidy.11 While SSA uses various sources of
information to identify individuals' income, it does not have access to
income data that could assist in imputing an individual's level of assets,
which it believes could be provided through IRS income tax data. SSA
estimates individuals' assets because IRS income tax return and other tax
data do not contain asset information. However, IRS officials told us that
its data have many limitations that could affect their usefulness. For
example, IRS officials said that they have limited data on assets for
individuals whose income is less than $20,000, because these individuals
do not typically have interest income, private pensions, or dividend
income from stocks that could assist SSA in estimating an individual's
potential asset level. Also, the officials said that many people with low
incomes are not required to file taxes, and therefore IRS would have only
limited information on them.12 IRS officials also explained that tax data
could most likely identify individuals who would not qualify for the
subsidy, rather than those who would. Conversely, the officials stated
that tax data might incorrectly eliminate some people who might qualify
for the subsidy, which could result in SSA not contacting them. Moreover,
the IRS officials said that the data it provides to SSA to determine
eligibility could be almost 2 years old and may not reflect an
individual's current income. For example, for subsidy applications in
2007, the last full year of tax data the IRS could provide would be for
2005. Given these various factors, IRS officials stated that summarily
sharing private taxpayer data to identify individuals who could qualify
for the subsidy, and the potential cost of systems changes, would have to
be weighed against the added value of the data. Despite IRS's position on
the limitations of its data on low-income taxpayers, SSA officials believe
that IRS data can still help to better target the eligible population.
However, no effort has been undertaken to determine the extent to which
IRS income data could benefit SSA in this effort, or improve estimates of
the eligible population. Legislation is currently pending before the
Congress to permit IRS to share taxpayer data with SSA to assist the
agency in better identifying individuals who might be eligible for the
subsidy.
10Under 26 U.S.C. S 6103(1)(7)(C), IRS may only provide tax return
information to SSA for purposes of, and to the extent necessary in,
determining the eligibility for, or the correct amount of, benefits
provided through the subsidy program. In signing the application form,
individuals acknowledge that SSA will compare the information reported by
them on the form to information supplied by federal, state, and local
government agencies, including IRS.
11Department of Health and Human Services, Office of Inspector General,
Identifying Beneficiaries Eligible for the Medicare Part D Low-Income
Subsidy. OEI-03-06-00120. Washington, D.C.: Nov. 17, 2006.
12Individuals' income, filing status, and age generally determine whether
they must file an income tax return. For example, in 2006, single
individuals 65 or older were not required to file tax returns if their
income was less than $9,700, whereas a married couple 65 or older, filing
jointly, was not required to file tax returns if their combined income was
less than $18,900.
Barriers That Limited SSA's Solicitation Efforts
Although SSA has approved 2.2 million applicants for the subsidy, it
initially faced difficulties in soliciting applications. To solicit
applications, SSA sent its first targeted mailing to the 18.6 million
potentially eligible individuals between May and August 2005. The mailings
included an application for the subsidy and instructions on how to apply.
SSA worked with various focus groups to develop the application, which
included questions about applicants' income and resources, the value of
life insurance policies, and household size. Appendix II provides the
total number of subsidy applications mailed by state. After the subsidy
applications were mailed, a contractor then made phone calls to 9.1
million beneficiaries who had not responded to the initial mailing, and
SSA made 400,000 follow-up calls to the beneficiaries who requested SSA
assistance. SSA also conducted other follow-up efforts, including sending
follow-up notices to individuals whom the contractor was unable to contact
and to specific subgroups that it identified as having a high likelihood
of qualifying for the subsidy, such as the disabled; individuals over 79
years of age living in high-poverty areas; and individuals in
Spanish-speaking, Asian-American, and African-American households. In
addition, SSA called over 300,000 Medicare beneficiaries who had not
applied, but had previously qualified for a temporary Medicare drug
discount card, and included information about the subsidy in its 2005 and
2006 annual cost of living adjustment notices to Social Security
beneficiaries and its annual Medicare Savings Program outreach letters.
SSA's efforts to solicit applications were hindered by various factors,
including individuals' confusion over the difference between the
prescription drug program and the subsidy, the reluctance of some
individuals to share personal financial information, and eligibility
requirements, among other factors. According to SSA field office staff and
state Medicaid and advocacy group officials, many individuals were
confused about the difference between the prescription drug program and
the subsidy, and did not understand that they involved separate
application processes, although the subsidy application and the decision
letters explained that Part D enrollment was a separate process.
Consequently, some individuals thought that once they were approved for
the subsidy, they were automatically enrolled in a prescription drug plan
and vice versa to a lesser extent. SSA field office staff and advocacy
group officials also told us some individuals were reluctant to apply
because they did not want to share their personal financial information
for fear that an inadvertent error on the application could subject them
to prosecution under the application's perjury clause.13 Though the impact
of these factors has lessened as individuals have become more educated
about the subsidy, concerns remain about eligibility requirements and the
overall complexity of the application. For example, SSA field office staff
and advocacy group officials said that the subsidy's resource test may
render some low-income individuals ineligible because of retirement
savings or the value of other resources. Legislation has been proposed to
increase the resource limit to allow more beneficiaries to qualify for the
subsidy. Advocacy group officials also said that the application may be
too complex for many elderly and disabled beneficiaries to understand and
complete without the assistance of a third party. SSA headquarters
officials told us that they have revised the subsidy application several
times to address such concerns, but that much of the information that
applicants may view as complex is required by the MMA.
Measuring the Success of SSA's Outreach Efforts is Difficult because of the Lack
of Reliable Data on the Eligible Population
Although the low-income subsidy participation rate compares somewhat
favorably to those of some low-income programs during similar stages of
implementation, the success of SSA's efforts is uncertain because no
reliable data exist on the total number of individuals potentially
eligible for the subsidy. Using available estimates of the potentially
eligible population, SSA approved between 32 to 39 percent of the eligible
population who were not automatically deemed by CMS for the subsidy.
