[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]






                    MEDICARE PROGRAMS FOR LOW-INCOME
                             BENEFICIARIES

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION
                               __________

                              May 3, 2007

                           Serial No. 110-36
                               __________

         Printed for the use of the Committee on Ways and Means




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                               

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                          Washington, DC 20402-0001















                      COMMITTEE ON WAYS AND MEANS

                 CHARLES B. RANGEL, New York, Chairman

FORTNEY PETE STARK, California       JIM MCCRERY, Louisiana
SANDER M. LEVIN, Michigan            WALLY HERGER, California
JIM MCDERMOTT, Washington            DAVE CAMP, Michigan
JOHN LEWIS, Georgia                  JIM RAMSTAD, Minnesota
RICHARD E. NEAL, Massachusetts       SAM JOHNSON, Texas
MICHAEL R. MCNULTY, New York         PHIL ENGLISH, Pennsylvania
JOHN S. TANNER, Tennessee            JERRY WELLER, Illinois
XAVIER BECERRA, California           KENNY HULSHOF, Missouri
LLOYD DOGGETT, Texas                 RON LEWIS, Kentucky
EARL POMEROY, North Dakota           KEVIN BRADY, Texas
STEPHANIE TUBBS JONES, Ohio          THOMAS M. REYNOLDS, New York
MIKE THOMPSON, California            PAUL RYAN, Wisconsin
JOHN B. LARSON, Connecticut          ERIC CANTOR, Virginia
RAHM EMANUEL, Illinois               JOHN LINDER, Georgia
EARL BLUMENAUER, Oregon              DEVIN NUNES, California
RON KIND, Wisconsin                  PAT TIBERI, Ohio
BILL PASCRELL, JR., New Jersey       JON PORTER, Nevada
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
CHRIS VAN HOLLEN, Maryland
KENDRICK MEEK, Florida
ALLYSON Y. SCHWARTZ, Pennsylvania
ARTUR DAVIS, Alabama

             Janice Mays, Chief Counsel and Staff Director
                  Brett Loper, Minority Staff Director

                                 ______

                         SUBCOMMITTEE ON HEALTH

                FORTNEY PETE STARK, California, Chairman
   
LLOYD DOGGETT, Texas                 DAVE CAMP, Michigan
MIKE THOMPSON, California            SAM JOHNSON, Texas
RAHM EMANUEL, Illinois               JIM RAMSTAD, Minnesota
XAVIER BECERRA, California           PHIL ENGLISH, Pennsylvania
EARL POMEROY, North Dakota           KENNY HULSHOF, Missouri
STEPHANIE TUBBS JONES, Ohio
RON KIND, Wisconsin





















                            C O N T E N T S

                               __________
                                                                   Page

Advisory of May 3, 2007, announcing the hearing..................     2

                               WITNESSES

The Honorable Lloyd Doggett, a Representative in Congress from 
  the State of Texas.............................................    14
The Honorable Jason Altmire, a Representative in Congress from 
  the State of Pennsylvania......................................    16
S. Lawrence Kocot, Senior Advisor to the Administrator, Centers 
  for Medicare and Medicaid Services.............................    34
Beatrice Disman, Regional Commissioner, New York Region, Social 
  Security Administration........................................    28
J. Ruth Kennedy, Medicaid Deputy Director, Louisiana Department 
  of Health and Hospitals, Baton Rouge, Louisiana................    74
N. Joyce Payne, Ed.D, Member, AARP Board of Directors............    78
Patricia Nemore, Center for Medicare Advocacy....................    89
Emelia Santiago Herrera, Moore Consulting Group, Inc., Orlando, 
  Florida........................................................   101

                       SUBMISSIONS FOR THE RECORD

National Council on Aging, statement.............................   110
Senior Citizens League, statement................................   116



 
                    MEDICARE PROGRAMS FOR LOW-INCOME
                             BENEFICIARIES

                              ----------                              


                         THURSDAY, MAY 3, 2007

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                    Subcommittee on Health,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:04 a.m., in 
room 1100, Longworth House Office Building, the Honorable 
Fortney Pete Stark (Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON HEALTH

                                                CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE
May 03, 2007
HL-9

Chairman Stark Announces a Hearing on Medicare Programs for Low-Income 
                             Beneficiaries

    House Ways and Means Health Subcommittee Chairman Pete Stark (D-CA) 
announced today that the Subcommittee on Health will hold a hearing on 
financial assistance programs for low-income Medicare beneficiaries. 
The hearing will take place at 10:00 a.m. on Thursday, May 3, 2007, in 
Room 1100, Longworth House Office Building.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from the invited witness only. 
However, any individual or organization not scheduled for an oral 
appearance may submit a written statement for consideration by the 
Committee and for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    While Medicare provides universal coverage for senior citizens and 
people with disabilities, it can require significant out-of-pocket 
spending. Congress recognized the need to help low-income beneficiaries 
with Medicare costs through the creation of the Medicare Savings 
Programs (MSP), which help cover premium and cost-sharing charges. 
Individually, these programs are the Qualified Medicare Beneficiary 
Program (QMB), the Specified Low-income Medicare Beneficiary Program 
(SLMB) and the Qualified Individual Program (QI). Congress also acted 
to help low-income Medicare beneficiaries in the new Part D 
prescription drug program by creating a Low Income Subsidy (LIS). 
Together, these programs help millions of beneficiaries afford needed 
medical services and medications. However, millions of beneficiaries 
who are eligible for these programs are not participating.

    Medicare Savings Programs

    The Federal Government broadly defines three categories of 
beneficiaries and programs that comprise the MSP. Under current law, 
Qualified Medicare Beneficiaries (QMBs) have income at or below 100 
percent of the federal poverty line (FPL) ($10,210--individual/
$13,690--couple in 2007), but above eligibility for full Medicaid 
coverage. State Medicaid programs pay Part B premiums and all Medicare 
cost-sharing for QMBs. Specified Low-Income Beneficiaries (SLMBs) have 
income between 100 and 120 percent of the FPL, and state Medicaid 
programs pay their Part B premiums. Qualifying Individuals (QIs) have 
income between 120 and 135 percent of the FPL and the Federal 
Government pays their Part B premiums. The QMB and SLMB programs are 
entitlements for which state Medicaid programs pay a share of these 
costs. The QI program is funded through an annual capped appropriation 
passed through the Medicare Part B Trust Fund. Federal law sets the 
income eligibility requirements, application procedures and asset 
limitations to qualify for these programs differ substantially across 
the states.
    The MSP are a vital safety net for approximately 1.6 million 
beneficiaries. However, estimates suggest that only 40 to 60 percent of 
eligible beneficiaries are participating. Onerous application 
requirements, personal disclosures about income and assets, and lack of 
awareness of the programs are largely responsible for the low 
enrollment rates. States also have a financial disincentive to find and 
enroll these low-income Medicare beneficiaries because state 
expenditures increase when beneficiaries enroll in MSP.
    Low-Income Subsidy Program for Prescription Drugs

    The LIS program provides extra help for beneficiaries with limited 
income and resources in paying for Medicare prescription drug plan 
costs. For 2007, beneficiaries with incomes below 150 percent of the 
Federal Poverty Level (FPL)--$14,700 individual/$19,800 couple and with 
assets under $10,210 (individual) or $20,410 (couple)--qualify for the 
LIS. However, benefits in the LIS differ substantially based on where 
beneficiaries fall on the income and asset spectrums--``ranging from 
complete premium assistance with no deductible and copayments of $1-
$5.35, to partial premium assistance with a deductible and copayments 
that are lower than standard coverage.
    Beneficiaries with full Medicaid benefits (``dual eligibles''), 
those in a Medicare Savings Program and those who receive Supplemental 
Security Income (SSI) are deemed eligible for the LIS and automatically 
enrolled in a prescription drug plan. Thus, of the approximately nine 
million beneficiaries currently enrolled in the LIS program, more than 
six million were automatically enrolled into a plan. However, CMS 
estimates that more than 3 million beneficiaries eligible for the LIS 
are not enrolled in a prescription drug program at all. Targeted, 
aggressive outreach programs are necessary to get these beneficiaries 
enrolled. Numerous Medicare advocates and analysts have also called for 
an end to the complicated asset test, which has kept millions more from 
qualifying for extra help and, they argue, penalizes beneficiaries who 
have managed to accrue even modest savings or assets.
    Increased enrollment in LIS and MSP would provide financial 
security to millions of Medicare beneficiaries who can't afford 
Medicare's out-of-pocket costs. Improved outreach, less burdensome 
application processes, and adjusted income and asset limits could 
greatly increase enrollment, improving both the financial and physical 
health of Medicare's most vulnerable beneficiaries.
``We must determine how best to ensure that Medicare remains affordable 
        for all senior citizens and people with disabilities,'' said 
        Chairman Stark in announcing the hearing. ``Improving the Low 
        Income Subsidy and Medicare Savings Programs is the most 
        efficient and direct way to guarantee affordable, comprehensive 
        Medicare coverage to low-income beneficiaries.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on the current state of the Part D Low 
Income Subsidy the Medicare Savings Programs, and opportunities to 
increase enrollment and expand eligibility in these programs.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``110th Congress'' from the menu entitled, ``Committee Hearings'' 
(http://waysandmeans.house.gov/Hearings.asp?congress=18). Select the 
hearing for which you would like to submit, and click on the link 
entitled, ``Click here to provide a submission for the record.'' Once 
you have followed the online instructions, completing all informational 
forms and clicking ``submit'' on the final page, an email will be sent 
to the address which you supply confirming your interest in providing a 
submission for the record. You MUST REPLY to the email and ATTACH your 
submission as a Word or WordPerfect document, in compliance with the 
formatting requirements listed below, by close of business Thursday, 
May 17, 2007. Finally, please note that due to the change in House mail 
policy, the U.S. Capitol Police will refuse sealed-package deliveries 
to all House Office Buildings. For questions, or if you encounter 
technical problems, please call (202) 225-1721.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. All submissions must include a list of all clients, persons, 
and/or organizations on whose behalf the witness appears. A 
supplemental sheet must accompany each submission listing the name, 
company, address, and telephone and fax numbers of each witness.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days' notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                 

    Chairman STARK. If our guests would like to join us and 
find a seat, we will begin our hearing on help for low income 
Medicare beneficiaries.
    Medicare is and should always remain an entitlement for 
seniors and people with disabilities. I think we have a duty to 
ensure that the most vulnerable low income Medicare 
beneficiaries are assured access to this entitlement.
    Recognizing this, I introduced the Medicare Catastrophic 
Coverage Act 20 years ago, at the request of President Reagan, 
it perhaps was the shortest lived piece of legislation to come 
out of this Committee, but it did have a decent drug benefit, 
which we do not have now, and it did have a catastrophic cap, 
but that is history.
    What is left of it, however, is what we now know as the QMB 
part of our legislation and the last vestiges of that Act.
    We in this Committee have a history on these issues to 
protect and advance the coverage of low income beneficiaries. 
Fifty percent of the people over 65 have incomes below $20,000 
a year and by the time you add up $1,100 in Part B premiums and 
$131 Part B deductible that is going up each year, and $300 or 
so in Part D premiums, and a Part D deductible that may be $265 
and a couple of hundred bucks more in out-of-pocket costs, many 
of these beneficiaries are spending over 10 percent of their 
already limited income on medical care.
    The two major programs that target financial relief for low 
income beneficiaries are the Medicare savings programs, which 
comprise QMB and SLMB and QI programs, help low income 
beneficiaries pay Medicare premiums and cost sharing.
    The low income subsidiary programs help beneficiaries pay 
for prescription drugs under Part D.
    These programs provide vital financial safety nets for 
millions of Medicare beneficiaries, but they are unnecessarily 
complex, and the participation rates are unacceptably low.
    Estimates suggest that three to four million people are 
eligible but not enrolled in the Part D LIS and in MSP, 
estimates that 40 to 60 percent of the eligible low income 
beneficiaries--only 40 to 60 percent get the help to which they 
are entitled.
    Bottom line is that millions of people who could benefit 
from these programs do not. I would wager it is not because 
they do not need or want the help, it is just they do not know 
it is there or how to go about getting it.
    Improving the low income subsidy and Medicare programs, 
savings is the most efficient and effective way to help the 
beneficiaries who need it most.
    Medicare Advantage plans would have us believe they are the 
ones offering the most help to the most vulnerable. That is 
just not true. Medicare MSP and LIS are far and away the most 
important and comprehensive sources of supplemental coverage 
for low income Medicare beneficiaries.
    Unlike Advantage plans, these programs protect the choices 
that matter to beneficiaries. Choice of doctor, choice of 
hospital, and full ``subsidation'' of cost sharing. No games. 
No profiteering. No low balls. Just straight up help.
    Done right, it is a strategy that is equitable, efficient 
and effective.
    Today we will hear more about the current state of these 
programs and the options for improving them. Simple changes to 
eligibility and enrollment rules coupled with strong outreach 
programs could help millions more beneficiaries get the support 
and medical care they need and deserve.
    I hope my colleagues will join us in our efforts to do that 
this year. I look forward to hearing from our friends, Lloyd 
Doggett and Jason Altmire from Pennsylvania. They will discuss 
legislation that they have to improve the LIS program.
    In the second panel we will hear from CMS and Social 
Security about how these programs are running, and I hope help 
us identify opportunities for improvement.
    The final panel, the State of Louisiana and several 
advocate and beneficiary organizations, will discuss the 
positive and negative aspects of the low income programs and 
what we can do to improve financial support for vulnerable 
beneficiaries.
    I look forward to the testimony of our witnesses and would 
like to yield to Mr. Camp for any remarks he would like to 
make.
    Mr. CAMP. Thank you, Mr. Chairman. I, too, welcome our 
panels today. Today we will examine programs that provide help 
to low income Medicare beneficiaries and certainly these 
programs are critical to our most vulnerable seniors who 
without them would not have access to health care services.
    As we consider ways to improve these programs, we must 
focus on measures that give beneficiaries the ability to choose 
how they get assistance and also promote the most cost 
effective strategy for administering these benefits.
    For over 30 years Medicare has provided assistance to low 
income seniors through Medicare savings programs, which have 
helped to pay premiums, cost sharing and deductibles for 
eligible low income beneficiaries.
    Yet these programs have not reached enough of the eligible 
beneficiaries. Some have suggested we should expand these 
programs and possibly even require beneficiaries to be 
automatically enrolled.
    This approach raises a number of potential concerns. A 
mandatory enrollment program could also raise significant 
privacy concerns. In order to automatically enroll all eligible 
seniors, multiple Government agencies would have to share 
sensitive and confidential information which may require 
changing existing privacy protections.
    These programs are not, however, the only way to assist low 
income Medicare beneficiaries.
    We will hear today from Ms. Emelia Santiago-Herrera, a 
Medicare beneficiary from Orlando, Florida. Ms. Herrera is 
enrolled in a Medicare plan that helped her qualify for the low 
income subsidy which coupled with her Medicare Advantage plan 
provides her with free prescription drugs.
    Ms. Herrera's plan also pays her co-payments and other 
costs as well as providing extra benefits that Medicare does 
not cover, like diabetes disease management and transportation 
to her doctor appointments.
    Without these additional benefits, Ms. Herrera would likely 
be forced to live in a nursing home.
    As we consider ways to assist low income beneficiaries, I 
hope that we will consider Ms. Herrera's testimony as an 
example of how beneficiaries can select how they receive their 
assistance and not force them into an one size fits all model.
    With that, Mr. Chairman, I yield back the balance of my 
time.
    Chairman STARK. Thank you. Now I guess we will hear in 
either order----
    Mr. DOGGETT. I am glad to lead.
    Chairman STARK. Mr. Doggett, a distinguished member of our 
Committee. You have a bill analysis before us.
    Mr. DOGGETT. Mr. Chairman, I have passed that out, I 
believe, and a bill analysis that we did on each section of 
that.
    [The information follows:]
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    
    
    

    Chairman STARK. Proceed, and enlighten us in any way you 
are comfortable.

 STATEMENT OF THE HONORABLE LLOYD DOGGETT, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. DOGGETT. Thank you for convening this important 
hearing. Mr. Camp, thank you for your constructive statement. 
Fellow Members of the Committee, I appreciate the opportunity 
to discuss the needs of low income seniors and individuals with 
disabilities to receive extra help to get the life saving and 
pain relieving medication that is so important to them.
    The supporters of the Medicare Modernization Act of 2003 
highlighted the ability of the extra help provisions of that 
legislation to afford 13 to 14 million low income Medicare 
beneficiaries the assistance that they need.
    Unfortunately both Part D and extra help have been plagued 
with problems that are keeping millions of individuals from 
receiving that assistance that was promised to them.
    We have, as all you know, debated in this Committee the 
pros and cons of that bill. Some of us think it is great. Some 
of us think it is not so great.
    I am not here today to re-visit those arguments. Rather, 
the sole purpose of this very modest bill is to simply see that 
the original intent of the supporters of the Part D Medicare 
provision have their promises fulfilled, and that we extend 
that extra help to those that need it the most.
    In her testimony to this Committee on February 13th, Acting 
CMS Administrator, Lesley Norwalk, indicated that at least 3.25 
million eligible people with Medicare are not receiving extra 
help.
    For all the things that may be said pro or con about the 
Part D bill, one thing that is not subject to debate is that 
for some individuals, some of the poorest individuals in this 
country, the Medicare Part D bill is 100 percent failure. They 
are not getting extra help. They are not getting any help. It 
is those folks to which this legislation is targeted.
    H.R. 1536, which you have before you, has been endorsed by 
AARP, which will be testifying later, the National Committee to 
Preserve Social Security and Medicare, the Center for Medicare 
Advocacy, which will be testifying, Families USA, Consumers 
Union, the National Council on Aging, and a number of national 
health care organizations in addition to that, particularly 
those concerned with individuals with disabilities and 
prolonged illnesses.
    It is co-sponsored by over 160 of our colleagues. My 
colleague, Jason Altmire, shares a strong concern for seniors 
and the disabled. He will be addressing his bill, which 
addresses one of the issues that mine touches in part.
    I salute his active and informed role in ensuring that our 
seniors and individuals with disabilities get the assistance 
that they need.
    In 2003, Medicare itself estimated to us on this Committee 
that over 58 percent more seniors and individuals with 
disabilities would sign up for extra help than have actually 
done so since that time.
    Many of the eligible individuals who thought they would 
receive assistance with this Act are not in fact covered today. 
The bill has just really four very simple objectives.
    Identify the eligible people. Notify them. Simplify the 
process. Adjust the asset test.
    First, on identification. As to those three and a quarter 
million people that are not now covered, the Inspector General 
of the Health and Human Services Department last Fall said 
``Access to IRS data would help CMS and the Social Security 
Administration identify the beneficiaries most eligible for 
subsidy.''
    Indeed, the Social Security Administration realized this 
when it requested this same data shortly after the Medicare 
bill was adopted.
    The Internal Revenue Service said it could not supply that 
information without a change in the law.
    Mr. Camp has referenced privacy protections and as a member 
of the Privacy Caucus here in Congress, I am keenly aware of 
the need to do that.
    This particular bill would simply require identification 
not of all income, but where IRS simply gives a yes or no on 
potential eligibility based solely on income. This does not 
automatically enroll anyone. It does not automatically force 
anyone into a Medicare prescription drug plan if they do not 
want to be in it.
    IRS will say if someone has less than $13,783 in income 
this year that they are probably eligible. They may not be, but 
they are someone to look at, and if they are above $15,315 in 
income, they will say they are probably not eligible. Only for 
the narrow group in between those figures will there be any 
actual income information supplied to Social Security, and 
there are other safeguards on confidentiality included.
    On notifying, we provide for a much clearer and direct and 
precise notification than has occurred to date.
    On simplifying, it is a fairly complex application that is 
required to be filed right now. Some of that relates to matters 
that are included in income.
    For example, if a child assists their parents with their 
groceries or something else, cleaning the house, this may be 
calculated as income. I think it is neither good family values 
nor good Government to demand that be calculated.
    My bill removes those items from the income calculation and 
simplifies that application.
    Fourth, the asset test adjustment. No one wants to provide 
the wealthy with free prescription drugs or discounted 
prescription drugs under this extra help program. The current 
limitation of lifetime savings is less than $8,000 for an 
individual, all the savings that they have been able to 
accumulate all their life and about $12,000 for a couple, in 
order to get the full subsidy.
    I make modest adjustments in those levels, raising them to 
$12,000 and $18,000 appropriately, and modest adjustments for 
the partial subsidy.
    The people who meet this income requirement but are 
disqualified by the restrictive asset test are by the way, 
according to the studies, mostly women, widows, living alone 
with no college degree. For the full subsidy, an individual 
would still be restricted to no more than $12,000 for an 
individual, $18,000 for a couple in savings. That is hardly a 
luxurious retirement.
    There are other changes that are made in the bill. I see I 
am over my time, and I would be glad to respond to questions.
    I hope we can build bipartisan support for modest changes 
that we can afford and reach more of these people and fulfill 
the promise of the Medicare prescription drug bill.
    Thank you, Mr. Chairman.
    Chairman STARK. Thank you very much.
    Jason, would you like to enlighten us on your bill?

 STATEMENT OF THE HONORABLE JASON ALTMIRE, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF PENNSYLVANIA

    Mr. ALTMIRE. Thank you, Mr. Chairman and Ranking Member 
Camp. I want to include my colleague Phil English from 
Pennsylvania.
    Chairman STARK. Jason. I am sorry, not Justin.
    Mr. ALTMIRE. That is okay.
    I very much appreciate the opportunity to testify today 
about my bill, H.R. 1310, the Relief and Elimination of the 
Medicare Enrollment Deadline Penalty Act, REMEDY Act.
    As part of the Medicare Modernization Act of 2003, Congress 
included provisions to apply a late enrollment penalty to the 
monthly premiums of Medicare beneficiaries who failed to select 
a prescription drug plan by the end of the initial enrollment 
period, which concluded on May 15, 2006.
    A late enrollment penalty, one percent of the base 
beneficiary premium, is added to each uncovered month that a 
beneficiary was eligible for coverage but did not enroll.
    For Medicare beneficiaries who were on the rolls prior to 
January
1, 2006, the clock began after the initial enrollment period 
ended.
    Their next opportunity to enroll was not until the annual 
enrollment period, which ran from November 15, 2006 through 
December 31. Individuals who deferred enrollment during the 
initial sign up period and decided to wait until the open 
enrollment period would therefore have seven uncovered months 
and are penalized an additional seven percent, starting with 
their 2007 monthly premium.
    This penalty applies for as long as the beneficiary is 
enrolled in Part D.
    The MMA does include exceptions. Individuals who are able 
to maintain creditable coverage through a current or former 
employer, or union, for example, are exempt. Other examples 
include TRICARE, the Federal Employees Health Benefits Plans, 
and coverage through the VA.
    In Pennsylvania, seniors are able to maintain creditable 
coverage through the PACE, PACENET and PACE Plus Medicare 
programs.
    Certain categories of low income populations, including 
dual eligibles, enrollees in Medicare savings programs, and 
supplemental security income recipients, are automatically 
enrolled in the plans, and therefore, face no penalties.
    The MMA also extends low income subsidies to individuals 
with incomes below 150 percent of poverty and with assets below 
$10,000 for an individual and $20,000 for a couple, but these 
beneficiaries may be subject to the late enrollment penalty.
    Outside of those exceptions, Medicare beneficiaries are 
subject to a late enrollment penalty for all uncovered months. 
It is permanently added to their monthly premiums and the 
amount is expected to increase each year as it is recalculated 
annually to the greater of the amount CMS determines is 
actuarially sound or one percent of the base beneficiary 
premium.
    In the months leading up to the initiation of the Medicare 
Part D program, beneficiaries were inundated with information 
about coverage options which often caused confusion and 
frustration among seniors.
    In my home in the Pittsburgh area, seniors had to choose 
from over 60 different plans that were submitted to them. It is 
simply too much information to consume within a short period of 
time.
    On top of the new plan options, the initiation of the 
program led to a number of access issues to the beneficiaries. 
Thousands of seniors were forced to wait days and in some cases 
weeks to obtain vital prescriptions.
    Considering the hurried initiation of the program, I 
introduced H.R. 1310 to provide Medicare beneficiaries with 
sufficient time in which to evaluate the myriad of coverage 
options available to them. Choosing a health care plan is one 
of the most important decisions one can make. It is only fair 
to provide beneficiaries with the time necessary to properly 
choose the appropriate plan.
    My bill provides the needed relief to millions of Medicare 
beneficiaries, particularly those with limited incomes. My bill 
delays implementation of the late enrollment penalty for the 
first two years, 2006 and 2007, of the program. These are the 
people that were directly impacted by the fact that it was a 
hastily prepared program and did not get off to a quick start.
    The bill directs HHS to devise a system in which to 
distribute rebates to any Medicare beneficiaries who paid the 
late enrollment penalty and it permanently eliminates the late 
enrollment penalty for low income subsidy beneficiaries who 
might find it otherwise difficult to pay for the increase in 
their monthly premium.
    I note that CMS in January did delay the late enrollment 
penalty for these people for one year, and my bill simply 
codifies this waiver and makes it permanent.
    Approximately 4.5 million eligible Medicare beneficiaries 
did not have prescription drug coverage last year at the 
deadline and thus, may be subject to the late enrollment 
penalty.
    In my district, the Pennsylvania Department of Aging 
estimates that 14,000 individuals are eligible for this 
coverage but are not enrolled.
    I urge the Committee to delay the late enrollment penalty 
for two years and provide seniors with the time necessary to 
evaluate their health care options without being penalized. It 
is a straightforward approach that maintains the current design 
of the program and protects against adverse selection while 
providing relief for millions of seniors.
    Thank you again, Mr. Chairman, and the rest of the 
Committee for the opportunity to testify.
  [The prepared statement of the Honorable Jason Altmire 
follows:]
Prepared Statement of The Honorable Jason Altmire, a Representative in 
                Congress from the State of Pennsylvania
    Thank you, Mr. Chairman, Ranking Member Camp, and Members of the 
Committee, including my colleague from Pennsylvania, Mr. English, for 
providing me with the opportunity to testify today about my bill, the 
Relief and Elimination of the Medicare Enrollment Deadline Penalty (or 
REMEDY) Act, H.R. 1310.
    As part of the Medicare Modernization Act of 2003 (MMA), Congress 
included provisions to apply a late enrollment penalty to the monthly 
premiums of Medicare beneficiaries who failed to select a prescription 
drug plan by the end of the initial enrollment period on May 15, 2006. 
The rationale for a late enrollment penalty was based in part on 
experience with the Medicare Part B program and to prevent adverse 
selection.
    The late enrollment penalty--1% of the base beneficiary premium--is 
added for each uncovered month that a beneficiary was eligible for 
coverage and did not enroll. For Medicare beneficiaries who were on the 
rolls prior to January 1, 2006, the clock began after the initial 
enrollment period ended on May 15, 2006. Their next opportunity to 
enroll was during the annual open enrollment period, which ran from 
November 15, 2006 through December 31, 2006. Individuals who deferred 
enrollment during the initial signup period and decided to wait until 
open enrollment would have a total of seven uncovered months and would 
be penalized an additional 7% starting with their 2007 monthly premium. 
The average monthly penalty in this case is $1.91 and the percentage 
penalty applies for as long as the beneficiary is enrolled in a Part D 
plan.
    MMA does include exceptions. Individuals who are able to maintain 
creditable coverage through a current or former employer, or union for 
example, are exempt. Other examples include TRICARE, the Federal 
Employees Health Benefits Plans, and coverage through the Veteran's 
Affairs Administration. In Pennsylvania, seniors are able to maintain 
creditable coverage through the PACE, PACENET, and PACE Plus Medicare 
programs.
    In addition, exceptions are made for low-income individuals. 
Certain categories of low-income populations, including Dual Eligibles 
(those eligible for Medicare and Medicaid), enrollees in the Medicare 
Savings programs, and Supplemental Security Income recipients, were 
automatically enrolled in plans, and therefore face no penalty. The MMA 
also extends low-income subsidies to individuals with incomes below 
150% of poverty and with assets below $10,000 for an individual and 
$20,000 for a couple, but these beneficiaries may be subject to the 
late enrollment penalty.
    Outside of these exceptions, Medicare beneficiaries are subject to 
a late enrollment penalty for all uncovered months. It is permanently 
added to their monthly premiums and the amount is expected to increase 
each year as it is recalculated annually to be the greater of: (1) the 
amount CMS determines is actuarially sound or (2) 1% of the base 
beneficiary premium.
    In the months leading up to the initiation of the Medicare Part D 
program, beneficiaries were inundated with information about coverage 
options, which often caused confusion and frustration among seniors. In 
the Pittsburgh area, seniors had the option of selecting one from over 
60 available plans. It was simply too much information to consume 
within too short of a time frame.
    On top of the new plan options, the initiation of the program on 
January 1, 2006 led to a number of access issues for beneficiaries. 
Thousands of seniors were forced to wait days, in some cases weeks, to 
obtain vital prescriptions. It was clear to all outside observers that 
the Medicare Part D program was not ready for prime time.
    Considering the hasty initiation of the program, I introduced the 
REMEDY Act, H.R. 1310, to provide Medicare beneficiaries with 
sufficient time in which to evaluate the myriad of coverage options 
available to them. Choosing a health care plan is one of the most 
important decisions one can make. It is only fair to provide 
beneficiaries with the time necessary to properly choose an appropriate 
plan. The REMEDY Act provides much needed relief to millions of 
Medicare beneficiaries, particularly those with limited incomes.
    H.R. 1310 does the following:

    Sec.   It delays implementation of the late enrollment penalty for 
the first two years, 2006 and 2007, of the program.
    Sec.   It directs the Secretary of Health and Human Services to 
devise a system in which to distribute rebates to any Medicare 
beneficiaries who may have paid a late enrollment penalty.
    Sec.   It permanently eliminates the late enrollment penalty for 
low-income subsidy beneficiaries, who may otherwise find it difficult 
to pay for the increase in their monthly premium. I note and applaud 
the announcement of Centers for Medicare and Medicaid Services (CMS) in 
January to delay the late enrollment penalty for low-income enrollees 
for one year. My bill will codify this waiver and make it permanent.