According to these estimates by CMS, the Congressional Budget Office, and
other entities, there are between about 3.4 million to 4.7 million
individuals who are eligible for the subsidy, but have not yet applied
(See table 2). In developing these estimates, however, these entities
faced the same data limitations as SSA in identifying potentially eligible
individuals.
13The perjury clause states that an individual could face imprisonment or
other penalties for making a false or misleading statement about
information provided on the subsidy application.
Table 2: Medicare Part D Low-Income Subsidy Estimates of the Eligible
Population Who Must Apply to Receive the Subsidy
Numbers in millions
SSA subsidy
approvals as of as
of March 2007 (and Eligible but have
Eligible but not estimated not yet
Source of automatically participation rate) applied(Column A
estimate approveda"(Column A) Column B) minus B)
Congressional 6.6 2.2 (33%) 4.4
Budget Officeb
Access to 6.8 2.2 (32%) 4.6
Benefits
Coalitionc
Rice and 6.9 2.2 (32%) 4.7
Desmondd
Centers for 5.6 2.2 (39%) 3.4
Medicare and
Medicaid
Servicese
Sources:
aWe derived these numbers by subtracting the 7.6 million beneficiaries
that CMS estimated in January 2007 were deemed for the subsidy, or had
comparable coverage from other federal programs, from the sources'
original estimates of all eligible beneficiaries (except for the Rice and
Desmond estimate, which included only undeemed beneficiaries).
bCongressional Budget Office (CBO), A Detailed Description of CBO's Cost
Estimate for the Medicare Prescription Drug Benefit, table 8, Washington,
D.C.: July 2004. The data were projected for calendar year 2006. CBO
estimated that an overall total of 14.2 million beneficiaries would be
eligible for the subsidy in 2006.
cThe Access to Benefits Coalition (Pathways to Success, page 1),
Washington, D.C: 2005. The Coalition estimated that an overall total of
14.4 million beneficiaries would be eligible for the subsidy in 2006.
dT. Rice and K. Desmond, January 2006. "Who Will Be Denied Medicare
Prescription Drug Subsidies Because of the Asset Test?" The American
Journal of Managed Care. 12 (1), pp.46-54. The authors estimated that a
total of approximately 6.9 million eligible individuals would not be
deemed, as of January 2006.
eReported in CMS Press release, "Medicare Drug Plans Strong and Growing:
Beneficiaries Compared Plans and Continued to Sign Up for Prescription
Drug Coverage, " Washington, D.C: January 30, 2007. CMS estimated that an
overall total of 13.2 million beneficiaries would be eligible in 2006.
SSA officials said that it is unfair to judge the success of its outreach
efforts for the subsidy in relation to these estimates, given the
limitations in identifying the size of the eligible population. SSA
officials stated that the program has been successful in meeting its
internal outreach goals. The advocacy group officials we interviewed
agreed that SSA has informed all Medicare beneficiaries of the benefit and
provided them with the opportunity to apply, but advocates questioned the
effectiveness of SSA's outreach methods because of the lack of personal
assistance available for elderly and disabled individuals who may not be
connected to a social service organization and may not be able to go into
an SSA field office. Advocacy groups believe that a more personalized
outreach approach, such as door-to-door contact, is needed to encourage
these individuals to apply for the subsidy. However, SSA officials also
stated that door-to-door contact with individuals would be a resource
intensive and costly endeavor for the agency.
After over 2 years of implementation efforts, however, SSA's estimated
participation rate of 32 to 39 percent of individuals who were not
automatically deemed eligible for the subsidy compares favorably to those
of some other low-income programs at a similar stage of implementation.
SSA's participation rate is around 68 to 74 percent when the deemed
population is included. However, we focused on the participation rate of
the nondeemed population, because this is the population of individuals
who had to sign up for the subsidy and to whom SSA targeted its outreach
efforts. After its second year of national implementation in 1976, the
Food Stamp Program had an estimated participation rate of 31 percent.
During its second year of implementation in 1975, the SSI program had an
estimated participation rate of 50 percent for those 65 or older.
According to SSA officials, two-thirds of the early elderly participants
were automatically transferred from state government programs to SSI
(these individuals are similar to those deemed eligible for the Part D
low-income subsidy). In both instances, the low-income subsidy
participation rate compares favorably.
SSA's Processes for Determining Applicants' Subsidy Eligibility, Resolving
Appeals, and Redetermining Eligibility Lack Key Tools for Monitoring Performance
SSA has established subsidy application processes for determining
applicants' subsidy eligibility, resolving appeals, and redetermining
subsidy eligibility, but has not established some key tools needed to
monitor the performance of all of its processes. For example, while SSA
tracks various information from its subsidy application processes through
its Medicare database and other means, it does not track information on
processing times for redeterminations, and does not currently have
performance goals to monitor the timeliness of appeals and individual
redetermination decisions. To enable agencies to identify areas in need of
improvement, GAO internal control standards state that agencies should
establish and monitor performance measures and indicators.14 Accordingly,
agencies should compare actual performance data against expected goals and
analyze the differences.
14GAO, Internal Control Standards: Internal Control Management and
Evaluation Tool, [26]GAO-01-1008G. Washington, D.C.: August 2001.
Eligibility Determinations
To determine individuals' eligibility for the subsidy, SSA largely relies
on an automated process. After an individual applies, income and resource
data provided by the applicant are electronically compared to income data
provided by IRS and other agencies to determine if the individual meets
income and resource requirements. In cases where there are conflicting
data or questions regarding the data, SSA field office staff follow up
with individuals to address such matters. SSA tracks the number of
eligibility determinations it makes, the outcome of those determinations,
and the length of time for completing the determinations. SSA also tracks
data on denials, and periodically conducts samples to examine the reasons
for such actions. Although the subsidy did not become available until
January 2006, SSA began processing applications in July 2005 to encourage
people to take advantage of the benefit when it became available.