    As of June 11, 2006, approximately 4.4 million Medicare 
beneficiaries did not have prescription drug coverage and thus may be 
subject to a late enrollment penalty. CMS has not released data about 
the specific number of Medicare beneficiaries who have started to pay 
the penalty in 2007. But in my district, the Pennsylvania Department of 
Aging estimates that 14,000 individuals are eligible for coverage, but 
are not enrolled.
    I urge the committee to delay the late enrollment penalty for two 
years and provide seniors with the time necessary to evaluate their 
health care options without being penalized. It is a straightforward 
approach that maintains the current design of the program and protects 
against adverse selection, while providing relief for millions of 
seniors.
    Thank you again, Mr. Chairman, for the opportunity to testify today 
in support of my bill.

                                 

    Chairman STARK. Thank you. Thank you both. The Rector of 
Justin was the founder of the Groton School. I don't know where 
that comes from in my memory bank, but I apologize again. You 
first heard about these problems in your town meetings?
    Mr. ALTMIRE. That is right. As I said, I have 14,000 
Medicare beneficiaries who are subject to the penalty and a 
number of them have approached me.
    Chairman STARK. They all come to your town meetings?
    Mr. ALTMIRE. They do not all come, but a number of them 
have, and the chief complaint was they were inundated with so 
much information in a short period of time.
    Chairman STARK. Your bill now makes this permanent; is that 
correct?
    Mr. ALTMIRE. Correct. It's a two year fix.
    Chairman STARK. You are not suggesting that we do away with 
the other late enrollment penalties, charges for say late 
enrollment into Medicare and those sorts of things which keep 
us from having adverse selection?
    Mr. ALTMIRE. I am not; right.
    Chairman STARK. Thank you very much.
    Lloyd, often we can solve the problems that you suggest 
through administrative changes when there is cooperation. Did 
you discuss this with CMS or the administration on how we might 
correct this in an administrative fashion?
    Mr. DOGGETT. I attempted to. I must say I have not met with 
great success in that regard and after some months, they 
determined that there was a need for an actual change in the 
law, but just to give you some background, actually, one year 
ago exactly today, the head of CMS, at that time, Dr. Mark 
McClellan, was sitting in this chair testifying to the 
Committee.
    I was asking him about these problems. Because I did not 
feel I was getting a very complete response about what was 
being done for the low income individuals, on May 26th, after 
his testimony, I was joined by 145 colleagues in sending a 
letter to him, at that time, thinking this could all be done 
administratively.
    It took over four months for us to get a response back that 
was essentially ``don't worry, be happy,'' we are doing a great 
job, not indicating there was a statutory barrier to targeting 
these low income individuals.
    We also wrote him again in June following further testimony 
he had given to the Subcommittee, seeking information. That 
also was a communication that was very delayed in getting back 
and very incomplete.
    Only when the Inspector General of the Health and Human 
Services Department came out with his report recommending that 
we do exactly what we had been asking CMS to explore, did I get 
any firm indication that a statutory change would be necessary.
    The fact that Ms. Norwalk, the current acting head of CMS, 
told this Subcommittee in February that despite all of their 
efforts, all their outreach, they still had about the same 
number of people that were not signed up that they had a year 
ago indicates that more needs to be done.
    A fact, which had not been made known to me previously, the 
fact that the Social Security Administration essentially asked 
for the same information this bill would authorize to IRS, 
because they thought that was the best way to target the 
information.
    Chairman STARK. Excuse me. The Social Security 
Administration asked for the same information?
    Mr. DOGGETT. According to the Inspector General's report, 
and without going through all of----
    Chairman STARK. Did they get it?
    Mr. DOGGETT. They were told that a change in the law would 
be necessary, that under existing law, they could not provide 
that.
    I have tried to work to craft, sharing the same concern Mr. 
Camp voiced about privacy, to craft the narrowest change 
possible. It is very similar to an approach that Senator Gordon 
Smith and Senator Jeff Bingaman have offered, after we filed 
this bill over in the Senate, trying to work with them to see 
how can we target rather than do a scatter shot.
    I have sought to work with the folks at CMS right through 
last night when unfortunately they again declined to really 
give a careful review of this legislation that has been 
pending, to tell us if there were any aspects that would create 
problems for them in administratively, or that would not 
achieve the goal.
    There is no doubt they are doing significant outreach, but 
that significant outreach has not brought in many of the people 
that need to be reached.
    I am not suggesting we replace what they are doing, but 
target it and do it with a simple, direct application that has 
a better chance of achieving success.
    Chairman STARK. Thank God you did not turn the problem over 
to the military recruiters. You might have even worse results.
    Mr. DOGGETT. I would just bring to your attention, today's 
USA Today has several articles outlining this problem with an 
article entitled ``Many Low Income Seniors Don't Get Drug 
Benefit, Advocates/Feds Failing to Reach Out to the Neediest.'' 
It really is just a summary of the same problems that I have 
been testifying about, that this bill is designed to correct.
    Chairman STARK. Maybe we can make some steps in that 
direction. Mr. Camp?
    Mr. CAMP. Thank you, Mr. Chairman. Mr. Doggett, thank you 
for your testimony today. Obviously, we would like to reach out 
to those eligible for the prescription Part D benefit as much 
as possible.
    Tell me, with the changes that you are proposing, have you 
had a chance to have this scored?
    Mr. DOGGETT. Other than protecting privacy, that is my 
biggest concern, because I'm committed to pay as you go, and I 
requested a score or the Subcommittee requested a score on this 
about two months ago. We continue to encourage the 
Congressional Budget Office to move forward on it, but we do 
not have it today.
    I have asked for a section by section analysis so that if 
we cannot do all of this, perhaps we can do some of it within 
the budget constraints that we face. I do not have a score 
today.
    Mr. CAMP. As you know, the cost of the entire prescription 
Part D program received a lot of attention. Unfortunately, it 
is coming in under what was suggested, but still the costs of 
this are going to be absolutely critical, and will be a big 
part of the policy changes that we are going to be able to 
make.
    Mr. DOGGETT. Absolutely. That concern is a very legitimate 
concern. Many of the advocacy groups that we work with that are 
concerned about protecting more people wanted to move to more 
of an automatic enrollment and eliminate the asset test 
entirely.
    There are some good arguments for that. I did not do that, 
and in fact, I reduced the asset test so that it makes some 
adjustment but a fairly modest adjustment, because of cost 
concerns.
    Mr. CAMP. Yes. Once you get that and then obviously how 
then we meet those PAYGO rules will be something we will have 
to grapple with within the Committee.
    Thank you very much for your testimony.
    Mr. DOGGETT. Thank you.
    Mr. CAMP. Thank you. Thank you, Mr. Chairman. I yield back.
    Chairman STARK. Mr. Pomeroy, would you like to inquire?
    Mr. POMEROY. Just one feature, and I intend to pursue it 
more extensively with the Social Security Administration 
representative in the next panel.
    It is my understanding that SSA was given some initial 
funding, which has now expired, relative to handling the 
inquiries and making the eligibility determinations for the 
extra help.
    I have been informed that without additional funding 
continuing, they are literally diverting resources away from 
the normal work of a Social Security office on a zero sum gain. 
We want them to tend obviously to the enrolling of those that 
are appropriate for extra help and making those determinations. 
We want the Social Security activities to continue.
    It is a little mind boggling to think that they would just 
think after an initial start up period there would not be any 
staffing consequences for the work that SSA has carried on this 
extra help determination.
    Lloyd, are you aware of anything regarding that?
    Mr. DOGGETT. I believe there will be some modest 
adjustments necessary. As you know, yesterday in the 
Subcommittee on Social Security, we were concerned about the 
same issue as it related to handling disability claims. They 
are going to be best positioned to answer that.
    We basically seek to have the Social Security 
Administration go back and re-ask the same inquiry to the 
Internal Revenue Service they did originally, perhaps with some 
variation given the privacy protections we have here, get that 
data, and then use it for a targeted notice out to these folks.
    There would be some costs attendant to that. I know costs 
was a concern that you had in deciding to join as a co-sponsor 
of this legislation, which I appreciate, the same concern Mr. 
Camp raised.
    Hopefully, when we hear from Social Security and we get 
back the score, we can focus any new dollars where they will do 
the most good to get the most people.
    Mr. POMEROY. Great. Thank you. Thank you, Mr. Chairman. I 
yield back.
    Chairman STARK. Mr. Hulshof?
    Mr. HULSHOF. Thank you, Mr. Chairman. I accept to my 
colleague, Mr. Doggett, your invitation to move forward, but I 
think I need to take a quick glance in the rear view mirror, 
having been in many hearings leading up to Part D.
    We heard the complaints that there were going to be zero 
choices for seniors, and then of course, we saw the flood of 
plans because the private sector saw this was something that 
could happen, and then the complaint was there were too many 
choices.
    It was proposed by some that we should actually have to 
legislate the monthly premium because we were not going to see 
$35 premiums. In fact, we have not. In fact, in Missouri, you 
can find a monthly premium as low as $15, and every senior in 
Missouri has had the opportunity to have the doughnut hole 
covered.
    There have been wild estimates of costs, as Mr. Camp 
pointed out. There was an attempt to embarrass the White House 
in this Committee, and now as some of us predicted, cost 
estimates were over blown.
    We supported the idea, for instance, Mr. Doggett, of means 
testing Part D for wealthy seniors. That was in the House 
version of the bill. I remember when we had that discussion on 
the Floor, if memory serves, that vote of means testing for 
wealthy seniors was rejected unanimously by those on your side.
    I am not here to play ``gotcha.'' When we had the debate on 
the Floor about drug negotiation, I asked the Majority Leader, 
why is it so difficult to at least provide some credit for 
those of us that got at least part of it right.
    I think this place would work a lot better when we did not 
care who got the credit when things go well.
    Mr. Altmire, you said ``hastily prepared program.'' ``Hasty 
initiation.'' Well, I respectfully disagree in that we had the 
interim drug card. Yes, there were glitches during the massive 
roll out, but the fact that eight out of ten senior citizens 
think this has been a good program for them.
    Yes, we should improve where we should improve.
    I would ask you, Mr. Altmire, you waived the penalty for 
Medicare beneficiaries who do not enroll in Part D, there are 
about 800,000 beneficiaries who pay a late enrollment penalty 
in Part B. Why do you not address those folks?
    Mr. ALTMIRE. In answering both of your comments, and I 
appreciate the question, in saying it was ``hastily prepared,'' 
maybe I did not articulate. It was not a pejorative statement.
    I was merely getting to the fact that in my home state of 
Pennsylvania, beneficiaries had 60 different plans to choose 
from in a relatively short period of time, something they had 
not been asked to do before, and then the fact that the penalty 
kicks in for seven months before they have the opportunity to 
make their next plan.
    It was not an editorial comment on the program. It was just 
merely getting to the fact that as you pointed out, there were 
more choices than people thought they were going to have, and 
as a result, some of them were unable to make their selection 
in time and then were subject to the penalty, which leads me 
into the second part, unless you want to follow up on that.
    Mr. HULSHOF. I would follow up in the sense that your 
written statement said ``It was clear to all outside observers 
that the Medicare Part D program was not ready for prime 
time.''
    You were on the health care side before coming here, were 
you not? A lobbyist or in some fashion?
    Mr. ALTMIRE. I was. I took that part out of my--you are 
right. That was in my written statement. I took it out for my 
comments. I thought that was over the top, admittedly.
    Mr. HULSHOF. Let me ask you, either from your experience in 
the health care industry before coming here, or now that you 
have joined this body, is there a reason for a late enrollment 
penalty?
    Mr. ALTMIRE. Yes. There is absolutely a reason with regard 
to adverse selection, and that is the reason, and Mr. Camp 
mentioned costs, as you did as well. That is the reason this is 
only a two year fix. This not an open-ended situation.
    I just wanted to resolve or remedy the problem for people 
who were caught in this trap of having too many plans to choose 
from in a short period of time and are now subject to the 
penalty.
    I understand how adverse selection works and the cost 
issues associated. I only made this a two year bill for that 
reason.
    Mr. HULSHOF. I would say and would you agree that there are 
some seniors, I do not know what the percentage might be, we 
are all concerned about those that are not covered, but there 
are some seniors, healthy seniors, or maybe even some that just 
choose not to participate in some Government run program? Would 
you agree with that?
    Mr. ALTMIRE. Absolutely. They still would have the right to 
do that.
    Mr. HULSHOF. Again, I appreciate each of you, as we try 
to--no one on this side or either side is saying there is not 
room for improvement. Certainly, providing access to those who 
need it, certainly on the low income side, again, the original 
version said for those that are the affluent who do not need 
help with drugs, we had that in the original House version, but 
it did not make the final version, but I appreciate the 
Chairman indulging me with my time.
    Chairman STARK. If the gentleman would yield, I would yield 
him time to yield back, I do want to suggest that your review 
of how we got where we are was accurate.
    I think that now, I do not suspect any of us want to repeal 
this law and start over. It is incumbent on us in the nature of 
oversight to see what we can do. We have the law. We ought to 
see that it gets administered fairly and probably directing 
some help to those who are less capable of understanding it.
    I think we have all had in every town meeting come and say 
I do not understand it, and we have had people call our 
district offices and try to get it explained.
    To that extent, I hope we could work together either to 
simplify or to make the process more user friendly. I think 
that is the intention of this hearing.
    Mr. HULSHOF. Would you yield?
    Chairman STARK. I would be glad to; yes.
    Mr. HULSHOF. I absolutely acknowledge and agree with the 
statement you just made, Mr. Chairman. What is extraordinary is 
that given the difficulty and almost the unanimous opposition 
when this plan first came out, the fact that if you believe the 
polls, and some people may not----
    Chairman STARK. It was not unanimous. It passed by one 
vote.
    Mr. HULSHOF. I am saying the unanimous--just a handful, Mr. 
Chairman, on your side, that supported the bill. Again, I am 
not here to point fingers. It is just as difficult as it was to 
get Part D passed, and certainly the implementation, I think it 
is extraordinary in the short amount of time to have the vast 
majority of senior citizens who now are covered with drugs that 
they need and the satisfaction rate given the difficulty to get 
it passed and certainly the almost unanimous opposition on the 
gentleman's side of the aisle.
    Yes, let's fix what needs to be fixed.
    Chairman STARK. If it will help the gentleman in 
deliberating on this issue, I will admit that I am happy we 
lost, and I think----
    Mr. HULSHOF. I am going to write that down.
    Chairman STARK. We think we now have the bill. It is not 
the bill I would have written, and it may not have been the 
bill the gentleman would have written.
    All I can say is let's live with it and improve it in 
whatever way we can afford to improve it to help the people who 
we hope are served by it.
    Mr. DOGGETT. Mr. Chairman, may I respond if there is time? 
I am not so happy that we lost, but we did, and you prevailed. 
The thrust again is only on ensuring that since you prevailed, 
we fulfill the promise that was made at that time.
    I am concerned that one of the reasons, not perhaps the 
major reason, but one of the reasons those cost figures have 
come in much lower than were predicted is that a significant 
number of the 13 to 14 million people that Billy Tauzin talked 
about and that Medicare estimated would qualify for extra help, 
that they just have not gotten it.
    If there is a way to achieve that within the cost 
constraints and within the privacy constraints, that is all I 
am trying to do.
    Chairman STARK. I thank the gentleman. Mr. Kind, would you 
like to inquire?
    Mr. KIND. Thank you, Mr. Chairman. Just briefly. I want to 
thank my two colleagues for the good work they are putting into 
both of these measures.
    Mr. Doggett, first of all, we are taking a look at the 
bill. We are quite frankly just waiting for some cost figures 
to come back. I think for some time now, we have to take a look 
at the asset limit for LIS individuals, but if you could 
refresh my recollection, are you proposing indexing those 
assets for future inflationary, or are you just bumping the 
asset limits up to increase eligibility?
    Mr. DOGGETT. I think we are just proposing to raise them 
and not to index them. They do need to be indexed. That might 
be an appropriate adjustment to the bill.
    Mr. KIND. Mr. Altmire----
    Mr. DOGGETT. If I might clarify that, apparently they are 
already indexed under current law. I know the income limit is 
indexed or has an inflation factor in it under current law. Our 
bill does not change that. There is something there already.
    Mr. KIND. You are also proposing in your legislation that 
you would waive the penalties for low income subsidy 
individuals on a permanent basis?
    Mr. DOGGETT. We do, and that is similar--it covers part of 
the population that Mr. Altmire does in his bill.
    Mr. KIND. Mr. Altmire, you are just proposing a two year 
waiver?
    Mr. ALTMIRE. Correct.
    Mr. KIND. Not only for low income subsidy but for?
    Mr. ALTMIRE. Anyone that is subject to the penalty.
    Mr. KIND. I agree. I had a lot of forms as far as sign up 
sessions when Part D eligibility enrollment period first opened 
up, tremendous amount of confusion, the complexity of it. A lot 
of people were not quite sure where to go for accurate 
information. It was difficult. If they did not enroll during 
that limited sign up period, they were shut off for about seven 
months and those penalties were accruing during that time.
    It is my understanding that CMS has waived the penalty in 
2007 for low income subsidy individuals, but that is it so far. 
Is that correct?
    Mr. ALTMIRE. Yes. In my bill, I codify that into the 
legislation.
    Mr. KIND. Very good. Thank you again for your work. Thank 
you, Mr. Chairman.
    Chairman STARK. Mr. Emanuel, would you like to inquire?
    Mr. EMANUEL. Thank you, Mr. Chairman, I would. I apologize 
for coming in late. I thank my colleague, Mr. Doggett----
    Chairman STARK. Did you bring a note from your mother?
    Mr. EMANUEL. My mother has a couple of other things she 
would like to bring besides a note, but I will make sure she 
knows you said that. She usually carried a 2 x 4 for her kids. 
My mother would actually like this whole forum just for her. 
That is the dedication of a Jewish mother.
    Mr. Doggett, you cited the USA Today story and the fact is 
that outside of the automatic enrollment, those low income 
seniors have not actually enrolled in the prescription drug 
Part D benefit. I was going to take note of that, but if it has 
been noted already in the interest of time, I will not do that.
    If you go back to the debate we had on the Floor, all those 
who were champions of the bill said how well it would do for 
low income seniors. In fact, the data shows it has not reached 
those, and there are about 3.2 million low income seniors who 
are not enrolled who would clearly benefit.
    I think our obligation is how do we figure out how to get 
to those folks. There are a lot of things to do. I want to 
compliment my colleague from Pittsburgh for his idea of waiving 
the fee.
    You have it obviously for everybody, but at a bare minimum, 
and I would hope, Mr. Chairman, we take note of his idea, at 
least codifying what CMS did for an one year proposal. If it 
was good for one year, it may be good for the second year when 
you have 3.2 million folks who are not enrolled that could be 
enrolled.
    We have to be doing everything we can. I would hope that 
obviously we look at this and take some recommendations of our 
two colleagues here. I am most impressed with the idea of 
codifying and expanding this idea of waiving the fee for 
seniors so we do not put up road blocks.
    If it was intended to get people in, they got in. Those who 
are left out, it is clearly not working for its intention. The 
intention was to have a fee to move people. We are past that 
stage. Now we have to figure out what we have to do to get them 
in because the late fee is a penalty to incentivize you to 
move, and that is past its prime. Its best days are behind it.
    I would point to my colleague from Pittsburgh who has come 
up with a piece of legislation where I cannot stress enough 
that we take consideration of and look into.
    To the debate between you and my colleague from Missouri, I 
will say that I wish this was not the plan. I do not think it 
was right. I think when we had the debate about $395 billion 
and it turned out to be closer to $800 billion, we should have 
know that information.
    We would have had a different judgment about whether we 
should have done this bill. That said, it is here. One of the 
things that concerns me and I hope as we look at it and debate 
this is the fact is when we looked in the 1980s and 1990s at 
the HMO and the privacy industry to save costs, the reason 
people looked at those plans was because they were supposed to 
be cheaper than Medicare fee for service.
    By the time we got to 2000, the advantage of the private 
plans from being more efficient than Medicare, the only way we 
got to those plans if we had to give them a 12 percent bonus on 
top of the fee for service.
    Their sales pitch in the 1980s and 1990s was they were 
cheaper, better, more efficient. By 2000, it became we had to 
pay them extra to get them to take on the Medicare.
    I am not suggesting that we eliminate all of the HMO 
benefits. They may work better in rural areas where you do not 
have a density, et cetera. All that we are doing here is trying 
to find after this period of time a better way to deliver a 
benefit in a more cost effective way, because it was never 
going to be $394 billion. It is now $800 billion.
    We have got to be better with taxpayer money so we can get 
a better benefit.
    Mr. HULSHOF. Would you yield for clarification, Mr. 
Emanuel?
    Mr. EMANUEL. Only if my mother is here. Yes, I will.
    Mr. HULSHOF. The Congressional Budget Office certified that 
the drug benefit was $395 billion and the Congressional Budget 
Office has not budged off that number.
    The reference to the larger number was the Office of 
Management and Budget under the administration that made 
different assumptions than the Congressional Budget Office, and 
it is the Office of Management and Budget that has indicated 
that because of the prevalence of wellness and preventive 
drugs, that the cost has been coming down.
    The record should indicate that CBO, the official score 
keeper for this institution, has held firm to the $400 billion 
or less. It is the administration's budget numbers that were 
the number.
    Mr. CAMP. Would the gentleman yield for one minute?
    Mr. EMANUEL. I think I need my mother.
    Mr. CAMP. It went down 30 percent from the initial 
projection. The fact is the costs are down 30 percent. That is 
unprecedented in the history of any Government program.
    Mr. EMANUEL. As you both know, because you are both very 
good and very studious and committed, one of the reasons the 
costs are down is because enrollment is not up. Fact.
    As Ronald Reagan used to say ``Facts are a stubborn 
thing.''
    The truth is and we all know it, yes, they are down, no 
doubt. B, one of the reasons they are down is enrollment is not 
up. C, one of the things that our two colleagues, from Texas 
and Pittsburgh, are trying to do is trying to figure out how to 
get enrollment up among the audience and parts of the 
population that are in most need of it. D, Richard Foster 
nearly lost his job for having--it was a different set of 
numbers, granted, but I believe had we known that, I do not 
think we would have gotten this bill.
    That is all I have to say. Thank you, Mr. Chairman.
    Chairman STARK. Would any of the members like to further 
inquire?
    [No response.]
    Chairman STARK. If not, I want to thank both the witnesses. 
I know Mr. Doggett will stay with us. Jason, if you would like 
to join us for the rest of the session up here and sit in and 
listen, you would be welcome.
    I am going to call our second panel with the caveat that we 
are expecting two votes sometime between 11:00 and 11:15. If 
Mr. Lawrence Kocot, Senior Advisor to the Administrator for 
CMS, and Ms. Beatrice Disman, Regional Commissioner of the New 
York Region of the Social Security Administration, would like 
to come forward, we will empanel you.
    Ms. Disman, if you would like to proceed to enlighten us. I 
think we will have time to get through the summary of your 
presentation, and then if we can prevail on you to stick around 
for a few minutes, the members will return after the vote and 
may wish to inquire.
    Please go ahead and enlighten us in any manner you are 
comfortable with.

 STATEMENT OF BEATRICE DISMAN, REGIONAL COMMISSIONER, NEW YORK 
             REGION, SOCIAL SECURITY ADMINISTRATION

    Ms. DISMAN. Thank you, Mr. Chairman, and Members of the 
Committee. On behalf of Commissioner Astrue, I thank you for 
inviting me to provide an update on Social Security's ongoing 
efforts to sign up eligible Medicare beneficiaries for the low-
income subsidy or ``extra help'' as it is known in the 
community.
    As you said, I am Bea Disman. I am the Regional 
Commissioner of the New York Region, and I have had the good 
fortune for the last three years to chair Social Security's 
Medicare Planning and Implementation Taskforce.
    In doing this, I have had the opportunity of seeing the 
truly tireless and dedicated efforts of so many Social Security 
employees as they have attempted to reach out to those 
individuals who could benefit from the ``extra help.''
    I am pleased to provide you with an update of our story. 
During the last year, Social Security has continued to use 
every means at our disposal to reach those who could benefit 
from ``extra help.''
    We have been in the communities and senior citizens' 
centers, pharmacies, public housing, churches, any place we 
thought senior citizens or the disabled were likely to be 
found.
    We have also continued to work with State pharmaceutical 
programs, State health insurance programs, area agencies on 
aging, local housing authorities, community health centers, 
prescription drug providers, and others to identify those with 
limited income and resources.
    Throughout these efforts, Social Security's goal has been 
to reach every potentially eligible Medicare beneficiary 
multiple times in a variety of ways. Whether there were 300 or 
three million people, Social Security's job is the same, find 
them. Find them where they live. Find them in the communities 
where they work, find them in any way we can.
    Our message is simple. If you could possibly benefit from 
this program, Social Security will help you apply.
    For more detail on the many avenues Social Security has 
used to inform low-income beneficiaries about ``extra help,'' 
for example, our multiple targeted mailings, telephone calls or 
targeted events, I refer you to my written testimony.
    Today, however, I would like to focus on a new initiative. 
On behalf of Commissioner Astrue, I am pleased to announce a 
new strategy in our continuing efforts to inform the public 
about ``extra help''.
    This outreach initiative, ``Show Someone You Love How Much 
You Care,'' is designed to inform relatives and care givers, 
the sons, daughters, grandchildren and family friends who count 
a Medicare beneficiary among the important people in their 
lives.
    By specifically focusing on these caregivers, SSA hopes to 
reach even more individuals who could be assisted through the 
``extra help'' program.
    Last week, Commissioner Astrue met with the advocacy 
organizations, some of whom will be testifying later, and 
encouraged them to help us in this new strategy. We have 
actually worked with all these organizations over the last 
three years.
    We plan to launch this new initiative around Mother's Day 
as we celebrate the most important special people in our lives. 
This year we are asking that people show someone they love how 
much they care by learning more about that ``extra help'' that 
is available with Medicare prescription drug costs.
    We are asking them to take a further step to help their 
loved ones apply. In the week preceding Mother's Day, Social 
Security employees around the country will be visiting their 
flower shops, restaurants and place of worship to make 
information about the ``extra help'' available. That is where 
mothers spend Mother's Day.
    I personally will be visiting one of the largest African 
American churches in Jamaica, New York on Mother's Day, and I 
filmed TV spots publicizing extra help for NBC's local consumer 
reporter yesterday.
    I have seen the activities from around the nation, in which 
my colleagues and their staff are actively engaged. Social 
Security also plans to publish related articles in the local 
media.
    Outreach efforts have also included distribution of special 
pamphlets explaining ``extra help,'' and I provided those 
pamphlets to each one of you so you could see them. The 
campaign will also continue throughout this year with a second 
series targeted at Father's Day.
    We also did officially send you pamphlets within the last 
day or two with a note from Commissioner Astrue. We are excited 
about this new initiative and its timing during Older Americans 
Month and its prospects for assisting low-income Medicare 
beneficiaries.
    I would now like to turn to another topic of great 
importance to SSA and this Committee, outreach to individuals 
potentially eligible for Medicare savings programs.
    In May 2007 as in prior years, Social Security will be 
sending an annual notice to approximately six million 
beneficiaries who based on our data and systems matching of 
data with Veterans Affairs, Office of Personnel Management and 
the Railroad Board, are potentially eligible for Medical 
Savings Programs (MSP).
    As in prior years, the MSP letters are tailored to address 
the programs which they are potentially entitled to based on 
our records. These letters also address ``extra help'' where 
appropriate.
    In addition to the notices we send information about MSP 
assistance to the various States. Information such as income 
along with names, and addresses of those individuals are shared 
electronically right after the mailing, thus providing vital 
information for the States to use in their own outreach 
programs.
    SSA also assists the States in MSP through the buy-in 
process. In 32 States and the District of Columbia, SSA has an 
agreement where a determination for SSI imparts Medicaid 
eligibility, therefore, MSP. Even in those States where we do 
not have an auto enrollment agreement with the State, we 
generate an alert that the State can use in assessing MSP.
    Finally, I would like to let you know that SSA decision 
letters about ``extra help'' have information about MSP. 
Information on ``extra help'' decisions themselves are 
transmitted to CMS, thus, CMS knows about whether ``extra 
help'' is approved or denied. They also receive certain 
information on income and resources.
    In terms of ``extra help,'' SSA has made a special effort 
with CMS to reach those beneficiaries who lost their deemed 
status effective January 2007. Of the approximately 630,000 
individuals affected, 247,000 have applied for ``extra help'' 
and 168,000 are eligible. This is in addition to those who have 
been re-deemed.
    Social Security is currently calling 188,000 individuals 
who have not yet filed.
    For this fiscal year, almost 850,000 beneficiaries have 
filed for the ``extra help,'' about 200,000 of these are 
unnecessary--I have about another 15 seconds, if I can 
continue--because they automatically were eligible or because 
they filed more than one application.
    For this fiscal year, we have found 350,000 individuals 
that are eligible for the ``extra help''. We continue to 
receive about 30,000 applications a week or over 100,000 a 
month.
    In conclusion, I want to express to this Committee my 
personal thanks and the thanks of Commissioner Astrue for your 
continuing support for the Agency. I can assure you that the 
dedicated employees of Social Security will continue to do our 
very best in administering the ``extra help'' assistance and in 
partnering with the state and CMS in the promotion of Medicare 
Savings Plans.
    We realize our job is not complete. We continue to look for 
ways in which we can reach out to those in need.
    We look forward to our continued dialogue with 
organizations, advocacy groups and of course, this Committee.
    Thank you. I will be glad to answer any questions you have.
    [The prepared statement of Beatrice Disman follows:]
Prepared Statement of Beatrice Disman, Regional Commissioner, New York 
                 Region, Social Security Administration
    Mr. Chairman and Members of the Committee:
    On behalf of Commissioner Astrue, I thank you for inviting me to 
provide an update on the Social Security Administration's (SSA's) 
ongoing efforts to sign-up eligible Medicare beneficiaries for the low-
income subsidy (LIS)--or ``extra help'' as it is commonly called, under 
the Medicare Prescription Drug Program. I am Bea Disman, and I have 
served for over a decade as Regional Commissioner of the New York 
Region. I have also spent the past 3 years as Chair of SSA's Medicare 
Planning and Implementation Task Force. In this role I have seen the 
truly tireless and dedicated efforts of so many SSA employees, as they 
have reached out to those individuals who could benefit from ``extra 
help.'' I am pleased to provide you with an update of our story--
exactly one year to the day after we last met to discuss this very 
important issue.
    Since we last spoke, SSA has continued its intensive efforts to 
locate low-income Medicare beneficiaries, and provide them with an 
opportunity to apply for ``extra help'' assistance. We have used 
targeted mailings, phone calls, computer data matches, community 
forums, partnerships with State agencies and non-profit organizations, 
public information fact sheets, word-of-mouth--in short, any and all 
means at our disposal--to reach those eligible to receive assistance 
with out-of-pocket costs associated with Medicare prescription drug 
coverage. Today's testimony looks back at some of those efforts, but 
more importantly, it looks at how SSA's outreach initiatives are moving 
forward.
Background
    To begin, it may be helpful to recap Social Security's role and 
responsibilities regarding the new Medicare Prescription Drug Program. 
This provides the context to further describe SSA's activities in 
getting low-income people the ``extra help'' intended by Congress.
    SSA was given the responsibility by Congress to take ``extra help'' 
applications and to make eligibility determinations for individuals who 
were not automatically eligible, by virtue of their receipt of full 
Medicare and Medicaid, Supplemental Security Income (SSI), or Medicare 
Savings Programs (MSPs). In order to be eligible for ``extra help,'' 
individuals must have incomes below 150 percent of the poverty level 
applicable to their corresponding household size. In 2007 this is 
$15,315 for an individual and $20,535 for a couple. Individuals with 
incomes between 135 percent and 150 percent of poverty are eligible for 
a subsidy amount based on a sliding scale. The income limits adjust 
annually, based on the Federal Poverty Level (FPL).
    Individuals must also meet a resource test. The resource level is 
$11,710 for single individuals or $23,410 for couples. (These figures 
include the $1,500 credit given to individuals who will use their 
resources for funeral or burial expenses.) Those who have countable 
resources of less $6,120 for an individual and $9,190 for couples, 
receive the most cost-sharing assistance. The resource limits adjust 
annually based on the Consumer Price Index, or CPI.
    SSA was given these responsibilities because of its network of 
nearly 1,300 offices across the country, and because of its already 
existing role in administering some parts of the Medicare program. Over 
the past 70 years, SSA has gained a reputation for helping people in 
the communities where they live, and Congress realized that SSA's 
presence ``on the ground'' would be vital in the launch of the Medicare 
``extra help'' program. Also, the low-income subsidy was designed with 
many similarities to SSI, a means-tested assistance program for low-
income aged, blind and disabled individuals, which SSA has administered 
for more than 30 years.
Application Process Improvements
    When we last met, I described for you the extensive research and 
review that went into the creation of SSA's application for ``extra 
help.'' Focus groups and cognitive testing experts, automation experts, 
advocate organizations, form design professionals, and Congressional 
staffs all contributed to this undertaking. The resulting application 
was the most extensively tested form SSA has ever produced. But you 
should also know that our efforts to improve the application--to 
provide an easy way for beneficiaries to apply for ``extra help''--are 
continuing.
    For example, we have added fields to the application that allow the 
applicant to enter the amount of his or her Social Security benefit. Of 
course SSA already knows this information, and the original application 
instructions stated that the applicant did not need to supply Social 
Security benefit amounts. But our analysis of applications received 
showed that applicants were trying to enter the information anyway, and 
this was frequently leading to inaccurate entries and inaccurate 
eligibility determinations. In addition, we revised the application to 
request the applicant's date of birth, so that we can identify him or 
her if they entered the wrong Social Security number. In another 
example, we simplified the question about filing as a couple and 
changed the resource amounts to reflect the 2007 resource limits.
    In response to advocates and Congressional concerns, SSA is 
currently reviewing the paragraph at the end of the ``extra help'' 
application (sometimes referred to as the ``penalty clause''). Our 
review has been prompted in response to concerns some have raised that 
such language might inhibit individuals from filing.
    Another interesting note is the way Medicare beneficiaries are 
currently filing for ``extra help.'' Since the beginning of Fiscal Year 
2007, about 22 percent of new applications are Internet filings. This 
means that, as a percentage of applications received, the online 
``extra help'' application has even exceeded the success of SSA's 
online Application for Retirement benefits. The online application has 
been a real success story, receiving one of the highest scores ever 
given to a public or private sector organization by the American 
Customer Satisfaction Index.
Outreach Efforts
    I would now like to summarize the efforts SSA has undertaken to 
inform beneficiaries about the ``extra help'' available for costs with 
prescription drugs. Efforts to educate the public about the new, 
``extra help'' program began almost immediately after passage of MMA, 
and this outreach continues today. As I mentioned earlier, SSA has 
worked with CMS and other Federal agencies, community based 
organizations, advocacy groups, and State entities in order to spread 
the word about the available ``extra help.''
    We have been in the communities--``in senior citizen centers, 
pharmacies, public housing, churches--``any place in which we thought 
senior citizens or the disabled were likely to be found. We also 
continue to work with States that have their own pharmaceutical 
programs, State Health Insurance Programs, Area Agencies on Aging, 
local housing authorities, community health clinics, prescription drug 
plans, and others to identify people with limited income and resources 
who may be eligible for the ``extra help.''
    Throughout these efforts, SSA's goal has been to reach every 
potentially eligible Medicare beneficiary multiple times, in a variety 
of ways: for example, by targeted mailings and events, and follow-up 
phone calls. And while we are confident we have taken appropriate steps 
to reach out to those who may be eligible for the ``extra help,'' our 
outreach efforts are continuing. Because there is no enrollment period 
for the ``extra help,'' a Medicare beneficiary can apply at any time. 
This means there is no inappropriate time to reach out to our lower-
income beneficiaries, and there is no wrong time for these individuals 
to complete an application.
    As you know, many estimates have been made as to the size of the 
eligible population. But whether there are 300 or 3 million people, 
SSA's job is the same--find them. Find them where they live, find them 
in the communities where they work, find them in any way we can. Our 
message is simple: if you could possibly benefit from this program, SSA 
will help you apply.
SSA's Initial Outreach Efforts
    To further explain how this outreach philosophy has translated into 
action, I would now like to describe some of the specific routes SSA 
has taken to reach our lower-income Medicare beneficiaries.
    As I described to you in last year's testimony, during the initial 
start-up phase of the new Medicare prescription drug program, SSA 
mailed almost 19 million applications to Medicare beneficiaries who, 
based on systems data available to SSA, appeared to have incomes below 
150 percent of the FPL. Our goal was to have as many potentially 
eligible lower-income Medicare beneficiaries as possible file for the 
``extra help'' before the Medicare prescription drug program started in 
January 2006.
    I also described for you some of the many ways in which SSA 
followed-up with those individuals who did not return the applications 
sent in the initial mailing.

          Through a vendor contract, we called 9.1 million 
        people and mailed 5 million follow-up notices. SSA 
        representatives provided one-on-one assistance to nearly 
        400,000 beneficiaries.
          Through a separate analysis, we identified 
        approximately 1.5 million disability beneficiaries who received 
        an ``extra help'' application mailer, but did not file an 
        application. We mailed a special follow-up notice to all of 
        these beneficiaries, assuring them that filing for ``extra 
        help'' would have no adverse effect on their disability 
        benefits.
          We personally called over 300,000 beneficiaries who 
        did not respond to an ``extra help'' application mailer, but 
        had previously applied for and received the Medicare $600 drug 
        discount card credit during 2004 or 2005.
          We coordinated targeted advertising efforts with 
        national organizations, such as AARP, and targeted outreach 
        events with state organizations such as the Elderly 
        Pharmaceutical Insurance Coverage program in New York.

Ongoing Outreach
    SSA continues to use our standard Agency mailings to inform the 
public. For example, the cost of living adjustment notice sent in 
November 2006 to over 50 million Social Security beneficiaries, 
contained information about the new drug program and the availability 
of ``extra help.'' In additional efforts to reach specific communities, 
SSA has undertaken targeted mailings to beneficiaries with 
representative payees, beneficiaries who speak Spanish, Asian-American 
and African-American households, and beneficiaries age 79 and older who 
lived in zip codes with a high percentage of low income households. 
During the period of June through August, 2006, 2.5 million ``extra 
help'' applications were mailed to these individuals. SSA has also made 
a special effort to reach and re-sign those ``extra help'' recipients 
who have lost ``deemed'' or automatically eligible status. As I 
previously described, some individuals received the subsidy 
automatically, by virtue of Medicaid, SSI or MSP eligibility. In some 
cases, however, these individuals lost eligibility to these other 
programs, and thus their deemed status, as of January 2007. Working 
with CMS, in September 2006, SSA mailed more than 600,000 applications 
with CMS notices to Medicare beneficiaries who would no longer be 
automatically eligible for ``extra help.'' To date, more than 247,000 
have reapplied and 168,000 are now eligible. This is in addition to a 
number of individuals who have regained automatic eligibility through 
re-entitlement to certain State programs. Social Security is also 
personally calling 188,000 of these individuals who, according to our 
records, potentially have incomes below the Federal Poverty Level. In 
addition to the many specific outreach activities SSA has performed in 
the past year, the agency also provides educational outreach to 
Medicare attainers--those current Social Security beneficiaries who 
turn 65 or reach the 25th month of their disability. If our records 
indicate an attainer may potentially be eligible for ``extra help,'' 
SSA sends an application. This means between 120,000-130,000 
beneficiaries receive ``extra help'' applications every month. 
Similarly, many individuals call our 800 number or visit our field 
offices to conduct traditional Social Security business. We educate 
these individuals about the ``extra help,'' and we will take the 
application if it is appropriate.
Reaching Caregivers: A New Strategy
    On behalf of Commissioner Astrue, I am also pleased to announce 
today, a new strategy in our continuing efforts to inform the public 
about the ``extra help'' program. This outreach initiative, themed 
``Show Someone You Love How Much You Care,'' is designed to inform 
relatives and caregivers--the sons, daughters, grandchildren and family 
friends--who count a Medicare beneficiary among the important people in 
their lives. By reaching these care providers, SSA hopes to reach even 
more individuals who could be assisted through the ``extra help'' 
program. Last week Commissioner Astrue met with the advocacy 
organizations that SSA has engaged as partners over these last three 
years, to ask their assistance in the new strategy.
    We plan to launch this new strategy around Mother's Day. On 
Mother's Day, we celebrate some of the most special people in our 
lives. This year, we are asking that people show someone they love how 
much they care, by learning more about the ``extra help'' that is 
available with Medicare prescription drug costs. We are also asking 
them to take a further step--help these loved ones to apply. In the 
week immediately preceding Mother's Day, SSA employees across the 
country will be visiting their local community centers, grocery stores, 
restaurants, and places of worship, to make information about the 
``extra help'' available on or around the Mother's Day weekend. SSA 
also plans to publish related articles in the local media. The outreach 
effort includes distribution of special pamphlets explaining ``extra 
help,'' entitled ``This Mother's Day, Show Someone You Love How Much 
You Care.'' The campaign will continue throughout this year. There will 
be a second series of targeted events scheduled for Father's Day. You 
should have received copies of these pamphlets within the past day or 
two, along with an announcement letter from Commissioner Astrue. We are 
excited about this new initiative, and its prospects of assisting low-
income Medicare beneficiaries.
Making a Connection with Medicare Savings Plans
    I would now like to turn to another topic of great importance to 
SSA and to this Committee--outreach to individuals potentially eligible 
for Medicare Savings Programs, or MSPs.
    In May 2007, as in prior years, SSA will be sending our annual 
notice to approximately 6 million beneficiaries who, based on SSA's 
systems matching of data with Veterans Affairs, the Office of Personnel 
Management and the Railroad Retirement Board, could be potentially 
eligible for MSPs. These programs (Qualified Medicare Beneficiaries/
QMB, Specified Low-Income Medicare Beneficiaries/SLMB, Qualifying 
Individuals/Q1, and Qualified Disabled and Working Individuals/QDWI) 
provide cost-sharing assistance or ``wrap-around'' coverage to low-
income recipients of traditional Medicare. They are a vital safety net, 
and SSA is pleased to cooperate with CMS in this effort. The MSP 
letters are tailored to address the programs to which, based on the 
matched records, an individual may be eligible. Since the inception of 
the Prescription Drug component of Medicare, the letters have also 
addressed ``extra help,'' where appropriate.
    In addition to the notices we send to inform individuals about MSP 
assistance, SSA also shares our list of potential eligibles with State 
Medicaid agencies. Information such as income, along with names and 
addresses of these individuals are shared electronically right after 
the mailing, thus providing vital information for the States to use in 
their own outreach programs.
    SSA also assists the States' MSP outreach through the ``buy-in'' 
process--generally speaking, the purchase of Medicare Part B by a State 
on behalf of a low-income Medicaid recipient. In 32 States (and the 
District of Columbia) SSA has an agreement that our determination of 
SSI eligibility imparts Medicaid eligibility as well, and therefore MSP 
eligibility. And even in situations where SSA has no auto-enrollment 
agreement with the State, we still generate an alert that the State can 
use in assessing MSP eligibility.
    Finally, we would also note that all SSA decision letters regarding 
``extra help'' provide generic information about Medicare Savings 
Programs. Information on the ``extra help'' decisions themselves are 
also transmitted to CMS. Thus CMS knows whether an ``extra help'' 
application is approved or disallowed. They also know whether the 
resource level is below $6,120 for an individual, or $9,190 for a 
couple, and the income as a percent of FPL.
Current Status of Beneficiaries Filing for ``Extra Help''
    From the beginning of the fiscal year (October 2006) through mid-
April, almost 850,000 beneficiaries have filed for ``extra help'' with 
SSA. About 200,000 of these filings were unnecessary, because either 
the applicants were automatically eligible or because they had filed 
more than one application. Based on these filings we have found about 
350,000 individuals eligible for assistance.
    Generally, SSA continues to receive 30,000 applications for ``extra 
help'' every week. This continued level of interest from beneficiaries 
tells us our outreach campaign is working.
    While SSA has no direct role in assisting individuals in either 
selecting or enrolling in PDPs, we have also provided instructions to 
the field offices on how to make sure those with the new Medicare 
prescription drug coverage questions are directed to the resources they 
need. In some cases this means our employees will simply refer the 
questioner to 1-800-MEDICARE, or to the beneficiary's PDP provider, but 
in other cases it means making a personal call to state coordinators, 
reprinting and faxing award notices, and even making emergency calls to 
CMS Regional Offices.
    SSA employees across the country are continuing to communicate 
information about this valuable benefit. Our job is not completed, and 
we continue to look for more ways to reach those eligible for the 
``extra help'' program.
Conclusion
    In conclusion, I want to express to this Committee my personal 
thanks, and the thanks of Commissioner Astrue, for your continuing 
support for the Agency. I can assure you that the dedicated employees 
of SSA will continue to do our very best in administering the ``extra 
help'' assistance, and in partnering with State and other Federal 
Government agencies in the promotion of Medicare Savings Plans.
    We look forward to our continued dialogue with organizations, 
advocacy groups, and of course, this Committee.
    Thank you and I will be glad to answer any questions you may have.

                                 

    Chairman STARK. Thank you very much. Mr. Kocot, if you 
would proceed. At the conclusion of your summary, we will 
recess for a few minutes to go vote. We should be back in 15 
minutes. Please proceed.

     STATEMENT OF S. LAWRENCE KOCOT, SENIOR ADVISOR TO THE 
   ADMINISTRATOR, CENTERS FOR MEDICARE AND MEDICAID SERVICES

    Mr. KOCOT. Thank you. Chairman Stark, Congressman Camp and 
distinguished Members of the Subcommittee, thank you for 
inviting me to discuss the low income subsidy available under 
Medicare Part D and the Medicare savings programs, the MSPs, 
which are joint Federal and state partnerships to assist 
qualified beneficiaries with Medicare premium and out-of-pocket 
costs.
    I am Larry Kocot, Senior Advisor to the Administrator of 
the Centers for Medicare and Medicaid Services. In my role at 
CMS, I have been deeply involved in the policy development and 
implementation of Medicare Part D, including outreach efforts 
designed to reach beneficiaries who may qualify for extra help.
    Today, roughly 39 million Medicare beneficiaries, more than 
90 percent of all those eligible for prescription drug 
benefits, are receiving the drug coverage they need. Without 
question, Part D has had a positive impact on the lives of 
people with Medicare, especially those who receive the low 
income subsidy.
    A primary goal of the Medicare Modernization Act was to 
provide access to prescription drugs and generous financial 
assistance to beneficiaries with the greatest need. That is 
what CMS is doing today.
    The low income subsidy provides substantial help to 
beneficiaries with limited incomes, and includes the Federal 
premium subsidy ranging from 25 to 100 percent of the monthly 
premium cost for qualified plans and minimal cost sharing for 
covered drugs.
    Over 75 percent of low income beneficiaries eligible for 
extra help now receive comprehensive drug coverage at little or 
no cost. That is 10 million out of an estimated 13.2 million 
people. With the extended special election period allowing 
subsidy approved beneficiaries to enroll without penalty, we 
expect these numbers to continue to grow throughout 2007.
    Compared with other means tested programs, enrollment in 
the Medicare low income subsidy is impressive. However, we will 
not rest until we have reached and assisted every Medicare 
beneficiary who qualifies and wants to apply for the low income 
subsidy.
    Our work to identify and enroll these beneficiaries has 
been a multi-faceted and continuous effort that did not stop 
with the end of the statutory enrollment periods. Given that 
many of these beneficiaries are very difficult to reach through 
traditional means, CMS has designed special ongoing initiatives 
to target those living in areas that general community outreach 
efforts may miss.
    To reach the estimated three million beneficiaries who may 
be eligible who have not yet enrolled in the low income 
subsidy, CMS will pursue innovative non-traditional outreach 
techniques. We will sponsor multi-media campaigns, and we are 
going to expand our grassroots networks.
    We are working closely with more than 40,000 partners who 
sponsored and participated in over 12,700 events to date.
    The one-on-one counseling and personalized attention made 
possible by these partnerships have enabled CMS to reach tens 
of millions of people one at a time.
    CMS recently launched a targeted data driven outreach 
effort with the Administration on Aging to provide resources to 
community based organizations and the National Aging Services 
networks, so they may provide personalized assistance to low 
income Medicare beneficiaries.
    Additionally, CMS recently announced $34.2 million in 
direct grants and program support to the state health insurance 
assistance programs, the SHIPs, which will build capacity for 
local counseling sites to reach LIS eligible individuals in the 
hard to reach populations.
    Our just launched initiative, ``A Healthier U.S. Starts 
Here,'' is another component of this comprehensive effort. CMS 
and HHS will crisscross the country by bus to raise awareness 
about disease prevention. At more than 300 public events, we 
will promote Medicare covered tests and screenings, as well as 
the availability of the extra help with prescription drug 
coverage.
    In fact, eligible Medicare beneficiaries will have the 
opportunity to apply for the low income subsidy on-site at 
these 300 locations.
    People enrolled in Medicare savings programs, the MSPs, are 
automatically eligible for the Part D low income subsidy.
    Through these joint Federal/state programs, qualifying low 
income Medicare beneficiaries are entitled to limited 
assistance with Medicare Part A and B premiums, deductibles and 
cost sharing, depending upon their income status.
    In general, the MSPs make Medicare coverage more affordable 
for low income beneficiaries and thus promote access to 
critical health care services.
    While MSP enrollment has grown in recent years, reaching 
this population is especially challenging and time and resource 
intensive. To assist states with MSP enrollment, beginning this 
year, CMS will begin sharing leads data, that is data on those 
who have applied for LIS and have either been accepted or 
rejected, on a monthly basis, so they may target outreach to 
potential MSP eligible individuals in their states.
    Outreach to promote and increase enrollment in the Medicare 
Part D LIS and related benefits, including the state based 
Medicare savings programs, is now part of the permanent 
campaign at CMS.
    We look forward to working with SSA, our partners here, and 
our partners in the local communities, as well as the 
Subcommittee, to refine our efforts to achieve even greater 
success in finding and enrolling all of the LIS eligible 
beneficiaries in Medicare.
    Again, thank you for the opportunity to appear today, and I 
would be happy to answer any questions that you may have.
    [The prepared statement of S. Lawrence Kocot follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    