As of March 2007, approximately 6.2 million individuals had applied for
the subsidy. SSA officials noted that the heaviest volumes occurred when
the public outreach campaign was most active. Figure 3 provides data on
the cumulative number of subsidy applicants and approvals from November
2005, when SSA began tracking the data, to December 2006.
Figure 3: Cumulative Number of Subsidy Applicants and Approvals, November
2005 to December 2006
Note: SSA did not have data available for the months of June, August,
September, and November of 2006.
Of the approximately 6.2 million individuals who had applied for the
subsidy as of March 2007, SSA approved 2.2 million, denied 2.6 million,
determined that no decision was required for 1.4 million, and had
decisions pending for 80,000 applicants. According to SSA officials, those
requiring no decision were the result of duplicate applications,
applications from individuals automatically qualified for the subsidy, or
canceled applications.15 To identify reasons for subsidy denials, SSA
conducted three separate studies that sampled a total of 1,326 denied
claims. These studies showed that most of applicants were denied due to
resources or income that exceeded allowable limits set by the MMA (fig.
4). SSA officials stated that they plan to conduct a longitudinal study to
examine the reasons for all cases in which applicants were denied the
subsidy.
15Canceled applications included applications that were withdrawn by the
applicant or applications that were canceled by SSA because the applicant
was not eligible for Medicare, as required to qualify for the subsidy.
Figure 4: Reasons for Subsidy Denials Based on SSA's Sampling of Denied
Claims
While SSA has captured data on the length of time it takes to make
eligibility determinations since it began accepting applications for the
subsidy in July 2005, it did not develop the capability to report the
data, and did not establish a performance goal for processing times until
March 2007. As a result, SSA did not have the management information that
it needed to monitor its performance in this area and identify areas where
improvements were needed. SSA has now established a goal of processing 75
percent of subsidy applications in 60 days.16 In March 2007, SSA provided
us with information showing the percentage of subsidy applications
processed within certain periods of time, ranging from 30 days or less, to
over 120 days.17 SSA's data as of mid-March for calendar year 2007 showed
that of the approximately 213,000 applications received, SSA had processed
about 94 percent in 60 days or less, compared to nearly 91 percent of the
approximately 1.3 million applications within the same time frame for
calendar year 2006.
16The processing time includes a built-in 20-day delay as part of the
predecisional process and the 10-14 days that it takes to receive IRS
data.
17SSA measured the processing time for eligibility determinations from the
date of the subsidy application or the date that the applicant became
eligible for Medicare, whichever was later.
Appeals
Individuals may appeal denied subsidy determinations, as well as the level
of the subsidy, by calling SSA's national toll-free number or calling,
writing, or visiting any Social Security field office. Individuals may
also complete an appeals form available on SSA's Web site and mail it in
to SSA. Individuals have the choice of having their appeal conducted
through a telephone hearing or a case file review. To process appeals, SSA
established six Special Appeals Units. SSA tracks data on the total number
of appeals and the time it takes to process them, the method used to
resolve appeals, the reason for appeals, and the final disposition of
appeals. However, SSA does not currently have a performance goal to assess
the timeliness of its appeals decisions, and lacks the capability to
report this information. In follow-up with SSA officials on their comments
on a draft of this report, they told us that the agency is planning to
establish a goal of processing 75 percent of appeals in 60 days, but will
have to modify its system to report this information. SSA officials told
us that they have managed the appeals process by redirecting resources
when case-processing times for appeals exceed 60 days.
Regarding data on SSA's appeals process, an SSA sample, conducted in July
2006, showed that about 80 percent of individuals chose to have a case
file review. According to SSA data on appeals from August 2005 to February
2007, it received about 79,000 appeals and completed about 76,000. The
number of appeals was consistent with SSA's initial estimate that about 3
percent of denied subsidy applications would be appealed, based on its
experience with other programs. On the basis of an SSA sample of 781
appeals, SSA reversed its decision for 57 percent of the cases and upheld
its decision for the remaining 43 percent.
SSA data show that the overall volume of appeals received was the highest
from November 2005 and July 2006, declined between August and November
2006, and rose again between December 2006 and February 2007 (See table
3). During the decline, SSA closed all but one of its Special Appeals
Units by October 2006.
Table 3: SSA Appeals Workloads, August 2005-February 2007
Number of appeals Number of appeals Average processing time
Month received processed (in days)
August 2005 23 19 1.6
September 2005 422 253 2.5
October 2005 1,981 1,366 6.1
November 2005 7,443 2,498 11.3
December 2005 16,057 4,883 22.2
January 2006 13,023 4,543 40.0
February 2006 10,116 8,070 46.1
March 2006 8,714 12,614 68.2
April 2006 3,305 11,611 80.1
May 2006 3,467 10,221 88.3
June 2006 2,709 8,209 80.2
July 2006 1,913 1,795 90.5
August 2006 983 1,276 75.8
September 2006 613 1,836 58.7
October 2006 226 1,261 71.9
November 2006 689 935 48.6
December 2006 3,014 1,254 16.3
January 2007 2,603 1,209 25.6
February 2007 1,892 2,463 41.5
Source: SSA Appeals Workload Summary, as of February 27, 2007.
The time it took SSA to process appeals varied widely, and did not
necessarily decrease when the caseloads grew smaller. For example, SSA
appeals workload data showed that it took SSA an average of 80 days to
resolve approximately 11,600 appeals in April 2006, but took about 90 days
to resolve about 1,800 appeals in July 2006. SSA data from December 2006
through February 2007 also show that the agency's processing time for
resolving appeals has not shown consistent improvement. For example, it
took SSA an average of 16 days to process 1,254 appeals in December 2006,
but 42 days to process 2,463 appeals in February 2007. An SSA July 2006
sample of 781 appeals showed that 63 percent of appeals were filed based
on applicants' challenges regarding an income issue, 24 percent were based
on applicants' challenge regarding a resource issue, and 13 percent were
based on other issues, such as an applicant's failure to respond to SSA
requests for additional data in a timely manner. SSA officials stated that
the agency plans to broaden the sampling effort to better understand the
reasons for appeals.
Redeterminations
According to the MMA and SSA regulations, all recipients of the low-income
subsidy are required to have a redetermination of their eligibility within
1 year after SSA first determines their eligibility.18 Future
redeterminations are required to be conducted at intervals determined by
the Commissioner. SSA's regulations provide that these periodic
redeterminations be conducted based on the likelihood that an individual's
situation may change in a way that affects subsidy eligibility.
Additionally, SSA's regulations provide that unscheduled redeterminations
may take place at any time for individuals who report a change in their
circumstances, such as marriage or divorce. However, there is no specific
requirement that recipients report such changes. SSA tracks various
results from the redeterminations process, such as the number of decisions
made, and number and level of continued subsidies, but does not track the
amount of time needed to complete redetermination decisions.
SSA initiated its first cycle of redeterminations in August 2006, which
included all of the approximately 1.7 million individuals who were
determined to be eligible for the subsidy prior to April 30, 2006. SSA
excluded from the redeterminations process about 562,000 individuals who
were either deceased, automatically deemed eligible for the benefit by
CMS, or whose subsidy benefit had been terminated. As a result, SSA sent
approximately 1.2 million notices to inform individuals that their
continued eligibility status was being reviewed. The notice also provided
individuals with the income and resources data contained in SSA's files
and asked them to notify SSA if the information had changed. SSA
subsequently sent 242,000 forms to beneficiaries who reported changes to
their income or resources, or whom SSA had identified as having such
changes from other sources, to allow them to indicate changes to the
information or dispute it. SSA data show that as of February 2007, SSA had
completed approximately 237,000 redeterminations. About 69,000 individuals
remained at the same subsidy level, another 69,000 had a change in their
subsidy level, and 98,000 individuals had their subsidies terminated,
based on a change in their circumstances.
18This does not include individuals who continue to be deemed or
automatically eligible for the subsidy. Individuals who report certain
changes to SSA regarding their benefit status are also excluded from the
initial redetermination process since they are redetermined as a result of
the change.
SSA does not track processing time for redetermination decisions and has
not established a performance time target for processing such actions. SSA
officials stated that since the redeterminations process is conducted
within a certain period of time, it is unnecessary to track the processing
time for individual redetermination decisions. However, as stated
previously, GAO internal control standards state that agencies should
establish performance measures for all activities and compare actual
performance against expected goals. Without such data, SSA will be unable
to identify areas in need of improvement.
The Impact of the Subsidy Program Has Been Manageable
Although the subsidy program affected SSA's workload and operations, SSA
officials said that the additional workload was manageable overall. SSA
hired a total of 2,200 field office staff to assist with subsidy
applications, as well as an additional 500 headquarters staff to support
its MMA activities. SSA officials stated that the agency's major
activities for implementing low-income subsidy activities for fiscal year
2004 included preparing public information materials for the subsidy,
systems development, and developing internal training materials for staff.
Officials also stated that major subsidy work activities for fiscal year
2005 included hiring the approximately 2,200 field office staff,
processing subsidy applications, and establishing Special Appeals Units.
For fiscal year 2006, SSA provided us with data showing that staff spent
the equivalent of approximately 2,190 work years on low-income subsidy
activities, with almost 50 percent of the time used to process subsidy
applications. These activities included processing subsidy applications
and resolving appeals, and developing business process planning and
systems development for the redeterminations process.
SSA officials stated that the agency's new responsibilities under the
subsidy program have not adversely affected its other workloads. In fact,
SSA officials pointed out that the processing times for other workloads
improved in fiscal years 2005 and 2006. For example, SSA exceeded its goal
of paying 83 percent of initial claims for retirement and survivor
benefits at the earliest point due, or 14 days after an applicant filed a
claim--the actual performance was approximately 85 and 87 percent,
respectively. Additionally, SSA exceeded its goal of paying 75 percent of
SSI claims for the elderly before their payment was due, or no more than
14 days after an applicant filed a claim--the actual performance was
approximately 85 and 88 percent, respectively.
Although SSA can track expenditures for implementing its various MMA
responsibilities overall, it cannot track expenditures related
specifically to low-income subsidy activities or other specific sublevel
MMA activities. For example, SSA cannot calculate the total amount of the
$500 million congressional appropriation it received for MMA start-up
costs that was spent on the subsidy program versus its other MMA
responsibilities. Although SSA could not provide documentation of the
total amount of its subsidy-related expenditures, it estimates that its
costs related to the subsidy program are about $175 million annually,
based on workload samples. However, SSA is planning to develop a tracking
mechanism to more accurately capture the data.
SSA officials attribute the light impact of the subsidy program to various
factors, including the automation of the subsidy application process and
the $500 million congressional appropriation it received for
administrative start-up costs to implement its MMA responsibilities. SSA
officials also told us that they were able to manage the other workloads
because the peak increases in subsidy applications and inquiries were
short-lived, allowing SSA's operations to return to a more normal
operating level after handling these peak work volumes. SSA officials
stated that they expect small increases in its low-income subsidy workload
during future prescription drug plan open seasons, which typically have
been held from November to December.