    Chairman STARK. Thank you very much. I think at this point, 
we will recess for about 15 minutes until we return from the 
vote, if you two would not mind waiting for us. Maybe we can 
even find you a cup of coffee while we are gone.
    [Recess.]
    Chairman STARK. The Committee will resume the hearing. 
Members will be returning a bit at a time from the Floor and 
their votes.
    Mr. Kocot, I guess I'm disappointed in the lack of 
suggested solutions or a discussion in your testimony of the 
problems that need to be solved.
    It was a marvelous ten pages of praising the Agency and 
detailing your past efforts, but I did not find that you 
acknowledged what more could or should be done or even any 
evaluation of the effectiveness of some of the strategies you 
mentioned, that you have had contracts for programs, but I 
could not gather from your testimony what the results were.
    At the bottom of page ten, you give us a little hope in 
that you pledge a commitment to do more. I could not find out 
what ``more'' was.
    Could you help us help you help the beneficiaries? I would 
like to know what you think can be done administratively to get 
more folks the benefits of LIS and MSP, to which they are 
entitled.
    Tell me what you can do and what you plan to do 
administratively, and then would you suggest what we can do 
legislatively that you will support to help accomplish this 
goal.
    Mr. KOCOT. I will be happy to, Mr. Chairman. First, let me 
take a step back because I want to just kind of ground this 
discussion and the fact that we are only in the second year of 
this program. It is a brand new benefit. Our primary objective 
was to get the benefit up and running and get the people in 
that needed the help that we could get.
    We undertook a massive effort----
    Chairman STARK. This is also about the Medicare savings 
programs.
    Mr. KOCOT. I understand that, sir. I am getting to that. We 
undertook a massive effort to reach a lot of people in a very 
short period of time, get them in. Get them enrolled. Get them 
signed up for a benefit, in addition to signing up for the 
Medicare benefit.
    Going back to the MSP programs, back in the early part of 
the decade, we did a lot of research on what was effective and 
what was not effective. We learned quite a bit from that 
research, particularly in that large Government programs, large 
Government efforts, largely do not work for the people who are 
the hardest to find, specifically those in minority 
communities, the poorest of the poor, and so forth.
    It is the one-on-one counseling and outreach to them 
through local organizations, through trusted intermediaries, 
that works best with that population. We have penetrated quite 
a few in the initial stages of this benefit. We are now 
focusing our campaign towards those hardest to reach, those 
most resource intensive and most expensive population to reach, 
to get those in the community to work with us on targeting them 
on a one-on-one basis.
    In terms of what we are actually doing specifically in 
terms of the minority communities, I mentioned in my testimony 
and in my oral what we are doing with some of the larger 
organizations, but it is really the on the ground organizations 
that count the most.
    We are working with the NAACP, the National Center for 
Black and Aged, the National Hispanic Council on the Aging, the 
National Asian Pacific Center on the Aging, the Office of 
Minority Health.
    We have targeted efforts in the African American community 
planned, and already, I will say our minority enrollment, 
particularly in the African American, Hispanic and Asian 
populations, is above the average.
    We feel like we have had a considerable amount of success 
so far, but our effort really has to turn now to a more focused 
hand-to-hand----
    Chairman STARK. Are those both LIS and MSP or just LIS, 
those outreach programs?
    Mr. KOCOT. This is primarily for LIS. Remember, on MSP, our 
charge is a little bit different. Specifically with MSP, we do 
alert beneficiaries in the Medicare and You Handbook they get 
about the MSP program. We participate with the 1144 letters 
with Social Security that go out to MSP eligibles or who we 
think are MSP eligible.
    We are launching a campaign this year to provide more data 
to the states for MSP enrollment, our leads program, and we 
will continue.
    As a matter of fact, the campaign that we have going on in 
the grassroots community dove tails very, very nicely with what 
the states might want to do on MSP.
    Remember, the MSP program is a Federal/state initiative. It 
really is a partnership with the states, so the states have to 
participate as well. We are making those opportunities 
available, but that is for them to decide on how they want to 
participate.
    Chairman STARK. What can we do legislatively that you would 
support? Anything?
    Mr. KOCOT. I do not know that you can do anything 
legislatively for us to reach these people on an one-on-one 
basis. That is really up to partnerships with local 
organizations, and that is relationship building.
    We are doing everything that we can right now, we think, 
that we possibly can, but obviously, we can do more, more 
creativity and working with us and having these discussions 
that we find very, very helpful. If you have ideas, we are 
happy to incorporate them into our efforts, and certainly we 
have not found the magic bullet, but we are going to keep 
banging away at it.
    Chairman STARK. I would just note that your recent handbook 
does not mention MSP until somewhere back after 70 odd pages. 
Any reason you hid that toward the back of the book?
    Mr. KOCOT. I cannot speak to that directly, sir. Although I 
will tell you that much of that handbook, I believe, is 
mandated by statute. I am not so sure about the ordering, but 
there is a lot in that because a lot is required.
    Chairman STARK. It is my understanding, Ms. Disman, that 
you send Mr. Kocot and his colleagues a lot of information that 
you receive for people who apply for various programs. You send 
them asset information, income information that you receive; is 
that correct?
    Ms. DISMAN. We provide information to CMS on our daily 
decisions.
    Chairman STARK. Both people who qualify and do not qualify?
    Ms. DISMAN. Both people.
    Chairman STARK. What do you do with that information, Mr. 
Kocot?
    Mr. KOCOT. I am sorry, I did not follow the answer.
    Chairman STARK. You get a lot of information from Ms. 
Disman about people who apply for various programs through 
Social Security. That information includes income information, 
asset information, a whole host of very valuable stuff. What do 
you do with it?
    Mr. KOCOT. As I said, we are going to be providing quite a 
bit of it to the states.
    Chairman STARK. But right now you do not do anything with 
it?
    Mr. KOCOT. I will have to get back to you on the specifics 
of----
    Chairman STARK. What do you think the states will do with 
it?
    Mr. KOCOT. Presumably, if we are giving it to them and they 
want it----
    Chairman STARK. There is somebody that knows what you do 
with it. In terms of the LIS data, let me give her a raise.
    Mr. KOCOT. I am sorry?
    Chairman STARK. Never mind. Go ahead.
    Mr. KOCOT. We use the LIS data to facilitate enrollment for 
those who are not dual eligibles.
    Chairman STARK. Facilitate what?
    Mr. KOCOT. Facilitate enrollment.
    Chairman STARK. How?
    Mr. KOCOT. We place LIS eligible beneficiaries who have not 
selected a plan by the end of the enrollment period into a 
plan.
    Chairman STARK. You just automatically enroll them without 
consulting them?
    Mr. KOCOT. We automatically enroll them if they have 
applied for the subsidy or if they are qualified for the 
subsidy and they have not enrolled in a plan. It does not do 
them much good to have a subsidy if they are not enrolled in a 
plan.
    Chairman STARK. Again, I guess your answer to the other 
question is you really cannot think of any legislation that we 
could do that would help you.
    Mr. KOCOT. I cannot think of any right now.
    Chairman STARK. Okay. Put your thinking cap on.
    Mr. DOGGETT. Will you yield?
    Chairman STARK. Sure, Lloyd.
    Mr. DOGGETT. Mr. Kocot, I gather that you agree with the 
thrust of Mr. Camp's opening statement and comments others of 
us have made that on this program, the low income extra help 
program, as with all other aspects of Government, what we are 
after is the most cost effective solution.
    Mr. KOCOT. That is right.
    Mr. DOGGETT. How much on this multi-media campaign that you 
say you are about to launch, how much money is the Medicare 
Administration expending to try to get more people in the low 
income extra help program?
    Mr. KOCOT. I do not have an exact figure for you.
    Mr. DOGGETT. Is that something you could give us next week?
    Mr. KOCOT. I can try.
    Mr. DOGGETT. You cannot think of any legislative ideas, but 
of course, you are aware, although I know you are Director of 
Legislation at Medicare and was not aware even as of the day 
before yesterday that the Social Security Administration, about 
the first thing they did after this bill was enacted, was to 
ask the Internal Revenue Service for information on who should 
be targeted to receive this benefit.
    You are aware of that today, are you not?
    Mr. KOCOT. I defer to SSA in the conversation they had with 
IRS.
    Mr. DOGGETT. I am asking you, sir. Are you aware today from 
my testimony--have you ever looked at the Inspector General's 
report?
    Mr. KOCOT. Yes, I have, sir.
    Mr. DOGGETT. You are aware, if you have read it, that the 
Social Security Administration shortly after this bill became 
the law, asked the Internal Revenue Service for information 
about who would be eligible for this extra help program, are 
you not?
    Mr. KOCOT. Yes.
    Mr. DOGGETT. Yes, sir. They declined to give it. The 
Inspector General, a Republican appointee, Health and Human 
Services, said ``Access to IRS data would help CMS and SSA 
identify the beneficiaries most likely to be eligible for the 
subsidy.''
    They pointed out similar information that is used with 
other programs.
    Do you disagree with the conclusion that I have just read 
from the Inspector General?
    Mr. KOCOT. I do not know that I disagree with the 
conclusion. I do not know that the conclusion is as well 
informed as it could be, with all due respect.
    Mr. DOGGETT. You do not disagree with the conclusion, but 
you think there is more to the story?
    Mr. KOCOT. Yes, I do.
    Mr. DOGGETT. If you do not disagree with the conclusion 
that access to the data would help identify the beneficiaries, 
instead of doing a scatter shot multi-media approach, why has 
not CMS come forward and recommended and why are you not 
recommending in answer to the Chairman's question that we 
change the law to make that information, that limited 
information, available so you can do a better job?
    Mr. KOCOT. First of all, sir, the information that you are 
talking about, because of the population that we are talking 
about, it is questionable how effective that information would 
be in terms of finding the beneficiaries that we are looking 
for.
    Mr. DOGGETT. It would find some, would it not?
    Mr. KOCOT. It would exclude some.
    Mr. DOGGETT. It would identify some individuals who have 
less than $13,000 in income, would it not?
    Mr. KOCOT. I do not know about specific income thresholds.
    Mr. DOGGETT. I am talking about the threshold that applies 
to this program. There is no reason that you could not 
identify--you might get all three million--you could identify 
some of them.
    Mr. KOCOT. No, the IRS, in conversations that we have had 
with the IRS, they have indicated that we might identify 
100,000 to 200,000 people of the entire population.
    Mr. DOGGETT. Let me ask you, when did you first ask the IRS 
for that information?
    Mr. KOCOT. I do not know the exact date.
    Mr. DOGGETT. When did you personally get involved? In 
anticipation of this hearing within the last few days?
    Mr. KOCOT. Yes.
    Mr. DOGGETT. Yes, sir. Who did you talk to over there?
    Mr. KOCOT. Yesterday, we had a conversation with your 
staff. I do not know exactly who----
    Mr. DOGGETT. You do not know the names of anyone you talked 
to at the Internal Revenue Service?
    Mr. KOCOT. We can get it for you.
    Mr. DOGGETT. I will continue in a few minutes. Thank you, 
Mr. Chairman.
    Chairman STARK. Mr. Camp?
    Mr. CAMP. Thank you, Mr. Chairman. Thank you both for your 
testimony.
    I have a question particularly. The low income subsidy has 
an outreach or enrollment of 10 million out of the 13 million 
eligible in just 14 months of the program, which means 75 
percent of those eligible are enrolled.
    The MSP has in the QMBs about 33 percent enrolled, and in 
the specified low income Medicare beneficiaries, about 13 
percent enrolled, and that is over a 30 year period.
    You correctly pointed out in your answer to Mr. Doggett 
that one is simply a Federal run program, one is a combination 
of state and Federal programs.
    In terms of the Part D program, we have a fairly high level 
of outreach that has been very successful.
    My question, Mr. Kocot, what flexibilities are currently 
available to the states to help simplify the application and 
enrollment process for the MSP program as that is a Federal/
state partnership?
    Mr. KOCOT. Actually, the states have quite a bit of 
flexibility in terms of the MSP programs. At least a few years 
ago, we actually developed a model application with the states 
that many are now using. The states have a lot of flexibility 
in determining--for example, the states can do on line 
enrollment if they wished. A lot of their rules vary by states. 
They can alter their rules. They do not have to use some of the 
asset and income restrictions that some of them do use. Those 
are choices they make.
    There is quite a bit of flexibility in terms of how they 
determine addition a liquid assets and so on. The states have 
quite a bit of flexibility to tailor their programs.
    Mr. CAMP. There is an asset test with these programs. What 
is the reason behind that? What is its purpose? Why does it 
exist?
    Mr. KOCOT. These are means tested programs. If people have 
sufficient assets to afford their health care, that is 
something they should be paying for rather than the state.
    The asset test is designed to really exclude those people 
who can afford this benefit without the state financing it.
    Mr. CAMP. I have a question for both of you. In my 
district, we have encountered some difficulties in the premium 
withholding part of Medicare Part D. As you know, this is when 
the Social Security Administration tracks a beneficiary's 
premium for a monthly Social Security benefit.
    We have experienced some difficulties that I have heard 
from my constituents in my district office when beneficiaries 
change their plans but continue to have the premiums withheld 
from their old plan.
    My office has contacted CMS and SSA. They have tried to 
speed this process along. We are routinely told it will take 
three to four months to have people get their money back and to 
fix the situation. In my view this is far too long, it is 
unacceptable.
    I am concerned that as we require different agencies to 
share information, more problems like this can occur. How are 
SSA and CMS working to resolve this problem, if you know, and 
if Congress requires or allows more automatic enrollment, how 
will we be certain that agencies will work together on these 
issues?
    Ms. DISMAN. We share your concern that the Social Security 
payments be accurate and also be timely. Certainly, CMS and SSA 
have worked together over the last three years in first setting 
up the requirements for the premium withholding, and I need to 
step back a moment because you (the beneficiary) tell your 
prescription drug plan that you want to have premiums withheld 
from your Social Security check.
    That then goes to CMS and CMS sends the data to Social 
Security. Certainly, the accurate and timely transmission of 
data is a very significant factor.
    Both organizations, CMS and SSA, have worked extremely 
close to resolve the issues that we did experience during 2006 
and certainly I am pleased to tell you that for 2007, all of 
the premium withholding transmissions that have come have been 
greatly improved.
    I will say, and I will turn to Larry Kocot for 2006, we 
actually are working with CMS on the issue. We have sent them 
an abstract of our files. They are in the midst of a 
reconciliation. They, themselves, are looking at 2006.
    More importantly, we have joint task forces that are 
looking at every aspect of the data exchange. I can tell you we 
had a major meeting in February to go over and identify 
problems, not just the IT people, but the program people, the 
business rules people. We really needed to get everyone in the 
same room to understand what was happening.
    We set up five major subgroups with priorities on things to 
look at, and the status that I have is that these groups are 
working very well. It is my understanding that we expect to 
hear their recommendations shortly.
    The good news is that 2007 is proceeding in a much smoother 
way.
    Mr. CAMP. Thank you very much. If you could just briefly 
answer. My time has expired. If you could just be brief, Mr. 
Kocot.
    Mr. KOCOT. I would just echo that. We had some early 
problems, as you know, with beneficiaries changing plans in the 
first few months of 2006. The systems that we had designed 
early on frankly did not accommodate a lot of quick changes the 
way our rules allowed, so we had a lot of things that we had to 
do with business rules. There is a lot of complex interfaces 
between our systems and so forth.
    As Ms. Disman has said, we have done quite a bit of work 
and we will continue to do as much work as we need to do to get 
these systems working together so beneficiaries have little 
problem.
    Mr. CAMP. Thank you. I thank the Chairman for the extra 
time. Thank you.
    Chairman STARK. Mr. Pomeroy, would you like to inquire?
    Mr. POMEROY. Yes, I would, Mr. Chairman.
    The extra help dimension of the Medicare Part D plan is an 
extremely significant benefit, but I am informed that the 
estimates are 40 to 60 percent of eligible beneficiaries are 
participating; is that correct?
    Mr. KOCOT. No, that is incorrect. Seventy-five percent of 
those who are eligible for some form of extra help are in the 
program.
    Mr. POMEROY. If you exclude those automatically enrolled, 
the dual eligible population, how many?
    Mr. KOCOT. If the auto enroll population is approximately 
6.6----
    Mr. POMEROY. The data I have is you have six million that 
are dual eligibles and automatically enrolled that is the low 
income help part. You have three million that are in on the 
extra help part, and that represents roughly 40 to 60 percent 
of those, aside from the dual eligibles, that are eligible for 
this extra help.
    Does that roughly strike you as correct?
    Mr. KOCOT. That is probably ballpark; yes.
    Mr. POMEROY. We have a tremendous benefit that is basically 
free drug coverage, and we have about half the population in 
it. We have a product that is essentially free money and only 
one out of two is taking it.
    This is the worse sales job in the history of the country, 
if you cannot give away free money to more than half of those 
eligible.
    I understand some serious efforts that been made. I think 
we have some program design issues, and I really admire my 
colleague, Congressman Doggett, in his leadership to try and 
get to the bottom of this.
    A concern I have is that we are not doing an adequate job 
of getting people enrolled, and by the way, while we are at it, 
we are hurting our Social Security regional offices in terms of 
providing the work they need to do on Social Security.
    We had a hearing two days ago in the Subcommittee on Social 
Security that showed the backlog on disability determinations 
just as one aspect of the program is at an all time high, never 
higher. This is really before the baby boomers retire.
    What we are in for scares me to death, without really 
taking a look at these systems.
    Ms. Disman, I thought that your report on what SSA has been 
attempting to do was really positive. I think you all have done 
yeoman's work. I know they have in North Dakota.
    I will never forget sitting at an enrollment forum with a 
couple from the North Dakota regional office, and they could 
not even get their phone answered because there had been a 
hiring freeze and they had lost personnel. They were down to 
two in the office. They just could not get it all done. They 
were trying their little hearts out.
    What extra resources have come into SSA relative to the new 
expectations we have now with trying to get people signed up 
for extra help on the Medicare Part D proposal?
    Ms. DISMAN. Let me go back a little bit.
    Mr. POMEROY. I do not have much time, so do not go too far.
    Ms. DISMAN. I will not go too far. With MMA itself, 
initially, I think you know that Social Security received $500 
million to implement MMA in 2004 and 2005. We actually carried 
over $111 million of that into 2006. Right now, the 
expenditures that we do for MMA come from our limitation 
account, our LAE account.
    We actually draw down from the Supplemental Medical 
insurance trust fund, and a very significant item is that while 
we have hired people before, trained 2,200 people on the front 
line in those offices that you were talking about for MMA. The 
fact that the President's budget has not really received the 
Congressional support for the last five years for Social 
Security, we did not receive its funding, certainly does have 
an impact on all of our workloads.
    I certainly am aware of the hearing that you had the other 
day.
    Mr. POMEROY. We are going to do better than what the 
President has asked for this year, and it has been shameful 
that those other Congress' have not funded Social Security, and 
there is no coincidental relationship between the failure of 
earlier Congress' under different management to fund the 
President's request for SSA and the fact that we have a record 
number on Social Security disability.
    We also have them waiting to have their Social Security 
disability determined, among other things. The walk in service 
deteriorated dramatically. People waiting an hour to get their 
phone calls answered, not their questions answered, their phone 
calls answered, and on and on.
    You just told us the money that was allocated to SSA for 
purposes of getting extra help is spent; is that correct?
    Ms. DISMAN. Yes, it was. It was funds for 2004 and 2005 and 
$111 million was moved to 2006.
    Mr. POMEROY. Did the administration request more funds for 
that?
    Ms. DISMAN. The funding for this comes from our regular LAE 
accounts, and we draw down from the Supplemental Medical 
Insurance Trust Fund. There really is not targeted funding 
specifically.
    Mr. POMEROY. Our SSA offices are out of money for this 
purpose, yet we have only signed up about half of those 
eligible. We have a lot of work to do. Looking at the capacity 
in our systems to do the work we are asking them to do has got 
to be a part of what this Congress requires.
    I think there have been significant efforts on the front 
line, but we have to get you enough resources so you can 
realistically get done what we are asking you to do.
    Thank you, Mr. Chairman. I yield back.
    Chairman STARK. Mr. Ramstad, would you like to inquire?
    Mr. RAMSTAD. Thank you, Mr. Chairman. Thank you to both of 
you expert witnesses. Appreciate the good jobs you do out there 
every day, tough jobs, and you are doing them well.
    Mr. Kocot, I want to ask you a question. I want to focus on 
the broader health care needs of lower income individuals. The 
empirical data certainly support the claim that lower income 
people typically suffer from more chronic conditions and have 
greater health care problems.
    I believe that traditional Medicare does the best job it 
can with the resources, limited resources, it is given. There 
is often little disease management and coordination of care
    On the other hand, Medicare Advantage relies on these types 
of programs to both keep beneficiaries healthy and to save 
money.
    Can you talk about the importance of disease management and 
coordinated care, especially for lower income beneficiaries, 
and also could you elaborate on how this can save Medicare 
dollars in the long run, is it not in fact the cost effective 
way to go?
    Mr. KOCOT. The simple answer to that, sir, is we truly 
believe that to be the case, but rather than just believing it, 
the MMA gave us many tools to try to test those hypotheses, and 
that is what we are doing.
    As you point out, the low income, particularly the 
population that is eligible for LIS, is typically a sicker 
population and coordination of care is a true issue with their 
health needs.
    We have a lot of different plans that are experimenting 
with not only coordinated care but also disease management. We 
have special needs plans that are specifically focused on 
specific conditions and the coordination of care. We have 
demonstration projects on disease management and coordinated 
care.
    We are really looking forward to seeing what the results of 
those demonstrations are to tell you exactly on the question 
you are asking, how much money does it save.
    Intuitively, coordinated care is going to save money. 
Disease management on the other hand, we need to see what 
specific programs work the best with these populations. 
Multiple chronic conditions and so forth, what works best 
together in order to really target the resources so we can save 
the maximum amounts possible.
    We will have a lot of data coming, but we are not there 
yet.
    Mr. RAMSTAD. When do you believe the findings in these 
studies will lead to definitive conclusions? In other words, 
when are the studies going to get back to you?
    Mr. KOCOT. In terms of some of the disease management and 
coordinated care demonstrations, I believe we have some interim 
reports. We have others coming over the next couple of years.
    That is not to say that all of those will be definitive. 
What the demonstrations are doing is looking at specific 
protocols, specific programs and seeing if they work. That is 
not to say that we have reached or penetrated all that might 
work, and we are going to continue working on this as we move 
into an era of better data and better coordinated care and 
probably a lot more evidence based results that we can put into 
practice.
    Mr. RAMSTAD. I have another question, Mr. Kocot, I would 
like to ask you. I will try to be brief. We all know about the 
really huge burden that long term care is placing on state 
Medicaid programs. Certainly, my state of Minnesota is no 
exception. States often are seeking waivers to move dual 
eligibles from intensive and costly long term care to more 
appropriate and less costly assisted living facilities, as you 
know.
    This creates a problem for a lot of people. Under Part D 
dual eligibles who live in nursing homes and other institutions 
do not have to pay co-pays while assisted living residents must 
pay them, even though they are nursing home eligible.
    In the last Congress, several of us introduced the Co-Pay 
Equity Act to address this problem, but it did not get to the 
Floor for a vote.
    As we begin to consider this problem again in the 110th 
Congress, I wanted to ask you why should these dual eligibles 
have to pay co-pays? What is the policy reason for that?
    It seems to make no sense.
    Mr. KOCOT. The exact provision you are pointing to is, it 
is institutionalized dual eligibles that get the zero co-pay. 
As you know, assisted living is not considered an institution 
under our interpretation of the statute. That does create a 
problem for assisted living facility patients, particularly 
dual eligibles.
    We certainly support and share with you the goal of 
providing the right incentives to get people out of long term 
care facilities and into assisted living facilities and into 
community based care. We will continue to pursue that.
    However, I think we still need to do a little work to 
determine whether or not providing a zero co-pay will provide 
the appropriate incentives. For example, most of the people 
that you are talking about, if they are not dual eligible, they 
would be either LIS or dual eligible, non-institutionalized 
beneficiaries and are only paying a couple of dollars in co-
pays, is that enough for these beneficiaries to incent them to 
go to assisted living.
    It is a complex problem. We are continuing to look at it.
    Mr. RAMSTAD. It is a complex problem, I understand that. 
Can we simplify it by eliminating these Part D co-payments? 
Would that not in fact remove a disincentive for Medicaid 
beneficiaries to live in assisted living or the community 
rather than in a more costly institution?
    Mr. KOCOT. Again, I do not know whether the co-pay itself 
would be enough to incent someone to go to an assisted living 
facility from a long term care facility. I think there are a 
lot of other factors in play. There are a lot of other expenses 
in play as well.
    Mr. RAMSTAD. Other factors, you are alluding to overall 
health and the economics of it as well?
    Mr. KOCOT. Precisely.
    Mr. RAMSTAD. You sound willing to look at it and work 
together to delve into it.
    Mr. KOCOT. Absolutely; yes, sir.
    Mr. RAMSTAD. Try to solve what I see as a real dilemma and 
one that needs to be fixed. Thank you very much, both of you. I 
yield back.
    Chairman STARK. Mr. Becerra, would you like to inquire?
    Mr. BECERRA. Yes, Mr. Chairman. Thank you. To the two of 
you, thank you very much for your testimony and we look forward 
to working with you as we try to resolve some of these issues.
    If I gave you 15 seconds each, tell me how we make the 
system work better under the current operating structure that 
we have. I will start the clock running.
    Mr. KOCOT. Which system? We have quite a few.
    Mr. BECERRA. How do you get those who qualify for the low 
income subsidy to better enroll and those who qualify for the 
savings programs under Medicare to enroll? How do we get the 
millions who we know are eligible, as Mr. Pomeroy said, it is 
free money in essence, how do we get them to better enroll 
under the current system in 15 seconds or less?
    Mr. KOCOT. I will take my 15 seconds first and talk fast. I 
think for the LIS population, we have done, as I said earlier, 
quite a bit of research on this. It is the hand-to-hand 
partnerships, trusted relationships, the community based 
relationships that are going to get those people into the 
program.
    We are using those relationships. We are leveraging them 
now. We will be doing quite a bit more in the coming year.
    With regard to the MSP programs, we are providing data. We 
are offering the opportunity for states to partner with us on 
these relationships, and if we can reach them with states, I 
think we have a good chance of enrolling some more of those as 
well.
    Mr. BECERRA. Good job.
    Ms. DISMAN. I want to talk about who we are, Social 
Security. We are in the community.
    Mr. BECERRA. Fifteen seconds.
    Ms. DISMAN. We are in the community. We do deal with people 
one on one, whether it be our field offices or 800 number. The 
focus that we really need to do is to get targeted types of 
individuals to deal with, we make phone calls to people that we 
think might be eligible.
    We just made 300,000 calls to people that had the 600 
dollar credit to see if they would be eligible for the Low-
Income Subsidy (LIS).
    It is how you narrow the list to identify people that might 
be eligible.
    Mr. BECERRA. What I am hearing is that within the current 
system, you think that we can do a better job of getting the 
millions who have not yet for whatever reason decided to take 
advantage of a way to save money that they right now use for 
rent or food or could use for rent or food and right now they 
are using for their medical care.
    Is there no belief that we have to sort of put a little 
explosive there under the current system and say it has not 
worked. We have 40 to 50 percent of people who could apply for 
some of these programs who do not, and go with something that 
changes the paradigm here?
    For example, why are you not proposing to us that we take 
the two programs and say rather than have different criteria 
for eligibility, that we will standardize that, so that instead 
of filling out one very complicated four or five page form in 
one case, and then have to fill out another very complicated 
four or five page form which asks for different information, 
which means you may qualify for one but may not for another, 
why not just come out with one form so that some of these 
seniors on fixed income, some not really financially literate, 
have an opportunity to qualify for that which they work for, 
and that is the benefits of these Medicare programs?
    Ms. DISMAN. I think you are referring to both the Medicare 
Savings Programs and the LIS.
    Mr. BECERRA. Correct.
    Ms. DISMAN. I can talk about the LIS because certainly 
there are different standards.
    Mr. BECERRA. Ms. Disman, I want you to tell me what is 
wrong with what I just proposed? Why do we have to have two 
different sets of criteria to qualify for a benefit that is 
provided through Medicare?
    Ms. DISMAN. I would have to yield to Mr. Kocot, since the 
whole Medicare program is under their jurisdiction.
    Mr. BECERRA. Let's go to Mr. Kocot.
    Mr. KOCOT. Let me point out that the MSP program is 
actually a Federal/state partnership run by the Medicaid 
agencies. It is partially funded by the Federal Government and 
partially funded by the states. There are other parties at 
interest here as well.
    Mr. BECERRA. You provide them with the information that 
helps them qualify these folks for the program; right?
    Mr. KOCOT. We are beginning to, yes.
    Mr. BECERRA. Without the information you provide them, they 
cannot qualify anybody for the program?
    Mr. KOCOT. No, that is not true. They can qualify people 
for MSP within their states. They have the means to do that.
    Mr. BECERRA. Are they going to do it?
    Mr. KOCOT. That is a decision that every state has to make 
in terms of the level of effort.
    Mr. BECERRA. Have they done it?
    Mr. KOCOT. Some states have done it better than others.
    Mr. BECERRA. Maybe you can provide us for the record which 
ones have because what I find is when you have millions of 
seniors who are on fixed income, who are using their money to 
pay for a Medicare benefit to which they would be entitled to 
receive at no cost or very low cost, and are trying to figure 
out how they buy groceries for the next week, I would think 
that you would want to change the paradigm that we have now, 
rather than talk about how the states might come up with a 
system because they have a Medicaid office.
    Does not the Social Security Administration have these 
1,300 offices, Ms. Disman, that you mentioned, that make it so 
valuable to try to reach out to all those seniors? Could we not 
use those 1,300 offices to do this joint effort instead of 
having some who know about one program and some who know about 
the other program and in some cases, many people knowing about 
neither one?
    It is crazy. This is what drives people bonkers about 
Government bureaucracy. Explain to a senior why they would have 
to apply to two different places, filling out two different 
applications, complicated applications, for a benefit under in 
essence the same Government program?
    Mr. KOCOT. They are not the same Government program. That 
is the point. These are different Government programs. That is 
the way Congress designed it.
    Chairman STARK. Will the gentleman yield? We could change 
it, could we not?
    Mr. BECERRA. Yes. Mr. Kocot, we want to get past the 
bureaucratic obstacles that seniors have to getting health 
care; right? Is that a shared goal?
    Mr. KOCOT. Yes.
    Mr. BECERRA. Ms. Disman.
    Ms. DISMAN. Yes.
    Mr. BECERRA. We want to get there. We also acknowledge that 
we have millions of seniors who we know qualify for these 
medical benefits, whether it is prescription drugs or just 
general health care under Medicare who are not receiving them. 
Agreed?
    Mr. KOCOT. The numbers clearly show that; yes.
    Mr. BECERRA. Ms. Disman.
    Ms. DISMAN. Yes.
    Mr. BECERRA. We know that part of this is that folks do not 
understand the programs or are not aware of the programs or 
find them too complicated to navigate. Fair?
    Mr. KOCOT. In part; yes.
    Mr. BECERRA. Ms. Disman.
    Ms. DISMAN. Needs based programs are complicated; yes.
    Mr. BECERRA. Why not try to find the simplest way to make 
sure folks who are eligible because they worked hard for these 
benefits in their years, productive years, who are now in 
retirement and able to receive these programs by simplifying 
the process, not making it more susceptible to fraud, not 
making it a giveaway to those who do not deserve it, but for 
those who deserve it, simplifying it so they do not have to 
worry about whether they are actually applying for something 
they are entitled to receive?
    Mr. KOCOT. One of the things that we are both committed to 
is providing more data to the states because as you know, 
qualification for the MSP program is going to get someone LIS 
qualification as well.
    Mr. BECERRA. Have you not given them enough data over the 
years? What you are saying is you need to give them more data. 
We have not given them enough data to help them get enrolled, 
all these seniors who have not enrolled?
    Mr. KOCOT. We are committed to giving them more data.
    Mr. BECERRA. That does not----
    Mr. KOCOT. So, they have better targeting.
    Mr. BECERRA. My time has expired, Mr. Chairman. I will 
yield back. This is the difficulty. You are either saying to me 
that you have been derelict in providing data to the states and 
therefore, they have not enrolled these seniors who are 
qualified and entitled to these benefits, or that the states 
have not been receiving the information they need to be able to 
know whom to enroll in programs that these seniors are eligible 
for and entitled to receive.
    Both of those are bureaucratic and I think unacceptable 
responses because there is no guarantee if you provide one more 
bit of information or data to the states that they will 
actually enroll more people, that the end result will be more 
people enrolled.
    While you are providing that data and during the 
bureaucratic running in place, there are seniors who are 
spending a lot of money for health care instead of on other 
basic necessities that should not have been spent for that.
    I think that is unconscionable that we do that. I would 
hope that you all would be able to work with us to figure out 
ways to streamline the system to remove the bureaucracy so we 
get these folks what they have earned over the years of their 
work.
    I yield back, Mr. Chairman. You have been gracious with the 
time.
    Chairman STARK. Mr. Doggett?
    Mr. DOGGETT. Thank you very much.
    Let me ask you, Ms. Disman, as I understand it, you were 
designated by the Commissioner of the Social Security 
Administration as an expert to present on behalf of the SSA 
today on the low income or extra help program.
    Ms. DISMAN. Yes, sir.
    Mr. DOGGETT. I appreciate your testimony and your interest 
in working with us to reach more of these individuals.
    In your professional work, have you had an opportunity to 
look at either the document or a summary of the document that 
the Social Security Administration sent to Internal Revenue 
Service asking for information about those who would be 
eligible for extra help?
    Ms. DISMAN. I actually participated in the meetings, sir, 
with the Internal Revenue Service. We knew identifying the 
potentially eligible individuals would be a daunting task.
    Mr. DOGGETT. Yes, indeed.
    Ms. DISMAN. We wanted to really narrow the field for the 
outreach. We looked at what the Lewin Group had done for the 
Medicare Savings Programs over the years, and it was really 
important to identify a targeted population that we could 
really focus on.
    Mr. DOGGETT. Indeed, because of the millions of people 
eligible for Part D, only a small portion of them were eligible 
for extra help; correct?
    Ms. DISMAN. We did have a discussion with them.
    Mr. DOGGETT. Did you have a written communication?
    Ms. DISMAN. No, there was not a written communication, sir. 
We were there in a session talking about what kind of data. 
Being the Regional Commissioner of New York, I am very familiar 
that we get 1099 data and other data for the SSI program. I 
know we do not have data from our matches on pensions and other 
kinds of things.
    We really wanted to narrow the 19 million, which we 
ultimately sent initially, by doing the screening. Of course, 
based on the statute, IRS had indicated to us that there would 
have to be a modification of 6103 in order to be able to use 
the data for screening.
    We do understand there are privacy concerns and other 
concerns. As a matter of fact, sir, we have been talking to IRS 
about the potential for us even to do a study. For example, if 
we send you some names and stuff, without you telling us, can 
you tell us how helpful some of your data would be? We are 
actually still currently talking to them.
    Mr. DOGGETT. You are aware that on November 17th, the 
Inspector General, Mr. Daniel Levinson, of the Department of 
Health and Human Services, sent a communication to Leslee 
Norwalk, the Acting Administrator at the Centers for Medicare 
and Medicaid Services, concerning the Social Security request 
to the Internal Revenue Service, and recommending that 
legislative action be taken to make that data that Social 
Security had sought and been denied, to make that available?
    Ms. DISMAN. I have seen the letter; yes, sir.
    Mr. DOGGETT. Since November 17, 2006, are you aware of 
anything that Ms. Norwalk or Mr. Kocot or anyone else at the 
Center for Medicare and Medicaid Services has done to attempt 
to get that legislative approval?
    Ms. DISMAN. I am aware they were involved in discussions 
but I was not a party to those, so I cannot comment.
    Mr. DOGGETT. Is there any disagreement that you have with 
the recommendation of the Inspector General?
    Ms. DISMAN. I think the data would be helpful to screen 
beneficiaries to determine whether or not there is potential 
eligibility. It would make our process much more efficient in 
trying to narrow the scope of people.
    Mr. DOGGETT. Thank you. That is the sole objective of that 
portion of the legislation that I have discussed with the 
Committee this morning, H.R. 1536.
    Let me ask you about one other aspect of that, and that is 
the complexity for seniors who are visiting with people all 
over the country trying to decide if they are eligible under 
the asset test.
    If someone receives help from their children in regularly 
paying their grocery bills, if they receive Meals on Wheels, a 
hot meal from a community service, if they receive breakfast 
from their church, is it possible those things will get 
included in the in-kind support and maintenance portion?
    Ms. DISMAN. I would like to refer, sir, to the application. 
Very specifically, we do say that certain things are not to be 
counted. If you look at our application, and you certainly do 
not have it in front of you, it says ``Do not include food 
stamps, house repairs, help from a housing agency, an energy 
assistance program, Meals on Wheels, and medical treatment and 
drugs.' ''
    It tends to be assistance that people receive in paying for 
their rent, paying for their telephone bills, paying for some 
of their groceries. It has to be regular. This comes from the 
SSI statute, which is really the directive of MMA.
    Mr. DOGGETT. If a family member buys food for a senior, 
would that fall within in-kind support and maintenance?
    Ms. DISMAN. If it is regular throughout the year.
    Mr. DOGGETT. If a church that is not Meals on Wheels 
provides a breakfast program or hot meal program for its 
members?
    Ms. DISMAN. That would not be included.
    Mr. DOGGETT. Would not be included, although it is not 
mentioned on the application specifically.
    Ms. DISMAN. That is correct.
    Mr. DOGGETT. It might involve some discretion around the 
country in how that is done.
    I suppose that if there were a way to fulfill the 
objectives of the law and simplify the application, Social 
Security would have no objection to that?
    Ms. DISMAN. Any simplification of a means tested program 
makes it easier to administer and easier for the public to 
understand.
    Mr. DOGGETT. Would you agree that there are a number of 
people of very modest incomes, poor seniors, who have been 
denied participation in the low-income subsidy program?
    Ms. DISMAN. We have provided some information to your staff 
and to yourself.
    Mr. DOGGETT. I appreciate that.
    Ms. DISMAN. About the people that are denied. We have also 
done a further longitudinal study. We will have some more 
information for you. I think really one has to look at what is 
the question, actually implementing the law as it is written.
    Mr. DOGGETT. I see my time has expired, Mr. Chairman, but I 
will have some questions if time permits for Mr. Kocot if we do 
a second round.
    Chairman STARK. I thought I might take a little bit of a 
second round, and then you can have a second round, too.
    Mr. Kocot, you have suggested that one of the reasons for 
low enrollment in Medicare Savings Programs is likely the--I 
think this is the quote--``the welfare stigma associated with 
Government programs.'' Do you recall that? It is either in your 
testimony or you mentioned it to us yesterday. Is that your 
assumption?
    Mr. KOCOT. Actually, that was specifically cited in a 
research report that we commissioned in the early 2000s.
    Chairman STARK. I do not suppose that people associate 
Social Security with that kind of a stigma because we all pay 
into it. Is that a fair assumption?
    Mr. KOCOT. I cannot speak for those beneficiaries, sir. I 
think many of them, based on the research that we have seen, 
are skeptical of Government programs in general. Any time 
anybody is talking about----
    Chairman STARK. Those are just the Republicans, Mr. Kocot, 
and there are not many poor ones.
    I would seriously question that people associate Social 
Security--Ms. Disman, do you think people associate your 
offices as welfare offices or an office which is going to 
provide them a payment to which they are entitled because they 
paid taxes?
    Ms. DISMAN. I do not think they associate us with a welfare 
office. As a matter of fact, I think the Kaiser Foundation said 
we were the third trusted source of Medicare beneficiaries.
    Chairman STARK. There you go. Given this stigma will attach 
to those applying for state assistance, why should we not just 
in an effort to increase enrollment ask the SSA offices to 
provide information on the program and to enroll the 
individuals there? What would be wrong with that? We would do 
away with that stigma, would we not?
    Mr. KOCOT. To the extent there is a stigma associated with 
Medicaid offices and you switch to Social Security, if there is 
no stigma, I suppose that might move it.
    Chairman STARK. Maybe we can do that. That is a great 
thought. Each year, Ms. Disman, you mail out a COLA adjustment 
notice to Medicare beneficiaries. You are going to include--you 
did include information this year on the LIS program, did you 
not?
    Ms. DISMAN. Yes, we did, sir.
    Chairman STARK. Could you not also include the MSP programs 
in the same mailing?
    Ms. DISMAN. Sir, I would have to take a look at the letter. 
I assume from what you are saying it is not included. Let me 
take that back to the Agency.
    Chairman STARK. Okay. One other question. You were kind 
enough in past testimony and at request to provide us with a 
lot of information about why people were turned down.
    It was as near as I could tell missing in your written 
testimony this morning. This would be those who fail and why do 
they fail, asset tests, incomplete application.
    Do you have those figures currently and could you submit 
them to us?
    Ms. DISMAN. I have the results where I think Acting 
Commissioner McMahon sent you a letter on what our 1,000 case 
study showed. We do have a report that will be coming out 
shortly that is being done by our Office of Policy that will 
have more longitudinal kind of information. Certainly, when it 
is available, sir, we would be delighted to share it.
    Chairman STARK. When you say ``shortly,'' will that be here 
in time to be included in the record of this hearing, do you 
suppose? In the next week or so?
    Ms. DISMAN. Let me just check, sir.
    Chairman STARK. As I say, you have done it in the past and 
it was very helpful to us to know whether it was income limits 
or asset tests, what was the bigger barriers to approval. That 
would be useful information. I appreciate that.
    Mr. Doggett, would you like to inquire?
    Mr. DOGGETT. Yes, Mr. Chairman. First, I would ask 
unanimous consent to include a copy of the Inspector General's 
report that I have referred to in the record.
    Chairman STARK. Without objection.
    [The information follows:]
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    