SSA's spending on its Medicare activities peaked in fiscal year 2005 (see
table 4) as supported by the $500 million congressional appropriation for
MMA start-up activities; more recent increases in such spending could
cause pressure on SSA's other workloads in the future. The amount of SSA's
administrative costs covered by the Medicare Trust Funds increased by
about 37 percent between fiscal year 2003 and estimated spending in fiscal
year 2008. The minimal impact of the subsidy workload and other MMA
activities through fiscal year 2006 was due, in part, to the $500 million
separately appropriated by the Congress. Now that the additional $500
million is exhausted, SSA's MMA responsibilities must compete with all
other workloads for resources within the overall administrative
appropriation limits. If the cost of SSA's Medicare workload increases, as
it has done recently, SSA's other workloads may experience pressure if the
overall administrative appropriation does not increase proportionately.
Table 4: SSA's Outlays Covered by the Medicare Trust Funds, Fiscal Years
2003-2008
Dollars in millions
Percentage
Outlays, not Outlays from the increase in
including the $500 $500 million total outlays
million congressional congressional Total since fiscal
Fiscal year appropriation appropriation outlays year 2003
2003 $1,214.6 $0 $1,214.6 -
2004 1,184.0 53.9 1,237.9 1.9 %
2005 1,364.4 346.5 1,710.9 40.9 %
2006 1,568.8 111.4 1,680.2 38.3 %
2007 1,600.1 0 1,600.1 31.7 %
(estimate)
2008 1,661.5 0 1,661.5 36.8 %
(request)
Totals $8,593.4 $ 511.8a $9,105.2b -
Source: Social Security Administration, "Budget Justification for
Appropriations Committees," fiscal years 2005, 2006, 2007, and 2008.
Note: The $500 million appropriation for MMA start-up costs was available
for fiscal years 2004 to 2006 only.
aSSA officials stated that outlays appear to exceed the $500 million
appropriation due to the funds being outlayed, recovered, and then
outlayed again in subsequent years.
bThe increase in Medicare spending occurred despite the transfer of the
Medicare appeals processing function from SSA to CMS in 2005.
Conclusions
SSA has made progress in approving individuals for the low-income subsidy,
but has not established specific performance goals and measures for its
outreach activities. Without such goals and measures, SSA will not have a
means to assess the effectiveness of its efforts, or to identify areas
that require improvement as it moves forward. Having such goals and
measures takes on heightened importance now since SSA is conducting
outreach efforts on a more limited basis. Although no reliable data
currently exist on the population of individuals who might qualify for the
subsidy, SSA does not need such data to establish specific performance
goals and measures to assess its outreach efforts. For example, SSA could
set specific goals and measures to assess the effectiveness if its
outreach efforts for subpopulations where there is an underrepresentation
of subsidy applications. Monitoring the progress of such efforts could
help SSA to identify areas where increased outreach efforts are needed.
Assessing the performance of outreach efforts can also help SSA to make
more efficient use of staff resources by directing them to areas where
increased outreach efforts are needed to encourage applications among
underrepresented segments of the eligible population. While advocacy
groups have called for a more personalized outreach approach, such as
door-to-door contact, to encourage additional enrollments among Medicare
beneficiaries, it may be difficult for SSA to conduct such efforts, given
its resource limitations. Also, it is unclear how much more outreach is
needed, given the lack of reliable data on the eligible population. The
extent of additional outreach efforts will also depend on SSA's ability to
more precisely identify remaining individuals eligible for the subsidy.
However, it is not clear to what extent additional taxpayer data from IRS
could help SSA to better target individuals potentially eligible for the
subsidy. Until an effort is undertaken to better determine the size of the
population that is eligible for the subsidy, it will be difficult for SSA
and others to assess its progress in approving individuals for the
subsidy.
Finally, while SSA has considerable data on its subsidy application
processes, it lacks systematic performance indicators to compare results
to expected goals. Without processing time data for redetermination
decisions, and performance measures for all subsidy application processes,
SSA will not have the information that it needs to assess the quality of
the services it provides or to identify areas of improvement. The
importance of identifying people who could benefit from the subsidy,
coupled with ensuring a timely and reliable process for deciding initial
determinations, hearing appeals, and making redeterminations, is essential
to the success of the low-income subsidy.
Recommendations for Executive Action
To improve SSA's outreach efforts and its ability to measure the
effectiveness of the Medicare Part D low-income subsidy application
processes, we recommend that the Commissioner of Social Security:
o establish specific performance goals and measures for SSA's
outreach activities to provide the agency with a means to assess
their effectiveness in soliciting applications from additional
individuals who qualify for the subsidy, but have not yet applied,
and
o direct staff to begin collecting data on the processing time for
individual redetermination decisions, and establish performance
standards for processing time for the appeals and redetermination
decisions.
We also recommend that the Commissioners of SSA and IRS work together to
assess the extent to which IRS tax data may help SSA to better target
individuals who might qualify for the subsidy, possibly aiding SSA in
better targeting its outreach efforts. This effort could also aid in
developing more precise estimates of the eligible population and help to
better inform the Congress on legislative proposals to allow IRS to share
tax data with SSA to assist the agency with its outreach efforts.
Agency Comments
We obtained written comments on a draft of this report from the
Commissioners of SSA and IRS. SSA agreed in theory with our recommendation
to develop a comprehensive plan, with specific performance goals and
measures, to detail the agency's strategy for encouraging individuals who
qualify for the subsidy to apply. In its response and in a follow-up
discussion, SSA stated that it believes that its National Strategic
Communications Plan serves as a comprehensive plan for its outreach
efforts agencywide, but stated that it would not be able to implement
specific goals and measures due to the lack of reliable data on the
eligible population. We agree that SSA's National Strategic Communications
Plan serves as a comprehensive plan for describing the agency's outreach
efforts, and revised our recommendation accordingly. However, we do not
believe that data on the potentially eligible subsidy population, while
useful, are needed for SSA to establish specific performance goals and
measures to assess the effectiveness of its outreach efforts.
SSA disagreed with our recommendation to begin collecting data on the
processing time for redetermination decisions, and establish performance
standards for processing times for appeals and individual redetermination
decisions. SSA stated that it monitors the time for completing the overall
redetermination cycle, which provides adequate management controls for
operational data. On the basis of GAO's internal control standards, we
believe that SSA should measure the time for processing individual
redetermination decisions because it could provide the agency with
information on the efficiency of processing such decisions. While SSA
stated that it had established a performance standard for assessing the
timeliness of appeals, in a follow-up discussion with agency officials
after receiving their comments, they told us that the goal did not
currently exist, but that the agency is planning to establish a goal of
processing 75 percents of appeals in 60 days. SSA officials added that the
agency would have to conduct additional programming to produce management
information for this data.
SSA agreed with our recommendation for the agency to work with IRS to
assess the extent to which IRS tax data may help SSA to better identify
individuals who might qualify for the subsidy. SSA stated that it has
begun discussions with IRS to evaluate how such a study might be designed.
IRS also agreed with this recommendation and stated that it is willing to
work with SSA in conducting such a study. IRS emphasized, however, that
current law prohibits the agency from sharing tax information, other than
in statistical form, before an individual applies for the subsidy. IRS
also discussed various limitations that could affect the usefulness of its
tax data. For example, IRS stated that its data may only be useful in
screening out individuals who do not qualify for the subsidy. In view of
this, we adjusted our recommendation to reflect that the study may assist
SSA in better targeting individuals who might qualify for the subsidy,
rather than identifying this population.
SSA's comments are reproduced in appendix III, and IRS comments are
reproduced in appendix IV. Technical comments provided by each of these
agencies have been included in the report as appropriate.
As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after its issue date. At that time, we will send copies of this report to
the Commissioner of SSA, the Secretary of HHS, the Commissioner of IRS,
and other interested parties. Copies will also be made available at no
charge on GAO's Web site at http://www.gao.gov.
If you have questions concerning this report, please call me on (202)
512-7215. Contact points for our Offices of Congressional Relations and
Public Affairs, respectively, are Gloria Jarmon, who may be reached on
(202) 512-4470, and Paul Anderson, who may be reached on (202) 512-4800.
Barbara D. Bovbjerg
Director, Education, Workforce, and Income Security Issues
Appendix I: Objectives, Scope, and Methodology
To assess the Social Security Administration's (SSA) implementation of the
Medicare Part D low-income subsidy, we reviewed the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (MMA) to understand SSA's
responsibilities under the law. We also reviewed various policies and
regulations SSA established to carry out its new responsibilities, as well
as guidance provided to field office staff to assist them in answering
questions about the subsidy and taking subsidy applications. We obtained
information on SSA's implementation activities from SSA officials in the
agency's headquarters in Baltimore, Maryland, and in two regional offices,
and from management and staff in eight SSA field office locations in
Texas, Maryland, Virginia, and Pennsylvania. We selected SSA offices in
those states because of the large number of subsidy applications that had
been mailed to individuals who were potentially eligible for the subsidy.
In addition, we selected SSA offices in Pennsylvania and Texas in
particular because they had counties (Philadelphia County in Pennsylvania
and Dallas and Fort Worth Counties in Texas) that had the most low-income
subsidy applicants as of June 2006. To understand state Medicaid agencies'
responsibilities for administering the subsidy, we reviewed regulations
provided to these agencies from the Department of Health and Human
Service's (HHS) Centers for Medicare and Medicaid Services (CMS). In
addition, we discussed views on SSA's implementation actions and feedback
that had been received from clients on the subsidy with state Medicaid
agency officials in Colorado, Kansas, Utah, Pennsylvania, and Texas. We
selected state Medicaid offices in Colorado, Kansas, Pennsylvania, and
Utah because they had established processes to make low-income subsidy
determinations. We also selected the Colorado and Kansas state Medicaid
agencies because we wanted to gain the perspectives of state officials
that had made low-income subsidy determinations. We visited the Texas
state Medicaid agency to gain the perspective of a state that had not yet
set up such a process, but had plans to do so in the future. We also
interviewed state Health Insurance program officials in Pennsylvania and
Texas, and officials from six advocacy groups, including the Access to
Benefits Coalition, the Health Assistance Partnership of Families USA, and
the Henry J. Kaiser Family Foundation. To obtain a contextual framework of
concerns surrounding the subsidy and issues that could affect its
implementation, we reviewed reports from GAO, the Congressional Research
Service, the Office of Inspector General of HHS, and various reports from
advocacy groups representing the elderly and disabled, whom the subsidy
was primarily designed to benefit.
To assess SSA's progress in identifying individuals potentially eligible
for the subsidy, we discussed the methodology the agency used to target
this population with SSA Medicare Task Force officials responsible for
implementing the subsidy program; we also discussed with them the agency's
overall outreach strategy and obtained and reviewed supporting
documentation. In particular, we discussed in detail how SSA developed the
approximately 18.6 million population of individuals to whom it targeted
its original mass mailing of subsidy material, as well as how it more
narrowly targeted groups within that population. We reviewed SSA's target
population by looking at the number of total Medicare recipients and
estimates of the total eligible population developed by the Congressional
Budget Office, CMS, and others. We also met with Internal Revenue Service
(IRS) officials to discuss the data restriction, and concerns officials
would have if the law were changed to grant SSA access to IRS data for
better targeting outreach efforts. To understand SSA's efforts to solicit
subsidy applications, we discussed with SSA officials the process used to
develop subsidy outreach materials and cognitive tests that had been
conducted to ensure that the materials were written at an appropriate
educational level for the target population. We discussed SSA's outreach
methodology with officials from CMS, state Medicaid agencies, and various
advocacy groups. Additionally, we discussed and obtained supporting
documentation of training provided to field office staff on the subsidy
and discussed with staff the usefulness of the training.