    Mr. DOGGETT. Mr. Kocot, referring you to that Inspector 
General's report again, it was sent to the Acting Administrator 
for whom I understand from your testimony you are a senior 
advisor, on November 17, 2006. That is almost four and a half 
months ago.
    If I understand your testimony, since that time, CMS has 
not recommended the legislation that the Inspector General 
recommended, correct?
    Mr. KOCOT. We have not.
    Mr. DOGGETT. In fact, until this week, you did not bother 
to even contact the Internal Revenue Service about it.
    Mr. KOCOT. I do not know if that is true or not, sir.
    Mr. DOGGETT. You are not aware of it in your role as a 
senior advisor to the Administrator?
    Mr. KOCOT. I am not aware of conversations we had, specific 
conversations we had with IRS on this specific topic, no.
    Mr. DOGGETT. The recommendation of the Inspector General 
said ``Legislation is needed to allow CMS and SSA to more 
effectively identify beneficiaries who are potentially eligible 
for the subsidy The identification of these beneficiaries will 
allow for more efficient and effective targeting of outreach 
efforts. Access to IRS data would help CMS and SSA identify the 
beneficiaries most likely to be eligible for the subsidy. 
Specifically IRS earnings data would help identify individuals 
who meet the income threshold for eligibility. This type of 
data sharing already occurs under the Medicare Secondary Payor 
program.''
    Since getting that recommendation, as I understand your 
testimony, you do not have the level of enthusiasm for this 
recommendation that Ms. Disman voiced, but you do not think 
that it would be harmful to have that information.
    Mr. KOCOT. We are concerned about the privacy aspects of 
sharing this magnitude of data and this amount of data for the 
benefit that it will bring. I think we have had these privacy 
concerns for some time now.
    I believe in the letter sent back to you, Ms. Norwalk even 
expressed those privacy concerns.
    Mr. DOGGETT. You have been offered an opportunity to 
evaluate specific legislative ways of addressing and protecting 
those privacy concerns, but as late as 6:00 last night, on that 
and on the other provisions that are contained in the 
legislation that I presented today, you have declined to 
comment specifically on any of those provisions, have you not?
    Mr. KOCOT. I have not personally, sir. With regard to the 
IRS----
    Mr. DOGGETT. You were involved in a phone call 
conversation----
    Mr. KOCOT. Yes, I was; last night.
    Mr. DOGGETT. Responding to my letter of about a year ago 
that occurred finally last night, and CMS declined to respond 
on any of the provisions of the bill.
    Mr. KOCOT. No, that is not accurate. I was in that 
conversation. We had a long discussion about the utility of 
using the IRS data, which my understanding----
    Mr. DOGGETT. CMS declined to discuss any of the other 
provisions.
    Mr. KOCOT. I think we said we were not prepared to discuss 
it.
    Mr. DOGGETT. Yes, sir. You were not prepared almost a year 
after the legislation was introduced, after it was forwarded to 
you, after we had meetings, after we sent it to you in advance 
of the telephone conversation, and indeed, you are still not 
prepared to discuss the other aspects of the legislation this 
morning, as you have declined to do in your testimony.
    Mr. KOCOT. Are you answering my question?
    Mr. DOGGETT. No, sir. I am asking you if that is not true, 
you have declined to do it in your testimony.
    Mr. KOCOT. That is not true.
    Mr. DOGGETT. You have not addressed any of the aspects 
other than in response to questions in that legislation. In 
fact, your ten pages of testimony praising the Agency for its 
good work devotes two summary paragraphs of conclusions about 
your desire to work together in the future, but does not 
respond to any of the details of the legislation.
    Mr. KOCOT. As I began to say, we are not prepared yet to 
respond to your legislation. One of the major points that you 
raised is expanding or doing away with or altering the asset 
test. That has a cost associated with it. We have gone to our 
actuaries and asked for an estimate of what that cost would be 
so we could further engage in a more meaningful discussion with 
you about this.
    We have not received word back from them. We are not trying 
to avoid your legislation or avoid you, sir. We want to be 
prepared when we have a discussion on specific provisions.
    Mr. DOGGETT. You are still saying today, sir, that you have 
had great success in reaching the low income beneficiaries, and 
it is correct that you have near 100 percent on the dual 
eligibles who were automatically enrolled or facilitated 
enrollment for extra help, but with reference to the people who 
had to enroll themselves, you predicted that about 57 percent 
of them would enroll and only 36 percent of them enrolled.
    It reminds me a little of the fellow who is standing with 
one foot on the embers and the other foot on a block of ice and 
thinks on the average things are just about right.
    You have done fine where you had automatic enrollment, but 
for the other people, the record has been very modest. This 
would be one thing if we were talking about matters that were 
not critical to the life saving prescriptions, pain reducing 
prescriptions, but frankly, I find the lack of responsiveness 
not only to me and the 140 some odd members of this Congress 
that asked you to respond to us, but to the Inspector General's 
recommendation, a Republican appointee, from November, to not 
get any more responsiveness than we have gotten, it does not 
surprise me there are over three million people that are poor 
people in this country that are not getting the benefits they 
need.
    As Members of Congress, we cannot get a timely complete and 
thorough response, and only get indifference and delay, and 
what some might call deceit, it is no surprise that poor people 
are not getting treated fairly under this legislation.
    I yield back.
    Mr. KOCOT. May I respond?
    Chairman STARK. Please.
    Mr. KOCOT. I will point out, sir, that compared to other 
public programs, some programs have been around for more than 
40 years, this program, even if you take away the dual 
eligibles, which I do not think is fair in terms of evaluating 
our treatment of this program and the LIS, frankly, 38.7 
percent of those dual eligibles do switch plans.
    We do have to track them. We do have to keep them in the 
program. We do have to make sure they are serviced the way they 
need to be, so we treat the LIS population as one population. 
We do not segment them out the way you are.
    Even if you do and you take between 40 and 60 percent of 
them are in, compared to Medicaid, the GAO has said that 
Medicaid right now is a 66 to 70 percent participation rate. 
The SCHIP program, 44 to 51 percent. Temporary assistance for 
needy families, 46 to 50. SSI, 63 to 73 percent. Head Start, 44 
to 54 percent. Food stamps, 46 to 48 percent. Housing vouchers, 
13 to 15 percent.
    By any measure, in the second year of this program, sir, I 
think we are doing well. We have a lot more to do. There is no 
one debating that. This is not CMS issue. It is not an SSA 
issue. It is not a Congressional issue. This is an American--it 
should be an American priority to get these people in.
    That is something that all of us have to do. That is why we 
are reaching out to the communities. That is why we are going 
very deep into the communities. That is why we are going to 
minority organizations.
    We have a lot more to do, admittedly. We will continue to 
bang away at this. It is not going to happen in the first year 
of a program.
    Chairman STARK. Mr. Camp?
    Mr. CAMP. Thank you, Mr. Chairman. I appreciate Mr. Doggett 
is very much an advocate for his legislation. Frankly, we have 
not even been able to get CBO to respond with the costs.
    I would urge you to work on CBO, and once we get the costs, 
I think it is something we certainly want to evaluate. I think 
you are correct in you cannot go out front until we know what 
this is. We have very tight budgets all the way around. We have 
new PAYGO rules.
    We all know the difficulties Medicare is in, particularly 
with the wave of baby boomers retiring that costs are spiraling 
up and up. Obviously, we want to reach out to people who are 
entitled to the program.
    I think frankly on Part D, the outreach has been 
commendable. I want to thank so many of the workers in the 
Social Security Administration who were there at my town 
meetings, who met--as you said, Ms. Disman, you do meet one on 
one with individuals, and really helped facilitate that.
    I think last year there were difficulties with the 
automatic enrollment, particularly on Part D. Many of those 
have been corrected. I am glad to hear in terms of the 
testimony that you feel much more confident about those who are 
having withholding in Social Security, that if they change 
plans, it will be handled in a much easier way.
    We cannot just evaluate the efficacy of a proposal without 
also looking at its cost. Once we get that, I hope we can have 
a meaningful discussion about it.
    I appreciate the Chairman's time. Thank you.
    Chairman STARK. I wanted to just try this. Mr. Kocot, I 
think I have heard you mention 15 times this morning in regard 
to MSP that you felt because it was a joint state/Federal 
program, there were certain things you could not do. Is that a 
fair assumption?
    We are going to hear shortly from a Ms. J. Ruth Kennedy, 
who is involved with the Louisiana Department of Health and 
Hospitals. Have you read her testimony by any chance?
    Mr. KOCOT. I have not.
    Chairman STARK. Let me just see if you would stipulate, and 
you can come back at me if I am really wrong, but Louisiana has 
done a bang up job of enrolling people, and from what I can 
gather, doing all the things right to get out there and get 
people enrolled in these programs.
    What would be wrong with CMS requiring certain procedures 
in all states, so they could come up to the level of Louisiana?
    Mr. KOCOT. Any such requirement will have a cost to the 
states. I am not ready to tell you whether or not that is a 
good idea because I do not know what that cost would be.
    Chairman STARK. What if you paid for it?
    Mr. KOCOT. Again, I do not know what the costs would be.
    Chairman STARK. What you are saying is there is a cost for 
providing health care to poor senior citizens beyond which you 
do not think it is right to go? Is that what you just said?
    Mr. KOCOT. No, that is not what I said.
    Chairman STARK. That is how I would interpret it.
    Mr. KOCOT. No. What you are saying is----
    Chairman STARK. Let me put it this way. Is there any cost 
too great that would prevent us from seeing that poor senior 
citizens get proper medical care?
    Mr. KOCOT. I believe that senior citizens should get the 
appropriate care that they need and deserve.
    Chairman STARK. Regardless of the cost?
    Mr. KOCOT. No. Whether or not we can reach all these 
beneficiaries, it has a cost associated with it, we know there 
is a diminishing return and more expense associated with 
getting----
    Chairman STARK. You are going to suggest to me that the 
only reason to not require the states to take certain steps is 
it might cost the states something; right?
    Mr. KOCOT. No. I am talking about effectiveness. If the 
states are not going to be as effective with more money, is it 
worth spending more money to have them have the same level of 
effectiveness, I think is the appropriate question.
    We have determined that reaching these beneficiaries, there 
is a stigma with state Medicaid offices. We have a lot to do on 
this. Just throwing more money at the states is not necessarily 
going to get----
    Chairman STARK. That is not what I said. Requiring the 
states to follow certain procedures, which is certainly 
traditional, when they are getting assistance from the Federal 
Government, what would be wrong with that?
    Mr. KOCOT. I would have to see the procedures first before 
I could comment on what specifically you are referring to.
    Chairman STARK. Let's say they are as good as Louisiana's. 
Would you accept theirs?
    Mr. KOCOT. I would commend Louisiana for doing a good job, 
and again, I am not familiar with their program. Whether other 
states have the wherewithal or whether they want to put the 
priority into this, that is really a state by state 
determination.
    Chairman STARK. No, it is not. There is nothing wrong with 
the Federal Government requiring the states to do certain 
things when they are in the best interest of seeing our 
programs succeed, and when we are paying the majority of the 
funds. That is pretty traditional.
    I would be glad to yield. Go ahead.
    Mr. DOGGETT. Mr. Kocot, we have tried to work with CMS for 
a year. We have written letters. We have asked questions 
politely and not so politely at hearings. We now are in a 
situation a year later where as you say, you have actuaries, 
but we still do not have a response on the details of 
provisions in this bill from CMS.
    We are five months after an Inspector General made a 
recommendation. We do not have really a response from CMS on 
that recommendation.
    We have you testifying that you are satisfied that although 
CMS has enrolled, on those it self-enrolled, about 60 percent 
fewer people than you estimated you would enroll, that is good 
enough.
    I think that demonstrates the problem that we have. We 
welcome your further response on any of the details. I am 
interested in a cost-effective system, as I said in my 
testimony. I want it to be cost effective. I know we have 
limitations here.
    Having the input from the agency about cost effectiveness 
and about a targeted effectiveness to reach the people that 
need this help is critical. We are talking about people that 
have died, that have suffered because they are not getting 
extra help. They are not getting any help.
    According to your own estimates, well over three million 
people. I know we will never sign up every single one of them. 
We can do a heck of a lot better job than has been done to date 
if we work together on it.
    Mr. KOCOT. May I respond?
    Mr. DOGGETT. Yes, sir.
    Mr. KOCOT. I agree with you. Nowhere in my testimony will 
you see that we said we have done good enough. Additionally, I 
want to also correct something for the record because we did 
send a letter back to you on February 12, 2007 where we 
addressed using the IRS data, and we told you that we had 
privacy concerns about it. It is not as if we have not 
responded to that as well.
    I do hope we can work together on this issue. As I said, I 
think this is an American priority. It is not just an agency 
priority. This involves a lot of other people, a lot of outside 
groups beyond Government. We all have to work together if we 
are going to achieve exactly what you are looking to do.
    Mr. CAMP. Mr. Chairman, would you yield?
    Chairman STARK. Yes.
    Mr. CAMP. I just have one last question, and that is, Mr. 
Kocot, are there any other ways to enroll low income 
beneficiaries that you can suggest to us?
    Are there any ideas that you might have? If not, if I am 
putting you on the spot, please follow up in writing at some 
point. If there are any other methods or ideas you have on how 
we might try to enroll low income beneficiaries, it would help 
the Committee a great deal to receive that information.
    Mr. KOCOT. We actually have contracted with an outside 
organization to look at that very question. What I would like 
to do is pull some of our organizations who are closest to 
these beneficiaries to get their recommendations. That is 
really what we are talking about, going to the people who are 
on the ground who are touching them on a day-to-day basis, who 
these beneficiaries trust.
    They do not necessarily trust Government, those of us in 
Government. We do not necessarily have the best solutions.
    Let us go back and talk with our partner organizations and 
come back to you with some recommendations.
    Mr. CAMP. If there are any existing programs that you might 
highlight in that, I would be interested in hearing that as 
well.
    Mr. KOCOT. Will do.
    Chairman STARK. Were you just referring, Mr. Kocot, to the 
RTI contract?
    Mr. KOCOT. Not specifically in answer to Mr. Camp's 
question.
    Chairman STARK. There is an RTI contract out there?
    Mr. KOCOT. Yes, there is.
    Chairman STARK. That was done in 1999, was it not?
    Mr. KOCOT. 1999 or I think the results were in 2000.
    Chairman STARK. When do you expect we will hear back on the 
results of that contract?
    Mr. KOCOT. I will have to get back to you. I do not know 
what the status of it is.
    Chairman STARK. It has been out there going on eight years. 
It would be interesting to find out what you got for your money 
and if you would share it with us, we would appreciate it.
    Mr. KOCOT. I am familiar with some iterations of this, Mr. 
Chairman. However, I do not know if there has been follow-up on 
contracts and so forth.
    Chairman STARK. It was not Bechtel?
    Mr. KOCOT. I am sorry. I did not hear you.
    Chairman STARK. I said it was not Bechtel with whom you 
contracted for that report?
    I want to thank the witnesses for your good humor and 
patience with us this morning, and we look forward to some 
results for helping poor people in the future. Thank you very 
much.
    I would like to now call the panel. Ms. J. Ruth Kennedy, 
who I took the liberty of referring to earlier, who now is 
going to prove she has one of the best programs in the country. 
She represents the State of Louisiana Department of Health and 
Hospitals in Baton Rouge.
    Dr. N. Joyce Payne, a member of the AARP Board of 
Directors, Ms. Patricia Nemore, from the Center for Medicare 
Advocacy, and Ms. Emelia Santiago-Herrera, representing the 
Moore Consulting Group of Orlando, Florida.
    Ms. Kennedy.

    STATEMENT OF J. RUTH KENNEDY, MEDICAID DEPUTY DIRECTOR, 
          LOUISIANA DEPARTMENT OF HEALTH AND HOSPITALS

    Ms. KENNEDY. Chairman Stark, Ranking Member Camp, and 
distinguished Members of the Subcommittee on Health, good 
afternoon. My name is Ruth Kennedy and I am an Medicaid Deputy 
Director for the Louisiana Department of Health and Hospitals.
    I am responsible for Medicaid and SCHIP eligibility and 
enrollment for our state. For the past seven years, we made a 
concerted effort to increase enrollment in our Medicare Savings 
Programs. By any measure, we have been successful.
    Now that MSP enrollees are automatically eligible for Extra 
Help with the Medicare prescription drug plan, these benefits 
are greater than ever.
    Since January of 2000, enrollment in the Medicare Savings 
Programs in Louisiana has increased by about 43,000 people, and 
for us, that represents a 44 percent increase.
    I want to thank the Committee for the invitation to 
highlight some of the strategies that have led to those 
enrollment increases.
    Increased enrollment in Louisiana is a result of three 
things: Simplifying the application process, focusing on 
retention once someone has enrolled, and third, aggressive 
outreach. Outreach alone is of limited usefulness, we believe, 
without changes in the application and renewal process.
    For us, improving retention rates was essential, since many 
people were having their MSP cases closed at renewal solely 
because they did not return the paperwork. We now conduct ex 
parte reviews. We use other systems to verify income and 
resources, and workers can now complete that annual review by 
phone without getting a signed application form.
    Beginning in July, we intend to begin using the method that 
Social Security used in 2006 to conduct low income subsidy 
renewals for our MSP renewals. We are going to mail a letter 
and request that enrollees contact us only if our information 
is incorrect or their situation has changed.
    This is because our administrative data shows that our MSP 
cases are almost never closed at renewal because of an increase 
in income or resources.
    Keeping eligible people enrolled or plugging the holes in 
the bucket is important, not only to increase our 
participation, but to prevent what we believe is undue 
hardship.
    Someone who is closed at renewal is often not even aware of 
it until several months later, when the direct deposit of their 
Social Security check is about $280 less than they expected it 
would be. That is because the back premiums that they owe are 
automatically deducted. Then we get the calls.
    Outreach is important because many people are unable to 
navigate even our kinder and gentler bureaucracy.
    Our Medicaid employees throughout the state, in our 45 
eligibility offices, have been the backbone of our grassroots 
efforts to increase enrollment. They live in these communities, 
in towns where they conduct outreach, and they are creative, 
imaginative, and passionate about what they are doing.
    They believe that it is important and deserving of their 
time and effort, and they manage their regular eligibility 
caseload in addition to outreach.
    We forged hundreds of partnerships in Louisiana with 
community organizations, medical providers, social service 
agencies, SHIP, and our local Social Security offices. These 
MSP partners have made a major contribution to our success as 
well.
    Our outreach model is relatively low cost, but without some 
funding for outreach, we could not have achieved the increases 
in enrollment.
    In 2002, we applied for and received a multi-year grant 
from the Robert Wood Johnson Foundation. We have also received 
through that grant valuable ongoing technical assistance from 
the Center for State Health Policy at Rutgers University.
    While our administrative costs have been relatively modest, 
as you can imagine, we have seen a large increase in the 
monthly bill for our share of Part B premiums, a 44 percent 
increase in enrollment translate to a 44 percent increase in 
our share on the payments.
    More eligible getting help with MSP translates to more 
eligible Louisianans enrolled in and getting Extra Help with 
the Medicare prescription drug plan, and we think that is a 
good thing.
    Yet, we know for all our success, many eligible people 
still do not realize that help through the Medicare Savings 
Programs is available, or if they do, their perception is that 
the application process is simply too onerous for them to try 
to navigate.
    We believe we have changed the reality, so now we continue 
to work to change their perception so they can get this very 
important benefit.
    Again, I want to thank you for the opportunity to share our 
experience, and I would be happy to answer any questions.
    [The prepared statement of J. Ruth Kennedy follows:]
   Prepared Statement of J. Ruth Kennedy, Medicaid Deputy Director, 
  Louisiana Department of Health and Hospitals, Baton Rouge, Louisiana
    Chairman Stark, Ranking Member Camp and distinguished members of 
the Health Subcommittee: Good morning. My name is Ruth Kennedy and for 
the past seven years I have been a Deputy Medicaid Director for the 
Louisiana Department of Health & Hospitals. In that position, I am 
responsible for Medicaid and SCHIP eligibility and enrollment in our 
State. During those seven years, we have made a concerted effort to 
increase enrollment of eligible seniors and people with disabilities 
into our Medicare Savings Programs. Most recently, one of the immediate 
goals of Governor Kathleen Blanco's 2004 Health Care Reform Plan 
included increasing participation of eligible but unenrolled persons in 
the Medicare Savings Programs (MSP).
    I want to thank the Committee for the invitation this morning to 
share some of the methods and strategies that have proven successful in 
substantially increasing enrollment in the Medicare Savings Programs in 
Louisiana. In the period from January 2000 to April 1st of this year we 
have seen enrollment in the Medicare Savings Programs increase by just 
under 43,000 individuals, which for us represents a 44% increase. The 
biggest percentage increases were in our Pure SLMB and QI-1 Programs: 
161% and 401% respectively. I make mention of this because nationally, 
the SLMB and QI-1 have lower take up rates than QMB.
Background
    Louisiana first began to focus on increasing enrollment in MSP in 
late 1999 in response to correspondence from CMS [at that time HCFA] 
which urged states to take pro-active steps to increase participation 
of eligible but unenrolled people into the Medicare Savings Program.
    For MSP qualifying seniors and people with disabilities, the 
current $93.50 increase in their monthly Social Security check 
represents as much as a 17% increase in ``spendable'' dollars. Now that 
MSP enrollees are also automatically eligible for Extra Help with out-
of-pocket costs and immediate enrollment into a Medicare Prescription 
Drug Plan, the value of MSP participation is even greater.
    The increase in enrollment in Louisiana has resulted from a 
combination of administrative simplification and intensive, ongoing 
outreach. Outreach alone is of limited usefulness unless both the 
application and renewal processes are streamlined and simplified.
Application Simplification
    Low literacy levels, poor eyesight, hearing impairments, memory 
loss and other health care problems are barriers to enrollment which we 
have identified and are working to mitigate. We designed a simplified 
Application Form specifically for the Medicare Savings Programs, 
eliminated the requirement for a face-to-face or telephone interview, 
relaxed verification requirements, and we use less restrictive methods 
when calculating countable resources. These are all options allowed the 
States by CMS. Information and application assistance is readily 
available through a widely publicized toll-free MSP hotline that is 
manned by knowledgeable Medicaid eligibility professionals.
Focus on Retention
    The annual renewal process has been addressed as well, since we 
found in our State that many enrollees were having their cases closed 
not because they were no longer eligible for MSP, but solely because 
they did not return the required paperwork. We began conducting ex 
parte reviews where possible, i.e., using our inquiry rights to other 
systems such as Food Stamps to verify income and resources. When an ex 
parte renewal is not possible, caseworkers can complete the review of 
circumstances subject to change by telephone, without the need for a 
signed renewal form. These procedures have resulted in less than\1/2\ 
percent of our enrollees having their case closed for failure to return 
a renewal form.
    Beginning in July, we are further simplifying MSP renewals by 
adopting the technique used by the Social Security Administration to 
conduct renewals for Low Income Subsidy. We will mail letters advising 
enrollees of the income and resource information on our records and 
request that they contact us only if our information is incorrect or 
their income or resources has changed. Otherwise they need not do 
anything. A careful review of our administrative data revealed that our 
MSP cases are almost never closed at renewal because of increased 
income or resources so we believe this is responsible public policy.
    We know that keeping eligible people enrolled--or plugging the 
holes in the bucket--is an important key to increasing Medicare Savings 
Program participation. Reducing closures at renewal for purely 
procedural reasons and simplifying the renewal process have resulted in 
significant administrative savings for the Department as well. \1\
---------------------------------------------------------------------------
    \1\ Summer, Laura Administrative Costs Associated With Enrollment 
and Renewal for the Medicare Savings Programs: A Case Study of 
Practices in Louisiana, 2004 http://www.statesolutions.rutgers.edu/
Reports/LA_CaseStudy_v1.pdf
---------------------------------------------------------------------------
    Closures at renewal can result in undue hardship for this 
vulnerable population. Persons closed at renewal are often not aware 
that their case has been closed until they discover that the amount of 
the Social Security check directly deposited into their checking 
account is $280 less than anticipated. The retroactive and current 
premiums due to SSA were automatically deducted.
Importance of Outreach
    We have made substantial administrative changes. But the reality is 
without help, many people in our target population are unable to 
navigate even our ``kinder, gentler'' bureaucracy. The only way to 
reach them is through intensive outreach and face-to-face interaction--
contact with them, but also with their sons and daughters, with their 
grandchildren, with their nieces and nephews, with caring friends and 
neighbors, and with sources of information they trust.
Community Partners
    We have forged partnerships with hundreds of those sources of 
information: SHIP outreach workers, the Social Security Public Affairs 
Specialists in Louisiana, community organizations, medical providers, 
and local social service agencies. They are valuable partners for 
identifying and disseminating information to potential enrollees, many 
who are homebound or live in rural areas. These local partners have 
day-to-day contact with our target audience and have credibility and 
the trust of their communities. We have found that the messenger is 
very important. Our targeted population responds well to a 
representative at the local Social Security Office, Council on Aging, 
Meals on Wheels, their doctor, pharmacist, or home health provider. 
Without question, the MSP partners we have engaged have been 
instrumental in helping raise awareness and increasing enrollment.
Role of Medicaid Eligibility Employees
    Medicaid eligibility employees who work in the 45 local Medicaid 
eligibility offices throughout the state have spearheaded our MSP 
community outreach efforts, logging literally thousands of hours. These 
employees--caseworkers, supervisors, and managers--live in the cities, 
towns, and communities where they are conducting outreach. They 
understand the culture. They can identify those trusted sources of 
information in the community and recruit partners. They have the 
knowledge and experience to assist with application completion and 
answer questions about MSP. Our eligibility offices have recruited 
community partners, distributed and kept stocked MSP applications in 
``Take One'' holders, given presentations about MSP, and conducted 
special direct mail initiatives. They have raised awareness of MSP and 
provided one-to-one assistance at hundreds of events and locations, 
with much of the activity taking place after normal working hours and 
on weekends.
    This past month for example--April of 2007--some of the settings in 
which our eligibility staff conducted MSP outreach were the Gusher Days 
Festival in Oil City, a Walgreens Pharmacy in New Iberia, the Etouffee 
Festival in Arnaudville, a community health center in Luling, the Delta 
Music Festival in Ferriday, a Family Life Conference in Hammond, heath 
fairs at places of worship in Baton Rouge and Monroe, and a senior 
citizen's center in eastern New Orleans.
    Our initiative to empower and provide opportunities for eligibility 
staff to conduct outreach for the Medicare Savings Programs is the same 
model we had earlier used beginning in late 1998 to increase enrollment 
of children in our Medicaid and SCHIP Programs. Their performance has 
greatly exceeded our (high) expectations. Our employees have 
demonstrated a strong commitment to helping seniors and people with 
disabilities who have limited income and resources. They have proven to 
be creative, imaginative, and passionate about outreach and they 
believe that what they are doing is important and deserving of their 
time and effort. Staff engaged in outreach work tirelessly to maintain 
their regular workload while also engaging in MSP outreach efforts. \2\
---------------------------------------------------------------------------
    \2\ Sofaer, Shoshanna, Assessing the Louisiana State Solutions 
Project, May 2006 http://www.statesolutions.rutgers.edu/Reports/
Shoshanna%20Brief.pdf
---------------------------------------------------------------------------
Funding MSP Outreach
    The outreach model we have employed is relatively low cost. But 
without monetary investment in outreach, we could not have achieved 
increases of this magnitude Medicare Savings Programs enrollment. In 
our case, funding for outreach as well as valuable technical assistance 
was provided by the Robert Wood Johnson Foundation through a three year 
State Solutions grant ($140,000 annually) and a subsequent, one year, 
``post-Katrina'' grant. We were able to claim federal matching funds 
for Medicaid administration (50% FFP).
    With that funding we held annual conferences for staff involved in 
MSP outreach at which they shared promising practices, heard from 
national subject matter experts and networked with local MSP partners. 
We purchased promotional items, which we found to be essential for 
generating interest at our outreach events. We provided compensation to 
employees for travel and for work performed outside normal working 
hours and on weekends, we printed posters and flyers, we paid for radio 
commercials, and we paid for follow up mailing to individuals 
identified through the Social Security Administration's ``leads'' file.
    I must acknowledge the Rutgers Center for State Health Policy 
which, in conjunction with the State Solutions grant, provided 
technical assistance, guidance, and support. They provided important 
expertise and additional resources such as opportunities to network 
with other States and organizations who are working to increase 
enrollment in MSP
    It is important to evaluate outreach activities to assure that we 
are getting ``the biggest bang for the buck.'' We closely monitor the 
number of phone calls requesting MSP information or an application and 
the actual number of new applications received as well as enrollment 
and retention trends in each geographic region of the State so that we 
can quickly and make adjustments as needed.
Program Costs in Louisiana
    While the costs for outreach have been relatively modest, the same 
cannot be said for the impact of increased enrollment on the Medicaid 
Budget. A 44% increase in enrollment translates to a 44% increase in 
our budget for Medicare Buy-In, at the same time that Medicare Part B 
premiums have been sharply increasing. Unlike regular Medicaid budget 
cuts, in which reductions in payments to providers is an option, we do 
not have the latitude to reduce our state match for the ``fixed'' 
Medicare Part B premium.
    I previously alluded to the rapid growth in enrollment in our QI-1 
program. In FFY 05, our QI-1 allotment was not sufficient to continue 
enrollment beyond March. We were unable to enroll additional eligible 
individuals for five months while CMS was working to get us a 
supplemental appropriation.
Conclusion
    We have found effective outreach for the Medicare Savings Programs 
to be more challenging than outreach to enroll uninsured children. Our 
target population is more likely to view government-funded programs 
with fear and mistrust, and stigma is certainly a factor.
    Nevertheless, largely as result of Louisiana's aggressive and 
sustained Medicare Savings Program outreach and administrative 
simplification initiative, 43,000 more Louisiana citizens with limited 
income and resources are now receiving much needed help with Medicare 
costs than received help in 1999. We had the infrastructure in place to 
actively participate in outreach for the Medicare Prescription Drug 
Program Low Income Subsidy and did so. Reducing the number of people 
eligible for, but not enrolled in MSP has reduced the number of people 
eligible for, but not enrolled in or receiving Extra Help with a 
Medicare Prescription Drug Plan.
    For all our success in connecting with and enrolling additional 
people into these programs, we have reason to believe that thousands of 
other people in Louisiana who would greatly benefit from enrollment in 
MSP are not yet enrolled.
    They still don't realize that help through the Medicare Savings 
Programs is available. If they do, they're not aware that we have 
simplified the application and requirements for enrollment. Their 
perception is that the application process is onerous and that it is 
highly unlikely that their application would be successful. We've all 
heard the axiom ``perception is reality''. We've changed the reality 
and we are working to change the erroneous perception--for the sake of 
needy Louisiana citizens who qualify for, but are not yet enrolled and 
receiving the benefits, of the Medicare Savings Programs.
    Thank you for the opportunity to share with your our experience.

                                 

    Chairman STARK. Thank you very much.
    Dr. Payne.

   STATEMENT OF N. JOYCE PAYNE, ED.D. MEMBER, AARP BOARD OF 
                           DIRECTORS

    Ms. PAYNE. Chairman Stark and Congressman Camp, I am Joyce 
Payne of AARP's Board of Directors. Thank you for inviting us 
to testify on the need to improve Part D low income subsidy and 
other Medicare programs for people with limited incomes.
    The ``extra help'' that LIS provides to those least able to 
afford their drugs is one of Part D's most important features 
and a key factor in AARP's continuing support. However, the LIS 
program has a serious flaw, an asset test.
    No one with even one dollar more than $11,710 in savings or 
a couple with more than $23,410 can qualify. Because of the 
asset test, the LIS application form is eight pages of daunting 
and invasive questions that are difficult for people to answer. 
That is a serious barrier, even for those who meet the asset 
test's unreasonable limits.
    Similar problems plague the Medicare Savings Programs, 
known as MSPS, that help pay for other Medicare cost sharing 
requirements.
    As with LIS, millions of beneficiaries living on very 
limited incomes are not getting the help they need from these 
vital programs.
    In addition, there is only limited coordination between LIS 
and MSP, even though they serve primarily the same populations. 
Beneficiaries enrolled in MSP programs are automatically 
eligible for and enrolled in the LIS. However, Social Security 
does not screen LIS applicants to see if they are also eligible 
for MSP.
    This is a serious missed opportunity, as MSP criteria in 
several states are less restrictive than LIS criteria, and some 
states have effectively eliminated the asset test altogether. 
Thus, many who are eligible for the LIS under their states. MSP 
rules are being improperly rejected because SSA only looks at 
LIS criteria.
    AARP believes there should be no asset test in Medicare. As 
a matter of public policy, we should encourage people to save 
for retirement, and to not penalize them for those savings.
    AARP also believes that there should be full coordination 
between the LIS and MSP programs.
    Until the asset test is fully eliminated, there are interim 
steps Congress can take to reduce the barrier it creates. AARP 
supports the Prescription Coverage Now Act introduced by 
Representative Lloyd Doggett. This legislation takes solid 
first steps toward our goal of eliminating the asset test, 
increasing enrollment, and improving coordination between LIS 
and MSP.
    This legislation would increase the asset test limits to 
$27,500 for individuals and $55,000 for couples. This will 
provide relief to millions of beneficiaries who truly need the 
help LIS can provide.
    Even those who did not oppose an asset test in Medicare's 
drug plan agree that current limits are far too low. This 
legislation would also streamline the LIS application. It would 
authorize Social Security officials to use income data they 
already have to target LIS outreach efforts more effectively. 
It also would require SSA to screen LIS applicants for MSP 
eligibility.
    AARP is committed to working to enact this important 
legislation, into law this year, and eventually completely 
eliminate the asset test for both LIS and MSP.
    We look forward to working with you. We look forward to 
working on both sides of the House. We ensure that we will 
continue to work to serve those populations that are most 
vulnerable in America today.
    We thank you for this opportunity.
    [The prepared statement of N. Joyce Payne follows:]
   
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
   

    Chairman STARK. Thank you, Doctor. Ms. Nemore.

   STATEMENT OF PATRICIA NEMORE, CENTER FOR MEDICARE ADVOCACY

    Ms. NEMORE. Good morning, Mr. Chairman, Mr. Camp, and Mr. 
Doggett. Thank you so much for this opportunity to testify.
    I am Patricia Nemore from the Center for Medicare Advocacy. 
In our work, we are in contact daily with thousands of 
beneficiaries and advocates around the country, and we are 
aware of how important these programs are, which mean the 
difference, and we know this from the literature and we know 
this from our experience, they mean the difference for people 
with LIS between going to the doctor or not for people with an 
MSP benefit, and they mean the difference between getting your 
prescription drug or walking out of the pharmacy without it 
because the co-pay for your single drug is $500. These are 
very, very important programs.
    I want to focus on a particular aspect of this, but before 
I do, I just wanted to highlight your comments at the 
beginning, Mr. Stark, about the importance of the Medicaid 
program for low income Medicare beneficiaries. This is truly 
the place where the most low income beneficiaries get the other 
health care they need that is not covered by the Medicare 
program. While we have a lot of work to do with MSP and LIS, we 
need to remember what an important part of the whole protection 
for low income Medicare beneficiaries the Medicaid program is.
    I want to just quickly tell two stories that I think 
illustrate some points that have been made this morning with 
respect to MSP and LIS.
    My husband recently turned 65 and he had retired earlier, 
was receiving Social Security, and he received his Medicare 
card. With his Medicare card, he got something or other that 
said if you do not want Part B, let us know, and we will not 
take the premiums out of your Social Security check.
    In contrast, if you are a low income disabled person with 
emphysema in the State of New York, for example, because New 
York's programs are not quite as enlightened as some other 
states, and you got the same thing my husband got. You would 
look at the premium and say, wow, that Part B premium is kind 
of expensive, I only have $800 a month income.
    I wonder if there is any way that I do not have to pay 
that, you would look through your Medicare and You Handbook and 
find references to three or four different pages which would 
finally tell you to call 1-800-MEDICARE, which would tell you 
to call your state agency, which would tell you to call your 
local Social Services office, which would have not a single 
word on any of its voice menu's about this program, so you 
would not really know what to do.
    If you found an office near you, you would go to that 
office, wait for several hours, talk to someone who might not 
know of the existence of the program because we know that 
Medicare savings programs are not known, not only to 
beneficiaries, but not known to a lot of agency people.
    When you finally found someone who did know it, they would 
tell you that you needed documents to prove your income and 
your residence and your assets, and if you did not have those 
documents, you would have to go home and find them and find a 
way to copy them and mail them back.
    If you did not mail them back, you would be terminated 
because you had not completed the process.
    For our middle class, better off Medicare beneficiaries, we 
have a process of enrollment that is streamlined and easy. For 
our sick, frail, less well educated, isolated, often not 
English speaking beneficiaries, we have a process that is 
incredibly difficult.
    I would urge this Committee and the Congress and the 
administration to think about ways that we can seek parity in 
our process, so that low income people do not bear the brunt to 
get the benefits that they need, that they are not bearing the 
heavier burden than higher income people do.
    One of the things that we have heard about today is that 
Social Security does have some way of identifying low income 
beneficiaries. Mr. Doggett's legislation would target that 
better and make it more focused.
    We know that Social Security sends letters to potentially 
eligible beneficiaries. What we do not know is what the states 
do with the data about potentially eligible beneficiaries. The 
states are given those data. We know there is a little bump in 
enrollment when people get those letters from Social Security, 
which come once a year. We also know that if the states were 
doing something with it, there might be a greater bump in 
enrollment, and we have no information that I am aware of as to 
how the states use those data.
    We have heard the administration talk about sharing data 
with the states from the LIS applications. We have no knowledge 
about how or if states would use those data.
    Louisiana has made a concerted effort to improve its 
program. It is not necessarily in the interest of states to 
increase their enrollments because it does cost them more 
money. If we really care about getting beneficiaries into these 
programs, we need to make them not bear the brunt of going 
through these very, very complex processes.
    Mr. Chairman, my written testimony has many recommendations 
or suggestions for policy options, and I am happy to answer 
questions or work with the Committee further.
    Thank you very much.
    [The prepared statement of Patricia Nemore follows:]
  Prepared Statement of Patricia Nemore, Center for Medicare Advocacy
    Mr. Chairman, Representative Camp, distinguished Members of the 
Subcommittee. Thank you very much for this opportunity to testify about 
the Medicare Savings Programs (MSP) and the Part D low-income subsidy 
(LIS), programs that, together, provide extra assistance to low-income 
Medicare beneficiaries for some or all of their cost-sharing in 
Medicare Parts A, B, C and D.
    The Center for Medicare Advocacy has a long history of serving 
dually eligible Medicare beneficiaries in the state of Connecticut and 
nationally. From our daily connection both with beneficiaries directly 
and with their advocates around the country, we know firsthand about 
the frailty of this population and the challenges they face getting the 
health care they need. We know of the challenges of finding and 
enrolling them in programs that make a huge difference in their access 
to care.
    The Center is grateful to the Committee for its oversight of and 
legislative concern about these issues and to Mr. Doggett and Mr. 
Altmire for the important pieces of legislation they have introduced, 
H.R. 1536 and H.R. 1310, respectively, both of which we support.
    I would like to begin my testimony with a story.
    My husband turned 65 in the summer of 2005. He was reasonably 
healthy at the time (and still is). A few months prior to turning 65, 
he had retired and lost his employer-based health insurance. By filling 
out a very simple form, he and I were added to my employer's insurance 
for which we make a monthly contribution that is deducted from my 
paycheck. Shortly before he turned 65, he received notice from the 
Social Security Administration of his impending Medicare eligibility 
with a simple form for him to complete, including a way to inform SSA 
if he did not want Medicare Part B. My husband's switching to my 
insurance and then enrolling in Medicare required almost nothing of 
him; what was required could be done by mail and phone.
    Contrast his story with that of a 58 year-old disabled New Yorker 
with emphysema who we'll call Mr. Gonzales. Mr. Gonzales receives $800/
month in Social Security disability payments. After his 24-month 
waiting period to be eligible for Medicare, he receives the same packet 
of information that my husband received. The question about whether he 
wants Part B is a hard one for him to answer because it costs $93.50/
month this year, nearly one eighth of his monthly income. Since he does 
speak and read English, unlike many low-income Medicare beneficiaries, 
he is able to read his Medicare & You Handbook and finds, near the 
front, a reference to help paying health care costs on pages 63-70. On 
page 63, he sees a reference to help paying premiums, discussed on page 
67. On page 67, he sees that to get this help you have to have income 
less than $1,123 (so he qualifies on that score) and resources of 
$4,000 or less. He has a checking and savings account and a couple of 
small life insurance policies and thinks the accounts don't add up to 
$4,000, so he might be okay.
    Mr. Gonzales follows the instruction to turn to page 90 to find out 
how to apply and there is directed to call 1-800-MEDICARE to get the 
number for his state Medicaid agency. When he calls the number, he is 
directed to call his local Department of Social Services. When he calls 
that number, none of the voice menu choices sounds like the right one 
for information about help paying Medicare premiums, nor does it tell 
him how to reach a live agent with his question, so he listens for 
where the closest office is. He starts the voice menu over again, 
because he hears one choice that tells him what documents to bring to 
apply, although again, it does not speak specifically about help paying 
Medicare premiums.
    Mr. Gonzales decides to take his chances and go to the office, 
which, fortunately for him, is only about 60 blocks away. He waits for 
two hours before seeing a caseworker. The caseworker he finally sees is 
not familiar with a program to help pay Medicare premiums, but, again, 
luckily for him, a caseworker nearby overhears them and tells his 
caseworker what to do. She asks what papers he has brought to document 
his name, date of birth, home address, other health insurance and 
income and resources (actually she is incorrect in asking him to 
document resources, but she never heard of the program before so didn't 
know that).
    Mr. Gonzales realizes he has left some papers at home and asks how 
he can get them to her. She says he can fax them, but he doesn't have a 
fax machine, or he can copy them and send them to her. He leaves the 
office; it is now late in the day and he is having trouble breathing. 
He will go to a copying place tomorrow, if he is feeling up to it. If, 
for some reason like illness or another emergency intervening, he fails 
to send the papers back to her, his case will be closed for failure to 
follow up. He is fortunate that he speaks and reads English because he 
was able to find the program to help him, something that millions of 
beneficiaries are not able to do. If Mr. Gonzales is found eligible for 
benefits, he will have to requalify each year by completing forms and 
documenting his income and resources again.
    Mr. Gonzales' story is not nearly as complicated as those of other 
low-income beneficiaries, who might be sicker, less literate, not speak 
English, not have a telephone or in other ways be less able to find the 
program and take the steps needed to enroll in it, but nevertheless, it 
demonstrates the extreme demands placed on those attempting to qualify 
for necessary benefits and support, often at a time when they actually 
need health care.
    Mr. Chairman and distinguished members, I ask that we make our 
policy and implementation goals the creation of parity between 
wealthier Medicare beneficiaries and low-income beneficiaries in ease 
of enrollment in health insurance programs Right now, the burden is 
much heavier on those who are poorer and sicker and far less able to 
endure the rigors of complex processes.
    Most of the rest of my testimony will suggest ways to move toward 
that parity by expanding benefits and aligning eligibility rules of the 
programs, by improving identification of and outreach to beneficiaries, 
and by addressing enrollment challenges. I will also comment briefly on 
issues that arise for beneficiaries who are enrolled in these programs 
in using those benefits.
Medicaid
    But before I talk about MSP and LIS, I want to remind us all that 
the program that most comprehensively serves low-income Medicare 
beneficiaries is Medicaid. Medicaid was passed in 1965 as a companion 
to Medicare, in large part to act as a supplement to Medicare's 
coverage for older people. More than 6 million Medicare beneficiaries 
get, through Medicaid, such services as long-term care, dental care, 
foot care, and eye care that are not available under Medicare. They get 
Medicare Part B premiums paid for them. Until 2006, they got 
prescription drugs from Medicaid. Now, their Medicaid status entitles 
them to the full Part D low-income subsidy. Medicaid is the single 
largest program of extra assistance to low-income Medicare 
beneficiaries, serving more people with more extensive benefits than, 
for example, Medicare Advantage plans.\1\ Its creation, early on, is a 
recognition that Congress has long been concerned about assuring access 
to care for this very vulnerable population.
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    \1\ Edwin Park and Robert Greenstein, ``Low-Income and Minority 
Beneficiaries Do Not Rely Disproportionately On Medicare Advantage 
Plans: Industry Campaign to Protect Billions in Overpayments Rests on 
Distortions.'' Center on Budget and Policy Priorities, April 12, 2007 
at 2.
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Low-Income Beneficiaries and Other Programs to Help Them
    Medicaid recipients and other low-income Medicare beneficiaries are 
frailer, more disabled, higher users of health services, have less 
education, and are more likely to be minorities, more likely to be 
females, more likely to live alone or in an institution than better off 
beneficiaries. Over the past two decades, beginning in 1986, Congress 
has responded to their health care needs by creating programs to 
increase their access to care. These are the programs we know today as 
the ``Medicare Savings Programs'' (Qualified Medicare Beneficiary or 
QMB, Qualified Disabled and Working Individual or QDWI,\2\ Specified 
Low-Income Medicare Beneficiary or SLMB, Qualified Individual or QI) 
and the Part D Low-Income Subsidy or LIS.
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    \2\ The QDWI program, enacted in 1989, is little used and is not 
part of the discussion in this testimony.
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Medicare Savings Programs
    The Medicare Savings Programs are operated through state Medicaid 
programs. The benefits are Medicaid benefits, paid for with federal and 
state dollars, using each state's Medicaid matching rate for federal 
financial participation. In determining eligibility for benefits, 
states must use at least the federal standards for measuring income and 
resources, but are allowed to be more generous. States differ in the 
ways they choose to be more generous, if at all.
    The salutary effects of Medicaid and Medicare Savings Programs on 
low-income beneficiaries were noted by the National Academy of Social 
Insurance (NASI) in its June 2006 report ``Improving the Medicare 
Savings Program.'' \3\ NASI cites the Medicare Payment Advisory 
Commission's (MedPAC) finding that while 23% of Medicare-only 
beneficiaries report that they delay seeking medical care because of 
costs, only 8% of those with Medicaid so report. Other research cited 
by NASI finds that QMB enrollees, for whom Medicaid assumes 
responsibility for all Medicare cost-sharing, are half as likely as 
non-enrollees to avoid visiting a doctor because of concern about cost. 
(NASI 2006)
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    \3\ Report of the Study Panel on Medicare/Medicaid Dual Eligibles, 
``Improving the Medicare Savings Programs,'' National Academy of Social 
Insurance June 2006. http://www.nasi.org/
usr_docImproving_the_Medicare_Savings_Programs.pdf (last visited April 
29, 2007).
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    Despite the identified health benefits associated with these 
programs, participation rates for MSPs have been abysmal (33% for QMB-
only, 13% for SLMB-only, according to the Congressional Budget Office 
\4\). Barriers to MSP enrollment, which have been documented in 
countless studies and reports over the past nearly two decades, include 
health, literacy, language and transportation deficits of the target 
population; lack of awareness of the programs on the parts of potential 
beneficiaries, community-based organizations and agency workers; and 
the complexity of eligibility rules and enrollment processes, including 
requirements to report and document assets and, in some cases, 
requirements, such as Mr. Gonzales experienced, for face-to-face 
interviews with eligibility workers.
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    \4\ Congressional Budget Office, ``A Detailed Description of CBO's 
Cost Estimate for Medicare Prescription Drug Benefit.'' July 2004 
http://www.cbo.gov/showdoc.cfm?index=5668&sequence=0 (last visited 
April 30, 2007).
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Differences between the Part D Low-Income Subsidy and Medicare Savings 
        Programs
    Part D's fully federal low-income subsidy and its implementation 
were modeled on MSPs, with slight, but nonetheless significant, 
differences. These differences, or non-alignments, make it difficult to 
assure that low-income Medicare beneficiaries get all the benefits that 
will best help them gain access to the health care they need. 
Differences include:

          LIS applications can be taken at both the state 
        Medicaid agency and at the Social Security Administration; MSP 
        applications are taken only at the state Medicaid office.
          LIS applications can be submitted on-line; this is 
        true only in a few states for MSPs.
          LIS applicants can certify to the truth of the 
        statements in their applications, without having to provide 
        documentation with the application; this is true only in some 
        states for MSPs.
          LIS application process does not require a face-to-
        face interview; a few states do for MSPs.
          LIS income and resource counting rules are uniform 
        throughout the country; MSP rules vary by state.
          LIS resource levels are higher than those of most 
        states' MSPs and the income level for the partial LIS subsidy 
        is higher than that of MSP in all but two states.
          LIS does not count non-liquid assets such as vehicles 
        and equipment; MSPs vary by state.
          LIS does not seek to recover benefits from the 
        estates of deceased beneficiaries; in some states, MSP benefits 
        are recovered.
          LIS is effective the first day of the month in which 
        an individual expresses an interest in applying; the MSP QMB 
        benefit is effective only the first day of the month after a 
        beneficiary's eligibility has been determined; SLMB and QI can 
        be effective up to three months prior to the month of 
        application, if the beneficiary was eligible in those months.
          LIS measures income against the poverty level for the 
        actual size of the applicant's family; MSPs in most states use 
        a measure of one or two person families only.\5\
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    \5\ For a detailed discussion of these differences, see Patricia B. 
Nemore, Jacqueline A. Bender and Wey-Wey Kwok, ``Toward Making Medicare 
Work for Low-Income Beneficiaries: A Baseline Comparison of the Part D 
Low-Income Subsidy and Medicare Savings Programs Eligibility and 
Enrollment Rules.'' Kaiser Family Foundation May 2006.

    It was hoped and perhaps expected by policy makers and advocates 
that the streamlined enrollment process and higher income and resource 
eligibility standards of the LIS would help overcome some of the 
barriers that have plagued MSP enrollment over the years. Yet 
enrollment numbers tell us something different. More than 3 million of 
the estimated 13.2 million thought to be eligible for the low-income 
subsidy have not applied for the benefit; indeed only 14% of those CMS 
estimates are eligible for the benefit have enrolled through the 
processes created for applying for LIS.
    By contrast, nearly 8.5 million people, or 80% of those who were 
receiving LIS in June 2006 received it because they are deemed eligible 
by virtue of their enrollment in full Medicaid, a Medicare Savings 
Program, or the federal income benefit, Supplemental Security Income 
(SSI) and did not have to take any action themselves to get it. \6\
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    \6\ ``Medicare: Prescription Drug Coverage Among Medicare 
Beneficiaries,'' Kaiser Family Foundation June 2006. Source: HHS, June 
14, 2006. www.kff.org/medicare/upload/7453.pdf (last visited April 28, 
2007).
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    This ``automatic'' enrollment, through deeming by virtue of 
eligibility for another benefit, corresponds more closely to my 
husband's experience of signing up for Medicare Parts A and B than it 
does to Mr. Gonzales' experience of trying to get MSP benefits in New 
York. In fact, we know that Medicare Parts A and B have among the 
highest participation of any benefit programs (99% and 95.5% 
respectively, according to one source \7\); eligibility for Part A is 
automatic for most beneficiaries; for Part B, beneficiaries must opt 
out if they do not wish to participate.
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    \7\ Dahlia K. Remler and Sherry A. Giled, ``What Other Programs Can 
Teach Us: Increasing Participation in Health Insurance Programs,'' The 
Commonwealth Fund, May 2003.
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    This knowledge suggests that while we might take many steps toward 
improving participation rates, the ones that will be most effective are 
those that put the least burden on the beneficiary, just as signing up 
for Medicare placed little burden on my husband.\8\ This, in turn, 
suggests a stronger federal role in MSP and expanded federal screening 
opportunities for LIS, which I will discuss further.
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    \8\ See National Council on Aging, ``Cost-Effective Strategies for 
Finding and Enrolling Low-Income Medicare Beneficiaries in the Limited 
Income Subsidy (LIS) And Other Key Public Benefits'' for discussion of 
creative state strategies to reach across programs to identify and 
enroll beneficiaries in low-income programs. Submitted as Appendix to 
Testimony of Howard Bedlin before U.S. Senate Special Committee on 
Aging, January 31, 2007. Copies are available through 
[email protected].
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    First, I would like to talk about program expansions and 
modifications that will promote ease of enrollment.
Expanding Program Benefits
Make the Qualified Individual program (135% FPL) permanent and align 
        MSPs with LIS income levels.
    The QI program, originally scheduled to sunset in 2002, has been 
extended for short periods of time over the past five years. Each time 
it is scheduled to end, states and beneficiaries suffer great turmoil 
with the uncertainty of its existence. Congress, in setting the full 
LIS benefit at 135% FPL, established that level as a minimum for full 
benefits. MSPs should be amended to reflect that development in 
Congressional thinking.
    Several approaches have been discussed among advocates and policy 
makers to achieve this. One is to roll the QI program into the SLMB 
program, so that QMB would go to 100% FPL and SLMB would go to 135% 
FPL. The 135% aligns them with the LIS full subsidy; the partial 
subsidy would remain at 150%, with no corresponding MSP.
    A variation on increasing SLMB to 135% FPL, suggested by NASI in 
its 2006 report, is to increase QMB to 135% FPL so that those who 
receive the full subsidy for LIS under Part D would also get full cost-
sharing assistance for Parts A, B and C. This approach is the most 
logical one, again reflecting Congress recognition that people with 
this amount of income need full benefit assistance, not merely help 
with their Part B premiums, as SLMB provides. Under this approach, QMB 
and full LIS would be aligned vis a vis income; SLMB might be expanded 
to 150% FPL to align with the partial LIS.
Make QMB benefits retroactive to three months before application.
    This is a relatively small change that could be very significant 
for beneficiaries. Currently, QMB is the only Medicaid program that 
does not provide retroactive coverage to three months prior to 
application if the beneficiary was eligible during those months. In 
fact, QMB coverage is available only beginning the month after 
eligibility has been determined. The significance of this is that many 
beneficiaries become aware of programs at the point of need (see NASI 
study), i.e. when they are using health benefits. They will need the 
benefit to pay for the services they are receiving; if it cannot be 
granted with retroactive coverage, it is less valuable to them.
Expand and align, or eliminate the assets test.
    For years, advocates and researchers have identified assets tests 
as a barrier to benefits for several reasons.\9\ To meet the test 
itself, beneficiaries must engage in time consuming and sometimes 
complex documentation of the value of various things they own, from 
bank accounts to vehicles to other property, other than their home. 
This process results in administrative costs to agencies processing 
applications and can result in beneficiaries being denied, not for 
being over assets but for failure to complete the process, such as 
might have happened to Mr. Gonzales if he didn't get his papers back to 
the caseworker. Moreover, some potential beneficiaries are unwilling to 
divulge their assets to anyone and will forego benefits rather than 
having to reveal the value of what they own.
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    \9\ For discussions of the effects of the asset test on Medicare 
Savings Programs and on the LIS, see NASI, supra note 2, Thomas Rice, 
PhD and Katherine A. Desmond, M.S. ``Low-Income Subsidies for the 
Medicare Prescription Drug Benefit: The Impact of the Asset Test,'' 
prepared for the Henry J. Kaiser Family Foundation, April 2005; Laura 
Summer and Lee Thompson, ``How Asset Tests Block Low-Income Medicare 
Beneficiaries from Needed Benefits,'' The Commonwealth Fund, May 2004; 
Laura Summer and Robert Friedland, ``The Role of the Asset Test in 
Targeting Benefits for Medicare Beneficiaries,'' Commonwealth Fund, 
October 2002; Marilyn Moon, Robert Friedland and Lee Shiry, ``Medicare 
Beneficiaries and Their Assets: Implications for Low-Income Programs,'' 
Henry J. Kaiser Family Foundation, June 2002.
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    As part of a program (such as MSP) whose income eligibility 
increases each year with new poverty guidelines, the MSP asset test 
(like those in other parts of Medicaid) is especially unfair because it 
is not indexed. Thus, while income limits for 100% FPL have nearly 
doubled since 1988 when the QMB program became mandatory ($5,770 in 
1988 to $10,210 in 2007 for one person), the asset level has remained 
the same over that 20 year period. Once again, Congress has finally 
recognized the unfairness of an unindexed asset level; the LIS level 
changes each year according to the Consumer Price Index.
    The asset test excludes many low-income beneficiaries. In 2002, 
researchers identified that 40% of all Medicare beneficiaries, not just 
those with low-incomes, had assets less than $12,000.\10\ Other 
research, reported the same year, identified that only 48% of those who 
met the income requirements in effect that year also met the asset 
requirements.\11\ Modest assets exclude many people from program 
benefits: SSA found that about 40% of those who did not qualify for LIS 
in 2006 were over assets, but the average total amount of assets of 
those disqualified was only about $25,000.\12\ Most State programs for 
pregnant women and children do not consider assets at all in 
determining eligibility for help with medical care.\13\ Only six states 
have eliminated the asset test for MSPs.\14\
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    \10\ Moon, supra note 9.
    \11\ Summer and Friedland, supra note 9.
    \12\ Social Security Administration, ``LIS Denial Studies,'' 12/11/
06.
    \13\ See ChipCentral chart on SCHIP eligibility at http://
www.chipcentral.org/_catdisp_page.
cfm?LID=121 (last visited April 28, 2007). See also Donna Cohen Ross 
and Caryn Marks, ``Resuming the Path to Health Coverage for Children 
and Parents: A 50 State Update on Eligibility Rules, Enrollment and 
Renewal Procedures, and Cost-Sharing Practices in Medicaid and SCHIP in 
2006,'' The Kaiser Commission on Medicaid and the Uninsured, January 
2007 at http://www.kff.org/medicaid/upload/7608.pdf (last visited April 
28, 2007).
    \14\ AZ, AL, DE, ME, MS, VT. In addition, MN has raised its asset 
limit to $10,000.
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    The most streamlined way to proceed would be to eliminate the asset 
test for both programs. This approach, coupled with increasing QMB or 
SLMB to 135% of FPL would bring the two programs into closest alignment 
and make cross-deeming easy and logical. Mr. Doggett's bill proposes to 
increase the assets test to $27,500 for the partial subsidy. This 
level, indexed, would capture many of those denied eligibility in 2006 
due to being over assets. The bill includes changes to counting assets, 
described earlier, to eliminate consideration of life insurance and of 
retirement accounts. Such modifications will be important if the asset 
test is not eliminated. Any asset test, however, retains the barriers 
of administrative complexity and beneficiary reluctance to divulge 
information. I know Mr. Doggett is aware of those limitations.
    Closer alignment would, in turn, make screening and enrolling at 
either a Medicaid office or a Social Security office more efficient and 
effective.
Screening, Enrolling, and Deeming
    Screen and Enroll. Mr. Doggett's legislation, H.R. 1536, includes 
an important provision to expand screening: a requirement that CMS 
inform all new Medicare beneficiaries of the Part D LIS and give them 
an opportunity to be screened for the benefit, including through the 
use of IRS data about income and assets. Mr. Doggett also proposes to 
have SSA screen all LIS applicants for MSP eligibility. The next step 
is to determine a streamlined way to enroll them.
    Screen (and enroll when eligible) all SSI applicants. Even under 
current law and program rules, the Social Security Administration could 
screen for LIS and basic MSP \15\ all applicants (or at least those 65 
and older) for SSI who are found ineligible for that benefit. While SSA 
already does this screening for those who are Medicare beneficiaries, 
some applicants may not have Medicare because they didn't ``earn'' it 
through quarters of coverage and they cannot afford the Part B premium. 
If they were found eligible for MSP, they could then get Medicare and 
be eligible for Part D and deemed eligible for LIS. According to NASI, 
SSA already screens for MSP eligibility, but it does not enroll 
beneficiaries in those programs. It refers them to their state Medicaid 
agency; advocates report that requiring this entire second process 
makes it unlikely that beneficiaries will follow up. SSA's experience, 
as reported by NASI, confirms this view. In addition to requiring 
screening for unsuccessful SSI applicants, the law could be amended to 
provide for automatic QMB eligibility for all SSI recipients.
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    \15\ By basic MSP, I mean MSP based on federal rules, rather than 
the varying more liberal rules used by the states. Such a screen and 
enroll by SSA would capture many MSPs; those found ineligible through 
this process could be referred to their states for further 
consideration.
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    Cross-deem. Under current law and implementation, all MSP 
beneficiaries are deemed eligible for LIS without having to file an 
application; the same is not true for LIS enrollees to receive MSP. 
Even without the proposed expansions described above, Congress could 
allow for cross-deeming that would improve enrollment in both programs 
by assuring that whichever ``door'' to eligibility beneficiaries 
entered, if found eligible for one program, they would also receive the 
benefits of the other.
    Avoid adverse consequences. Any process that deems or auto-enrolls 
beneficiaries into a public program must include the assurance that the 
beneficiary will be protected from losing other public benefits as a 
result of the program. With respect to MSPs, this would require 
amending the law to ensure that MSP benefits are not subject to 
Medicaid estate recovery requirements, as they currently are at the 
option of the state. With respect to LIS, a change in the law might 
assure that so-called medically needy Medicaid recipients would not 
cycle on and off Medicaid and the low-income subsidy from year to 
year.\16\
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    \16\ The plight of medically needy Medicaid recipients is 
particularly complex and difficult with respect to Part D and the LIS. 
The medically needy must show their state that they have accrued 
certain medical bills before they are entitled to Medicaid. Once they 
have accrued their ``spend down'' amount, Medicaid will pay the rest of 
their health care costs for a certain period of time, usually between 
one and six months. A medically needy person who met spend down at any 
time in 2005 was deemed eligible for LIS for all of 2006. But if they 
had met spend down in 2005 with high prescription drug bills, they did 
not have those bills for 2006 because of LIS. So they may have lost 
Medicaid in 2006 and thus not have been deemed for LIS for 2007. If 
they do not know to apply for LIS, or if they do not qualify, they will 
again have high drug bills in 2007, requalify for Medicaid and likely 
then be deemed eligible for LIS for 2008 (at least, if they are on the 
Medicaid rolls in the months that CMS looks at them to determine who 
will be deemed eligible for LIS. This roller coaster eligibility for 
Medicaid and LIS would be substantially mitigated, if not fully 
resolved, if the amount Medicare pays for the LIS counted toward their 
medically needy spend down.
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Other Steps to Improve Program Participation
    Additional steps to improve enrollment and continued participation 
might be categorized as:

          Identifying/reaching out to beneficiaries and 
        providing help with applications, and
          Simplifying enrollment and redeterminations.

Identify, Reach Out, and Help Beneficiaries
    Advocates believe that potential beneficiaries could most 
accurately be identified through IRS data; Mr. Doggett's legislation 
proposes a one-time review of IRS data for current Medicare 
beneficiaries to improve identification of low-income beneficiaries, 
with a prospective use of the data, for new beneficiaries, only with 
their permission. IRS data would more precisely target potential 
beneficiaries who are, under current law, identified by SSA only by 
reference to their sources of federal income (from Social Security, 
Railroad Retirement, Civil Service and Veterans).\17\
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    \17\ Section 1144 of the Social Security Act directs SSA to 
identify Medicare beneficiaries potentially eligible for MSPs and LIS 
and to communicate that information to those beneficiaries and to the 
state in which they reside. The information upon which SSA makes such 
determinations does not include non-federal sources of income, nor does 
it include any estimate of resources.
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    While it is important to notify beneficiaries of their entitlement 
to benefits that can help them, experience tells us that a letter 
informing individuals of a benefit and how to apply for it, without 
more, has limited success. To the extent that beneficiaries must 
continue to be faced with the challenges of navigating complex 
eligibility rules and requirements, federal funds must be provided 
either directly to the entities that are the ``trusted'' source for 
specific hard to reach populations, or to states to provide grants to 
such entities, so that those entities can help potential eligibles 
apply for benefits. Congress, SSA and CMS should explore the 
possibilities of providing private, non-profit beneficiary-oriented 
``trusted sources'' with specific beneficiary identifying information, 
by zip code to promote enrollments.
Simplify Enrollment and Redeterminations
    Application

          In-kind support and maintenance. The LIS application 
        asks for information about help the applicant gets from other 
        family members--what SSA calls In Kind Support and Maintenance 
        (ISM). The question is confusing and advocates report from 
        experience that clients often don't understand what is being 
        asked of them and give wrong answers that may disqualify them. 
        Moreover, the consideration of ISM in determining eligibility 
        provides a disincentive for families to help their members. 
        More than a third of the states have eliminated this inquiry 
        from their MSP eligibility considerations. SSA could probably 
        do the same under existing law through the Medicare Act of 
        2003's directive to it to create a simple application process.
          Value of life insurance. Similarly, SSA asks 
        applicants to report the cash surrender value of life 
        insurance, an amount that is not known from the face value of 
        the policy. Advocates believe this question poses a stumbling 
        block, slowing down the application completion while the 
        beneficiary tries to figure out how to find out what is asked 
        of her or him. Moreover, research shows that about one-third of 
        people with incomes at the poverty level would be disqualified 
        because they have a life insurance policy above the allowed 
        amount of $1,500.\18\ Some states have eliminated this 
        requirement for MSPs; others allow a higher amount of life 
        insurance. SSA could probably eliminate this requirement for 
        LIS under existing authority; it has already exercised 
        discretion to modify the SSI rules to which LIS is linked by 
        not counting non-liquid resources. Mr. Doggett's bill would 
        eliminate consideration of life insurance for LIS; it would 
        also eliminate consideration of retirement accounts in 
        determining eligibility. This provision creates parity between 
        those whose retirement benefits are through a company pension 
        program (value not counted for LIS) and those whose benefits 
        are primarily from an Individual Retirement Account or a 401(k) 
        type account (value counted for LIS). While states are free to 
        eliminate consideration of both of these resources, they are 
        not required to do so. Better aligning MSP and LIS would 
        require legislation addressed to this issue for both programs.
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    \18\ Laura Summer and Lee Thompson, supra note 9.
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          Attestation under penalty of perjury. While SSA's LIS 
        application does not require documentation of the information 
        provided, its attestation clause is overly precise and 
        frightening. It suggests to applicants that if they make an 
        honest mistake, or forget to include some requested 
        information, they can go to prison. This language should be 
        softened.
          Authorization of information sharing between SSA and 
        states. Currently, SSA plans to send brief identifying 
        information about LIS applicants to states to allow them to 
        screen for MSP eligibility. But the information to be provided 
        is not precise enough for the state to determine eligibility 
        without finding the potential beneficiary. SSA's LIS 
        application could include a check off box by which the 
        applicant authorizes SSA to share details of the application 
        with the state so the applicant can be screened for other 
        benefits.

Eliminate Estate Recovery for MSP Benefits
    Nearly half the states require recovery of MSP benefits from the 
estates of deceased beneficiaries; federal law authorizes but does not 
require this. Estate recovery has long been identified as a barrier to 
enrollment for MSPs. Its elimination would promote greater interest in 
the benefits and make various automatic enrollment opportunities more 
salient. As noted above, it is essential to make this change if 
beneficiaries are automatically enrolled in MSP programs through other 
connections.
Redeterminations
    The law requires the Commissioner of SSA to re-determine 
eligibility for the subsidy at least once after initial determination 
and after that, as he determines necessary. Advocates encourage 
programs to use processes that require the least amount of response 
from a beneficiary. SSA sent beneficiaries letters asking them if their 
circumstances had changed and if not, they were not required to do 
anything more. Once the initial redetermination is completed, SSA might 
consider, as it has authority to do, requiring nothing more of 
beneficiaries than that they report changes in circumstances.
    Additional paths exist for requalifying for LIS can be confusing, 
especially for those whose circumstances fluctuate over the course of a 
year. Those who were deemed eligible for LIS--that is, those who are 
also enrolled in Medicaid, a Medicare Savings Program, or SSI--were re-
deemed for 2007 if they were on the rolls in one of these programs in 
July of 2006. If they had been eligible earlier in the year, but not in 
July, they were informed they would not be deemed again and sent an 
application to apply for LIS through SSA. If they became eligible 
through Medicaid, MSP or SSI later in the year, they were once again 
deemed. So much moving in and out of deemed status, and having 
applications pending results in errors in plans' and pharmacies' 
knowledge of the correct cost-sharing to apply to beneficiaries. This, 
in turn, results in beneficiaries being unable to get drugs because 
they cannot afford the non-LIS co-pays charged.
    When a Medicaid beneficiary loses eligibility for Medicaid 
benefits, states have an obligation under Medicaid law to determine if 
that person is eligible under another category of the state's program. 
For example, someone losing Medicaid eligibility might, nonetheless, 
still be eligible for a Medicare Savings Program, since these income 
and resource limits are higher than Medicaid in most states. If states 
routinely undertook these new determinations of eligibility for other 
Medicaid benefits before terminating people from the program, fewer LIS 
recipients would find themselves in the limbo of not knowing about 
their LIS status. Similarly, even for those individuals no longer 
eligible for any benefits under the state Medicaid program, the state 
or the Social Security Administration (SSA) could undertake 
independently to determine their eligibility for the LIS, the income 
and resource limits for which are higher than those of most states' 
Medicaid programs.
    CMS could remind states of their obligation to screen for 
eligibility for other Medicaid programs when a recipient loses Medicaid 
in one category and monitor their compliance. Congress could amend the 
law, if necessary, to require states to undertake independent 
determinations of LIS eligibility when a beneficiary loses benefits 
under the state Medicaid program.
Making the Benefit Better for Those who are Enrolled
    While I know the Committee's focus for this hearing is on 
opportunities to increase enrollment and expand eligibility, it is 
impossible for me not to talk about ways to improve the benefits 
themselves, both so that they are perceived to be valuable and so that 
they are valuable. Three areas warrant particular attention:

          Failure of LIS co-pay information to be available at 
        the pharmacy
          Lack of clarity about whether and how states pay 
        cost-sharing for QMBs in Medicare Advantage plans and
          Lack of clarity about Medicare providers' obligation 
        to serve QMBs without charging them cost-sharing or balance 
        billing.