To review SSA's subsidy application processes--making eligibility
determinations, resolving appeals, and redetermining individuals'
continued subsidy eligibility--we reviewed the laws and regulations
relating to each of these processes and SSA's strategic plan for relevant
performance goals and measures. Specifically for the subsidy eligibility
determinations process, we reviewed monthly data on the total number of
subsidy determinations. For applicants that had been denied the subsidy,
we obtained and reviewed available data on the reasons for the decisions.
We requested SSA data on the timeliness of the eligibility determinations,
but were told that while SSA captured the data in its Medicare
Applications System, it had only recently developed the business
requirement to report the data. Regarding SSA's appeals resolution
process, we reviewed three SSA studies on samples of appeals identifying
the reasons for the appeals and the final disposition of the appeal. We
also reviewed SSA data on the total number of appeals filed and the length
of time for resolving them. Regarding the redeterminations process, we
reviewed data on the number of determinations conducted during the first
cycle in 2006 and the statistics on the results. We discussed with SSA
officials the actions that it planned to take to provide information on
these processes, as well as SSA's plans for developing performance goals
and measures for these processes. On the basis of electronic data provided
to us, we were generally able to verify some data on the processing time
for eligibility determinations. However, we did not have all of the
information needed to verify the validity of other data.
To determine the impact that subsidy work activities had on SSA
operations, we discussed the issue with SSA headquarters officials and
field office managers and staff. In particular, we obtained and reviewed
SSA estimates of the resources the agency would need to implement the
low-income subsidy and discussed with SSA officials the mechanisms for
assessing the program's impact. We also coordinated with another GAO team
that is reviewing how SSA spent the $500 million appropriation for
implementing all of the agency's responsibilities under the MMA. In
addition, we reviewed SSA's methods for tracking financial expenditures
and staff time dedicated to Part D activities. We also discussed with SSA
the implications of possible budget restrictions and reductions in
carrying out its Part D work. Finally, we reviewed SSA budget documents
and spending on the Medicare Trust Fund from fiscal year 2003 to fiscal
year 2008.
We conducted our work between May 2006 and April 2007 in accordance with
generally accepted government auditing standards.
Appendix II: Subsidy Application Mailings by State, May 27, 2005-August
10, 2005
State Number of mailings
Alabama 343,448
Alaska 27,384
Arizona 363,084
Arkansas 237,524
California 1,614,086
Colorado 249,901
Connecticut 212,346
Delaware 54,086
District of Columbia 29,282
Florida 1,434,108
Georgia 479,699
Hawaii 99,611
Idaho 89,457
Illinois 769,394
Indiana 426,956
Iowa 251,207
Kansas 195,899
Kentucky 325,571
Louisiana 290,073
Maine 115,475
Maryland 332,418
Massachusetts 398,717
Michigan 658,889
Minnesota 312,476
Mississippi 186,890
Missouri 439,898
Montana 75,544
Nebraska 125,809
Nevada 137,367
New Hampshire 87,690
New Jersey 500,519
New Mexico 122,958
New York 1,136,243
North Carolina 637,564
North Dakota 53,037
Ohio 872,963
Oklahoma 265,009
Oregon 250,344
Pennsylvania 994,908
Rhode Island 75,955
South Carolina 315,913
South Dakota 64,853
Tennessee 381,972
Texas 1,069,524
Utah 96,433
Vermont 48,985
Virginia 469,428
Washington 362,295
West Virginia 176,397
Wisconsin 382,047
Wyoming 34,698
Total: 18,676,334
Source: Social Security Administration.
Appendix III: Comments from the Social Security Administration
Appendix IV: Comments from the Internal Revenue Service
Appendix V: GAO Contact and Staff Acknowledgments
GAO Contact
Barbara D. Bovbjerg (202) 512-7215 or [email protected]
Acknowledgments
The following team members made key contributions to this report: Blake
Ainsworth, Assistant Director; Jeff Bernstein; Kyle Browning; Susannah
Compton; Mary Crenshaw; Rosamond Katz; Sheila McCoy; Lisa Reynolds;
Vanessa Taylor; and Paul Wright.
Related GAO Products
Medicare Part D: Challenges in Enrolling New Dual-Eligible Beneficiaries.
[28]GAO-07-272 . Washington, D.C.: May 4, 2007.
Prescription Drugs: An Overview of Approaches to Negotiate Drug Prices
Used by Other Countries and U.S. Private Payers and Federal Programs.
[29]GAO-07-358T . Washington, D.C.: January 11, 2007.
Medicare Part D: Prescription Drug Plan Sponsor Call Center Responses Were
Prompt, but Not Consistently Accurate and Complete. [30]GAO-06-710 .
Washington, D.C.: June 30, 2006.
Medicare: Communications to Beneficiaries on the Prescription Drug Benefit
Could Be Improved. [31]GAO-06-654 . Washington, D.C.: May 3, 2006.
Social Security Administration: Medicare Part D Subsidies. [32]GAO-06-344R
. Washington, D.C.: January 13, 2006.
Medicare: Contingency Plans to Address Potential Problems with the
Transition of Dual-Eligible Beneficiaries from Medicaid to Medicare Drug
Coverage. [33]GAO-06-278R . Washington, D.C.: December 16, 2005.
Medicare: CMS's Beneficiary Education and Outreach Efforts for the
Medicare Prescription Drug Prescription Drug Discount Card and
Transitional Assistance Program. [34]GAO-06-139R . Washington, D.C.:
November 18, 2005.
Medicare: CMS's Implementation and Oversight of the Medicare Prescription
Drug Discount Card and Transitional Assistance Program. [35]GAO-06-78R .
Washington, D.C.: October 28, 2005.
Retiree Health Benefits: Options for Employment-Based Prescription Drug
Benefits under the Medicare Modernization Act. [36]GAO-05-205 .
Washington, D.C.: February 14, 2005.
Medicare Savings Programs: Results of Social Security Administration's
2002 Outreach to Low-Income Beneficiaries. [37]GAO-04-363 . Washington,
D.C.: March 26, 2004.
(130580)
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Highlights of [45]GAO-07-555 , a report to the Committee on Finance, U.S.
Senate
May 2007
MEDICARE PART D LOW-INCOME SUBSIDY
Additional Efforts Would Help Social Security Improve Outreach and Measure
Program Effects
Congress passed the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA), which created a Part D outpatient
prescription drug benefit that enables Medicare beneficiaries to enroll in
competing private drug coverage plans. The benefit also offers a subsidy
administered by the Social Security Administration (SSA) to assist certain
low-income Medicare beneficiaries with out-of-pocket costs. GAO was asked
to review (1) SSA's progress in identifying and soliciting applications
from individuals potentially eligible for the subsidy; (2) SSA's processes
for making eligibility determinations, resolving appeals, and
redetermining beneficiaries' eligibility; and (3) how the subsidy has
affected SSA's workload and operations. To conduct this study, GAO
reviewed the law, assessed subsidy data, and interviewed SSA and other
officials.
[46]What GAO Recommends
GAO recommends that SSA develop specific performance goals and measures
for its outreach activities, develop key management tools for its appeals
and redetermination decisions, and also that SSA and the Internal Revenue
Service (IRS) work together to assess the extent to which taxpayer data
could help to better target individuals who might qualify for the subsidy.
IRS generally agreed with our recommendation, and SSA generally agreed
with all but one of our recommendations.
SSA approved about 2.2 million Medicare beneficiaries for the low-income
subsidy as of March 2007, despite barriers it faced in identifying the
eligible population and soliciting applications; however, measuring the
success of SSA's outreach efforts is difficult because there are no
reliable data on the size of the eligible population. In 2005, SSA mailed
18.6 million subsidy applications to Medicare beneficiaries who were
potentially eligible for the subsidy. SSA knew that this mailing was an
overestimate, but took this approach to ensure that all who were eligible
would be contacted. SSA had hoped to more specifically identify the
eligible population using IRS tax data, but current law restricts the use
of taxpayer data unless an individual has already applied for the subsidy.
Further, SSA conducted a campaign of about 76,000 events held nationwide
to educate people about the subsidy and how to apply for it. Since the
initial campaign ended, however, SSA has not developed specific
performance goals and measures to assess the progress of its continuing
outreach efforts. SSA's efforts to solicit applications were hindered by
beneficiaries' confusion about the difference between the subsidy and the
Medicare Part D prescription drug plan, and the reluctance of some
individuals to share personal financial information, among other factors.
While the early subsidy participation rate compares favorably to those of
some other low-income programs, the lack of reliable data on the size of
the eligible population means that the extent to which SSA has signed up
the eligible population for the benefit is unknown.
While SSA has established processes for making subsidy eligibility
determinations, resolving appeals, and conducting redeterminations, it has
not established some key management tools to monitor the progress of all
of its efforts, as specified in GAO's internal control standards. For
example, while SSA tracks various results from its appeals process, it
does not currently have a performance goal to assess the timeliness of
appeals decisions, but agency officials told us that SSA plans to
establish a goal of processing 75 percent of appeals in 60 days. Also,
while SSA tracks the status of its redetermination decisions, officials do
not believe that it is necessary to measure the time for processing
individual redetermination decisions because they said that the time to
complete the overall redeterminations cycle provides adequate information.
SSA's implementation of the low-income subsidy did affect the agency's
workload and operations, but according to SSA officials, the additional
workloadhas been manageable overall as a result of increased funding that
the agency received to carry out MMA activities. SSA hired 2,200 field
office staff, and 500 headquarters staff to handle its new subsidy
workload, as well as to carry out other activities for the program. In
2006, SSA staff spent the equivalent of 2,190 work years on low-income
subsidy implementation activities, with about 50 percent of the time spent
on subsidy applications. While there were periods of high subsidy
application activity, SSA officials told us that subsidy program
activities did not have an adverse impact on other SSA workloads. The
officials attributed the minimal impact of Part D to several factors,
including the highly automated subsidy application process and the $500
million congressional appropriation that SSA spent on MMA start-up costs.
SSA estimates that its costs for low-income subsidy activities are $175
million annually.
References
Visible links
26. http://www.gao.gov/cgi-bin/getrpt?GAO-01-1008G
28. http://www.gao.gov/cgi-bin/getrpt?GAO-07-272
29. http://www.gao.gov/cgi-bin/getrpt?GAO-07-358T
30. http://www.gao.gov/cgi-bin/getrpt?GAO-06-710
31. http://www.gao.gov/cgi-bin/getrpt?GAO-06-654
32. http://www.gao.gov/cgi-bin/getrpt?GAO-06-344R
33. http://www.gao.gov/cgi-bin/getrpt?GAO-06-278R
34. http://www.gao.gov/cgi-bin/getrpt?GAO-06-139R
35. http://www.gao.gov/cgi-bin/getrpt?GAO-06-78R
36. http://www.gao.gov/cgi-bin/getrpt?GAO-05-205
37. http://www.gao.gov/cgi-bin/getrpt?GAO-04-363
45. http://www.gao.gov/cgi-bin/getrpt?GAO-07-555
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