LIS Fails To Be Available at the Pharmacy Counter
    Too often low-income beneficiaries with full LIS arrive at the 
pharmacy to discover that the pharmacist does not have access to their 
correct co-pay level. Some of these beneficiaries take 20 medications, 
or have co-pays for one prescription of over $500. They often leave 
without the medication(s). The lucky ones find advocates who will work 
the system for them and get the problem corrected. Even ``corrected'' 
problems are sometimes only corrected for the transaction at hand; the 
same problem occurs when the beneficiary seeks to fill another script.
    The failure of LIS eligibility and co-pay level to be available at 
the pharmacy is among the most common complaints we hear both directly 
from beneficiaries and from advocates around the country. It happens in 
part because of the lack of real time information exchange among all 
parties to a Part D transaction for low-income beneficiaries: states, 
CMS, SSA, the Part D plan and independent contractors who track LIS 
information. It also results from plans' failure to follow CMS policies 
which direct them to use the best available information to determine 
proper cost-sharing amounts.
There Is a Lack of Clarity About Whether and How States Pay Cost-
        Sharing for QMBs in Medicare Advantage Plans
    CMS policy directs that states pay copayments for QMBs in Medicare 
Advantage plans.\19\ But states do not necessarily have systems to 
fully identify all the benefits in the plan in which a QMB is enrolled, 
nor do they all have systems for paying either the plan or the plan's 
providers any copayments required under the plan.
---------------------------------------------------------------------------
    \19\ DHHS, Health Care Financing Administration, Medicaid Letter 
Number: 00-09, Subject: Medicaid Obligations to Pay Medicare Cost-
sharing Expenses for Qualified Medicare Beneficiaries in Medicare 
Health Maintenance Organizations or Competitive Medical Plans or 
Medicare Plus Choice Organizations--INFORMATION. August 2, 2000. 
Available from pnemore@
medicareadvocacy.org.
---------------------------------------------------------------------------
    Correcting this lack of clarity and oversight for QMBs in MA plans 
will improve the benefit for all such individuals. It will also 
mitigate the damage done by marketing scams where agents of health 
plans go door-to-door at senior housing facilities to solicit 
enrollment in MA plans, enroll beneficiaries with diminished capacity 
or limited English proficiency, or enroll beneficiaries in an MA-PD 
when they wanted to enroll in a PDP. Under such circumstances, low-
income beneficiaries end up in plans they did not intend to choose. 
Moreover, we know that, while MA plans purport to provide better and 
more benefits than original Medicare, their relative value depends in 
large measure on what services are used. We know of plans, for example, 
that have $90/day co-pays starting at day 4 of a skilled nursing 
facility benefit; under original Medicare, by contrast, days 1-20 have 
no cost-sharing at all. Some plans charge 25-30% coinsurance on Part B-
covered drugs, which are often expensive. Such a coinsurance would be 
unaffordable to someone with $850/month income, as a QMB would have. 
Cost-sharing assistance would be critical to making the benefit work. 
CMS must assure that states have systems to identify QMBs in MA plans 
and to pay their cost-sharing.
There Is a Lack of Clarity About Medicare Providers' Obligation To 
        Serve QMBs Without Charging Them Cost-Sharing Or Balance 
        Billing.
    Medicare does not permit providers to pick and choose for which 
Medicare beneficiaries they will bill Medicare and for which they will 
bill privately. If they take care of a patient with Medicare, they must 
bill Medicare and can bill the beneficiary only the remainder up to the 
Medicare allowed amount. For a person with QMB, the beneficiary's 
portion is paid by the state, or in some cases, not at all. It is not 
the responsibility of the person with QMB. CMS policy, however, seems 
to permit providers to decide that they will serve a person with QMB as 
a private pay patient and not bill Medicare at all.\20\
---------------------------------------------------------------------------
    \20\ State Medicaid Manual, Part 3 Eligibility Section 3490.14 B at 
http://www.cms.hhs.gov/Manuals/PBM/
itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=1&sortOrder=
ascending&itemID=CMS021927& intNumPerPage=10 (last visited April 23, 
2007).
---------------------------------------------------------------------------
    This policy, together with a provision of law that permits states 
to forego paying the person with QMB's share of cost-sharing if the 
state's Medicaid payment for the same service is less than what 
Medicare has paid has resulted in people with QMB being denied access 
to health care providers, according to a federally-mandated study 
released in 2003.\21\ Perhaps Congress could direct CMS to correct its 
policy of allowing providers to bill people with QMB as private 
patients; such action would promote greater access to health care 
providers for people with QMB and make the benefit more valuable.
---------------------------------------------------------------------------
    \21\ Report to Congress, State Payment Limitations for Medicare 
Cost-Sharing, Tommy G. Thompson, Secretary of Health and Human Services 
2003, transmitted by letter of May 20, 2003 to Speaker of the House of 
Representatives, J. Dennis Hastert.
---------------------------------------------------------------------------
Conclusion
    In summary, we recommend that Congress expand the benefits, make 
the enrollment processes easier, with greater emphasis on deeming and 
other nearly automatic methods of enrollment and promote improved 
implementation of both programs, so that low-income beneficiaries can 
actually use the benefits once they are enrolled.
    I thank the members of this Subcommittee for an opportunity to 
speak on behalf of the Center for Medicare Advocacy and the thousands 
of beneficiaries we represent. I look forward to working with you 
further on these important matters.

                                                        May 3, 2007

    Appendix
    Medicare Savings Programs (MSPs)
    Basic Subsidy Eligibility:

          Qualified Medicare Beneficiary (QMB). Income at or 
        below 100% federal poverty level (FPL) ($10,210/year in 2007); 
        resources at or below $4,000/individual or $6,000/couple.
          Specified Low-Income Medicare Beneficiary (SLMB). 
        Income at or below 120% FPL ($12,252/year in 2007); resources 
        as QMB.
          Qualified Individuals (QI). Income at or below 135% 
        FPL ($13,784/year in 2007); resources as QMB.

    Indexing: Income levels change each year when federal poverty 
levels are announced between January and March; states must use the new 
levels by July 1. Asset levels are not indexed.
    Income/Resource Counting Rules: Start with rules for Supplemental 
Security Income program, but states, under a statutory provision known 
as 1902(r)(2), can use more liberal rules.
    Enrollment Path: The State Medicaid Agency.
    Payment: Federal and state dollars. MSP benefit is medical 
assistance, eligible for the state's matching rate for federal 
financial participation (FFP). FFP for administrative costs is 50%.

                                      2007 Medicare Savings Program Groups
----------------------------------------------------------------------------------------------------------------
                                 Year       Income
          Category              Enacted      Limit        Resource Limit         Medicaid Pays       Entitlement
----------------------------------------------------------------------------------------------------------------
Qualified Medicare..........       1988        100%      200% of SSI limit        Part B premium;          Yes
Beneficiaries (QMBs)........                poverty    ($4,000/individual,     Part A premium, if
                                                            $6,000/couple)   any; all deductibles
                                                                                  and coinsurance
----------------------------------------------------------------------------------------------------------------
Specified Low-Income........       1990     120% of      200% of SSI limit        Part B premium;          Yes
Medicare Beneficiaries......                poverty    ($4,000/individual,                   only
(SLMBs).....................                                $6,000/couple)
----------------------------------------------------------------------------------------------------------------
Qualifying Individuals......       1997     135% of      200% of SSI limit        Part B premium;           No
(QIs).......................                poverty    ($4,000/individual,                   only
                                                            $6,000/couple)
----------------------------------------------------------------------------------------------------------------
Chart Source: ``Report of the Study Panel on Medicare/Medicaid Dual Eligibles: Improving the Medicare Savings
  Programs,'' National Academy of Social Insurance, June 2006
Medicare Part D Low-Income Subsidies (LIS).


    Basic Subsidy Eligibility: Full subsidies for beneficiaries with 
incomes at or below 135% of federal poverty levels (FPL) ($13,784/year 
in 2007); resources up to $7,620/individual and $12,190/couple in 2007. 
Partial subsidies for those with incomes at or below 150% of FPL 
($15,315/year in 2007); resources of not more than $11,710/individual 
or $23,410/couple in 2007.
    Indexing: Income levels based on federal poverty levels announced 
between January and March; increases retroactive to January. Asset 
levels adjusted prior to January, based on the Consumer Price Index.
    Income/Resource Counting Rules: Generally, those of Supplemental 
Security Income (SSI) program.
    Enrollment Paths:

          Deemed status. For those who receive benefits of full 
        Medicaid (dual eligibles), Medicare Savings Programs (QMB, 
        SLMB, QI), or SSI.
          SSA door. By application, through a local SSA office, 
        through the SSA toll-free number, or through the SSA website at 
        www.socialsecurity.gov.
          Medicaid agency door. By application at the state 
        Medicaid agency. If a beneficiary applies for LIS with the 
        state, the state must also screen for MSP and other Medicaid 
        benefits.

    Payment: Benefit is all federal dollars. When states enroll 
beneficiaries, the states are paid at the Medicaid administrative match 
rate of 50%.

                                    2007 Low-Income Subsidy Groups and Costs
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Out-of-...................
Pocket
Costs
  ........................       Standard           Group 1         Group 2           Group 3           Group 4
                                  Benefit
 
                                             Dual Eligibles             MSP      Income  135%      Income  150%
                                                                    (QMB, SLMB,            FPL               FPL
                                                                        QI)
  ........................                                                          Resources          Resource
  ........................                                          SSI w/o
  ........................                                         Medicaid             Below             Below
  ........................                                                     $7,620/$12,190   $11,710/$23,410
----------------------------------------------------------------------------------------------------------------
Premium                     Varies by plan               $0              $0                $0    Sliding scale:
                                  ($27.35
                                 national                                                              $0 up to
                               average in                                                         ``benchmark''
                                    2007)
                                                                                                      (Based on
                                                                                                        income)
----------------------------------------------------------------------------------------------------------------
Deductible                  $265 per year                $0              $0                $0               $53
----------------------------------------------------------------------------------------------------------------
Cost                          Up to $3850          Co-pays:   $2.15/$5.35 co- $2.15/$5.35 co-   15% coinsurance
 
Sharing*                    out-of-pocket                               pay               pay
                                                      $0 if                                     ................
                                            institutionalize
                                                          d
  ........................
                                            $1/$3.10e  100%
                                                         FPL
  ........................
                                            $2.15/$5.35>100%
                                                         FPL
----------------------------------------------------------------------------------------------------------------
Cata-
strophic..................
  ........................  Greater of 5%                $0              $0                $0   $2.15/$5.35 co-
                                                                                                            pay
                            or $2.15/$5.35
Coverage                           co-pay
----------------------------------------------------------------------------------------------------------------
* Individuals in the four LIS groups do not have the ``Donut Hole'' gap in coverage.


                                 

    Chairman STARK. Patricia, thank you, and thank you for the 
help you have provided to the Members of the Committee, for 
advising us and enlightening us both today and previously.
    Ms. Emelia Herrera? Did I pronounce that right?
    Ms. SANTIAGO-HERRERA. Santiago-Herrera.
    Chairman STARK. Welcome to the Committee. You have come a 
long way. Why not just tell us what you would like to tell us 
in any way you would like?

 STATEMENT OF EMELIA SANTIAGO-HERRERA, MOORE CONSULTING GROUP, 
                        ORLANDO, FLORIDA

    Ms. SANTIAGO-HERRERA. First, I would like to thank you, 
Chairman Stark, and the Ranking Member, Mr. Camp, and 
Subcommittee members.
    My name is Emelia Santiago-Herrera. I am from Orlando, 
Florida. I am 81 years old, and I have 8 grown children and 54 
great grand's and 18 great great grand's.
    I have had five heart attacks and three strokes. I have a 
lot of health problems and I need assistance. I am a low income 
Medicare beneficiary and receive low income benefits. I am 
enrolled in Medicare Advantage with prescription drug coverage 
and receive the full Part D low income subsidy.
    I received information from a neighbor of mine about 
Evercare, although I did have the Medicare and You Handbook, 
reading it myself, but there were so many things in there that 
I could not decide which would be beneficial to me.
    She said go with Evercare. I called Evercare. They sent two 
people out to the house to talk to me. I decided to enroll with 
them, which I have not regretted. I depend on them and I 
appreciate everything they are doing for me.
    They also have me with a disease management program and 
their nutrition program assistance. They also send someone to 
my house twice a week to help me clean and do errands for me 
because I have no transportation.
    They also give me advice on my diet, which I developed 
diabetes in the last year. I also was told that I needed 
diabetic shoes, which cost $50 an inch, which I could never 
afford.
    Evercare got me the shoes for nothing. They also help me 
with a doctor who comes out to my house and does my nails 
because I cannot go to a regular foot doctor.
    Someone from Evercare also comes to my house and sees if I 
am being treated right, at least every three months. They ask 
me questions about the attitude, disposition and personality of 
the person who comes to see me.
    Since I am low income, all of the services I receive are a 
blessing. I used to have to pay my doctor a co-payment and I 
used to have to pay so much on certain types of medication that 
were not over the counter, which I cannot afford.
    I want to thank you all for letting me come here today and 
try to explain some of the advantages that Evercare has given 
to me, and I hope they can continue in the future.
    [The prepared statement of Emelia Santiago-Herrera 
follows:]
Prepared Statement of Emelia Santiago Herrera, Moore Consulting Group, 
                         Inc., Orlando, Florida
    Thank you Chairman Stark, Ranking Member Camp and Subcommittee 
Members.
    My name is Emelia Santiago Herrera and I am from Orlando, Florida. 
I am an 81 year-old mother to 8 children, a grandmother to 54 children 
and a great-grandmother to 18 children!
    I've had 5 heart attacks and 3 strokes, so I have health problems 
and need assistance. I am a low-income Medicare beneficiary and receive 
low-income benefits. I am enrolled in a Medicare Advantage plan with 
prescription drug coverage and receive the full Part D low-income 
subsidy.
    I received information about Evercare and other Medicare Advantage 
plans in my ``Medicare & You'' Handbook. My friend told me to ``Go with 
Evercare, they treat you with dignity and respect!'' I called to see 
about enrolling in a plan and an Evercare representative came to my 
house to discuss my different options and go over everything with me. I 
then decided to listen to my friend's advice and enroll in an Evercare 
plan. I have not regretted it, I love Evercare and appreciate all the 
benefits I receive and depend on.
    My Evercare Plan provides me with disease management, preventative 
care and nutritional assistance. Evercare is available to take me to 
the doctor 10 times a year, they give me diabetic shoes that would 
normally cost $50 per inch, and a foot doctor comes to my house to clip 
my toe nails to avoid complications with diabetes. Evercare goes 
grocery shopping for me, and to help manage my diabetes, I have 14 
meals delivered to my house every month. Someone from Evercare even 
comes to my house to clean twice a week!
    To top it all off, someone from Evercare comes and checks on me 
every three months to make sure I am being treated well by the Evercare 
representatives.
    Since I am low-income, all of the services I receive are just a 
blessing. I used to pay a $9 co-pay for my prescription drugs but now I 
don't pay anything at all because of the extra help I receive. Even 
though I am a low-income senior, they treat me like a queen and I don't 
know what I would do without them and all the benefits of this plan! It 
is for all of these reasons: disease management, preventative care, 
nutritional assistance and especially the no co-pay, I don't have to 
live in an assisted living home.

                                 

    Chairman STARK. Thank you very much. I will start the 
inquiry here. We may get called away again for about 15 minutes 
if a vote comes up. I hope some of you will be able to stay, if 
all of the members do not have a chance to inquire.
    Ms. Kennedy, I am not sure I completely understand the 
Louisiana Charity Hospital setup, but it has been suggested 
that in some states, the governors are not too keen about 
enrolling more people in these plans because it costs the state 
something to enroll them.
    That certainly would not be any of the governors you and I 
know, because they are all kind-hearted folks.
    In Louisiana, would they not, if they were not in the MSP 
program, for instance, would they not become eligible for the 
Charity Hospital program in Louisiana? In a sense, if you get 
them into MSP, the state might save a little because the 
Federal Government would pay part of that and it would not have 
to be entirely born by the Charity Hospital, or is that not a 
correct understanding of your state program?
    Ms. KENNEDY. Chairman Stark, the major benefit of the 
Medicare savings program is that we pay the Medicare Part B 
premium, which in 2000, January of 2000, was $45.50. Now, it is 
$93.50.
    Whether or not someone gets their health care at one of the 
safety net hospitals in Louisiana, their Medicare premium for 
Part B coverage is $93.50.
    Chairman STARK. You mentioned all the things you do, and I 
am impressed by the increase that you have had. Do you have any 
idea to help us? We have heard today people say they do not 
want to impose costs on states.
    Let's suppose that we said to Mississippi, you have to do 
what Louisiana does, maybe they do, but let's just assume they 
do not have as good a program as you do, what would you guess 
it would cost the State of Mississippi just to increase their 
efforts to enroll MSP people at the level you do?
    Any idea how much we are talking about?
    Ms. KENNEDY. I think as an indicator, I could use the 
amount of the Robert Wood Johnson Foundation grant, which was 
$140,000 annually for three years, and then we got an extension 
because of Katrina and the issues with enrollment. The Robert 
Wood Johnson Foundation gave us an additional year.
    We were able to get Federal matching funds which parlayed 
that $140,000 into $280,000. Also, that technical assistance 
from the Rutgers Center for Health Policy, that kind of 
technical assistance is helpful for states.
    I might add, Chairman Stark, that a model that could be 
used perhaps is the 1999 Ticket to Work legislation, set aside 
money for states for administration, Medicaid infrastructure 
grants they are called. They are not mandatory. States can 
voluntarily apply for those grants and get help for outreach, 
coalition building, to improve enrollment in that program and 
the optional Medicare for Working People with Disabilities 
program.
    I know those grants vary from $500,000 annually to $1 
million. These are administrative grants with no state match 
requirement. Those are, I think, are an incentive for states.
    Chairman STARK. Give me an idea, let's say, in round 
figures, you have been spending $280,000, maybe $300,000 a 
year, about how many people have you enrolled as a result, 
would you guess, of that kind of revenue, with that kind of 
expenditure?
    Ms. KENNEDY. Of the 44,000--the annual mailing, even before 
we got the grant in 2002, we had used the Social Security leads 
file, but that identifies everyone who is a Social Security 
beneficiary. It is just as the name implies, a leads file, 
because it does not contain information about assets, about a 
spouse's income, or other income other than Social Security.
    There was a mailing in 2002 by Social Security that had 
state specific information, the number in Louisiana to call, 
and we got a surge there.
    I think the estimate by the GAO was that there was a .9 
percent increase as a result of that mailing in Louisiana.
    Chairman STARK. I am just trying to figure out with this 
$300,000 that you used, about how many numbers of people do you 
think you signed up as a result of spending that money? Can you 
make a guess?
    Ms. KENNEDY. 40,000 over seven years.
    Chairman STARK. 6,000 people a year.
    Ms. KENNEDY. About 5,000 a year, as a result of outreach 
and improvements in our system.
    Chairman STARK. For $60 a head, you got people signed up.
    Ms. KENNEDY. It would seem.
    Chairman STARK. That is pretty good, is it not?
    Ms. KENNEDY. Yes, sir.
    Chairman STARK. I wonder why the Federal Government thinks 
that would be so horribly expensive. It does not sound as 
expensive as fixing Katrina, does it?
    Dr. Payne, I just want to commend you and your organization 
for pitching in here to help us. I have a suspicion that many 
of the people that will be helped if we follow your suggestions 
are not members of AARP. They probably do not have enough money 
left over to take advantage of all the wonderful discounts you 
offer the members in a variety of areas that your members can 
participate in.
    I do appreciate your outreach and your assistance and your 
suggestions. I want to thank you for that.
    Mr. Doggett, would you like to inquire?
    Mr. DOGGETT. Yes. Thank you very much, Mr. Chairman. Ms. 
Kennedy, I do thank you for your leadership and that of your 
agency. I would hope that the Center for Medicare and Medicaid 
Services could take some lessons from your success and 
commitment there in Louisiana.
    Ms. Santiago, I am particularly pleased that you are here 
today because you are what this is all about. You had the good 
fortune to be automatically enrolled in this program. You did 
not have to go through a lot of hoops to get in it.
    I believe that there are tens of thousands of seniors that 
are out there just like you that need help with their feet, 
that have heart medications, that have other needs, many of 
them probably some of your friends, that are not even able to 
come up to Washington as you have been able to do.
    The reason that I am expressing such outrage this morning 
about the indifference and the delay from the Centers for 
Medicare and Medicaid Services is I am worried about those 
people, that they are not getting any of the kind of help you 
are getting.
    When you come here today, you really demonstrate why we 
need to act and why we need to force a bureaucracy that has 
been indifferent and has delayed to get its job done, and that 
is what we are trying to do.
    Ms. Nemore, you have focused attention on some of the 
practicalities of what happens when people go to apply for 
benefits. One of the areas that I know you and Dr. Payne 
support and your organizations support is what I propose to do 
with reference to sharing Internal Revenue Service data, but 
that is only one part of the bill.
    Talk to our Committee a little bit about the application 
process itself, and some of the things in the current asset 
test as mandated by law, that we are trying to change, and how 
they make it more difficult for a person like Ms. Herrera who 
might want to apply and are not automatically enrolled, to get 
the benefits that she got.
    Ms. NEMORE. Yes. Mr. Doggett, I can speak to several very 
particular things in the application that we believe could be 
changed administratively, and then I would like to talk also to 
your comment that Ms. Santiago-Herrera was automatically 
enrolled.
    There are several things on the application. One, there was 
some conversation with the administration earlier about where 
you get help from your family, what is referred to as in-kind 
support and maintenance.
    The questions on that in the application are confusing, and 
we understand from advocates in the field that people often do 
not understand exactly what is being asked in that question, 
and they give incorrect--they give information that is not 
really what is being asked, and that can disqualify them.
    We believe that could be eliminated administratively 
because while the Social Security Administration and CMS are 
linked into the Supplemental Security Income program's rules, 
they have deviated from those rules already, and they have 
deviated in ways that are helpful.
    Mr. DOGGETT. Has your Center asked them to do that 
administratively?
    Ms. NEMORE. Yes, we have.
    Mr. DOGGETT. How long ago was that request?
    Ms. NEMORE. We and many other advocacy organizations have 
made those comments at every opportunity, before----
    Mr. DOGGETT. Going back to 2003?
    Ms. NEMORE. Yes, before the law went into effect.
    Mr. DOGGETT. CMS has declined to do that so far 
administratively?
    Ms. NEMORE. That is correct. That pertains to counting 
income, how you count income. Another piece that is commonly 
referred to that pertains to how you count assets is a question 
about life insurance.
    Life insurance is again a confusing question because life 
insurance is allowed if the face value of your policy is under 
$1,500, but if it is over that, then you have to report the 
cash surrender value. These are terms, when I was briefing your 
staffs earlier this week, we realized that even among----
    Mr. DOGGETT. Experts.
    Ms. NEMORE. People who work on this all the time, that is 
very confusing terminology, and the amount has been $1,500 
since the beginning of time, and has never ever been indexed at 
all.
    Both the lack of indexing of that amount and the confusion 
of having to report it, we think are obstacles on the 
application.
    Mr. DOGGETT. You might have a senior who bought a life 
insurance policy early in their life, a small policy, and by 
this time, that insurance company may have changed hands three 
or four different times. They have misplaced the policy. They 
hoped it would be there to cover their burial expenses or help 
their family at the end of their life, and they are confused 
about that, and finding all that is an obstacle to them getting 
these benefits.
    Ms. NEMORE. Those are the kinds of things that make it hard 
for people, and they end up having their application 
disapproved because they were not able to find it or to provide 
the documentation. We know that is a factor.
    There is another thing, the question that you have in your 
legislation to get data from IRS, we believe it may be possible 
for Social Security to get those data if they had the 
permission of the beneficiary, and they could perhaps put a 
check off box on their application that would say I agree to 
have SSA check IRS data and send it to my state.
    Finally, SSA has done something that many states have not 
done, and it is beneficial. They allow people to certify the 
truth of the contents of their application. We would be much 
better off if more states would adopt that. Unfortunately, SSA 
has used language that is quite intimidating by including a 
reference to crime and going to prison for giving mis-
information.
    The reference to the crime is in the context of fraud. It 
is intimidating language, and I think people may fear that if 
they just made a mistake or they forgot to report something 
that they could go to prison. We believe that is a barrier.
    I would just like to quickly go back to this issue getting 
automatically enrolled. I think it is an important one both 
administratively and legislatively for us to look at.
    According to CHS's numbers from June 2006, eighty percent 
of the people getting the low income subsidy are automatically 
enrolled. Eighty percent of the people getting the low income 
subsidy are automatically enrolled. That is how we get people 
into programs, by not making it difficult for them.
    If we could have, as other people testifying have 
suggested, a sort of cross deeming, meaning if you are in this 
program, you are deemed eligible for this program, we do that 
for MSP. If you are in MSP, you are deemed into the low income 
subsidy.
    If we could align the programs closely enough so you could 
do that both ways, then if I went to Social Security to sign 
up, I would get both programs. If I went to my state agency to 
sign up, I would get both programs. That would be a big step 
towards improving the enrollment in both programs.
    Mr. DOGGETT. Thanks to all four of you for your statements.
    Chairman STARK. Mr. Camp.
    Mr. CAMP. Thank you. Thank all four of you for being here. 
Thank you for your testimony.
    Ms. Kennedy, my first question was going to be after sort 
of reviewing your testimony and looking at the things Louisiana 
has done and this flexibility is available to all states, why 
have not other states done what Louisiana has done, and then I 
saw you did receive a grant from a Foundation, and also the 
matching funds.
    What about states who do not have these resources? Do you 
think that is a big barrier to not adopting some of the 
flexibility and changes that Louisiana did?
    Ms. KENNEDY. I cannot speak for them. I think it would be a 
factor.
    Mr. CAMP. Would Louisiana have been able to proceed with 
those reforms without the Foundation and matching dollars?
    Ms. KENNEDY. No.
    Mr. CAMP. Dr. Payne, if we expand the number of people--
first of all, if you look at the MSP programs, between 13 and 
30 percent of the eligible low income beneficiaries are 
actually signed up. It is not a high enough number.
    What I heard in your testimony was let's expand the number 
of people eligible for those programs. Should we not focus on 
the currently eligible people and try to get more of them 
enrolled before we expand the program?
    Ms. PAYNE. No. We feel that there are a large number of 
people who need these benefits, desperately need these 
benefits, and we ought to do everything we possibly can to 
bring in those vulnerable populations.
    Mr. CAMP. Absolutely.
    Ms. PAYNE. There are some administrative efficiencies that 
can be employed to improve the program, but we certainly think 
that we need to remove all of the barriers to enrollment in 
Part D, especially for low income communities.
    Mr. CAMP. Yes. That is not suggesting an expansion of the 
program, but that is trying to get those who are currently 
eligible enrolled, which Part D has done a much better job of 
than MSP. Would you agree?
    Ms. PAYNE. Yes, I would agree with that. I think several 
have mentioned the integration of programs. We think if one is 
eligible for LIS, then certainly they ought to be eligible for 
MSP and vice versa. I think there needs to be more integration 
of the programs.
    Mr. CAMP. Ms. Santiago-Herrera, if you were to lose access 
to your current plan and had to go back to the plan that you 
had before, what would that mean?
    Ms. SANTIAGO-HERRERA. I would have to go into a nursing 
home because there would be no one to come to see about my feet 
or no one to come to help me clean the house or take a bath, 
and there would be no food for me, because I am a diabetic. I 
became a diabetic a year ago.
    When they sent me the handbook to choose from, I did not 
know what to choose from because the book is very confusing, 
believe me, when I tell you. I just did not know.
    My neighbor came over and she was telling me about 
Evercare. I said, well, I do not know, it is too much for me. I 
just put the book aside. The next day I called Evercare, and 
they sent a man and his wife out to my house, and they sat down 
and went through the whole thing to make me understand it.
    Also, I forgot to mention, they give me ten trips a year to 
my doctor, back and forth. They would wait for me and bring me 
back. I have had the five heart attacks and the three strokes.
    Mr. CAMP. Thank you.
    Ms. SANTIAGO-HERRERA. I could not exist without them, sir.
    Mr. CAMP. You were not automatically enrolled then, you 
signed up yourself?
    Ms. SANTIAGO-HERRERA. No, I signed up.
    Mr. CAMP. At the suggestion of a friend.
    Ms. SANTIAGO-HERRERA. Yes.
    Mr. CAMP. Thank you. Thank you all. Thank you, Ms. Nemore, 
for coming to the previous briefing and helping us understand 
these issues. I appreciate all of your testimony. Thank you 
very much.
    Thank you, Mr. Chairman.
    Ms. SANTIAGO-HERRERA. Thank you, Mr. Chairman.
    Chairman STARK. Mr. Doggett?
    Mr. DOGGETT. If I could direct a query to Dr. Payne and Ms. 
Nemore really on this same point that Mr. Camp raised, because 
it is a critical issue for you to comment on.
    We see so many people that are not covered now, who are 
eligible, according to Social Security and Medicare, over three 
million people.
    Comment, if you will, on the observation, and it appears to 
have some good reason behind it, that if you have three million 
people that are not covered, why should we raise the asset test 
or adjust it in order to expand that number?
    What is the rationale behind doing that? You did that to 
some extent, Dr. Payne, but I know you have not inquired on it. 
I believe the people we are talking about expanding it, you 
would like to see it expanded much more than my bill, but the 
group we are expanding it to slightly in this bill are not rich 
people. They are people of fairly modest income.
    If you would just close focusing on that question that I am 
so pleased Mr. Camp raised.
    Ms. NEMORE. Thank you, Mr. Doggett. I think if we look at 
the rules for the low-income subsidy and the way it has been 
administered both by how Congress described it and how SSA has 
done it, and the Medicare savings programs, what I see is that 
Congress has grown in its understanding over the last 20 years 
about the needs of low income beneficiaries.
    We started in 1988 with 100 percent of poverty, and by the 
time we got to Medicare Part D, we recognized that people 
needing full benefits need to be at 135 percent of poverty. It 
took us 20 years--it took us until 1997 to get to that level 
for the Medicare Savings Programs.
    We also recognized in Part D what had not been recognized 
before, that you have to index the asset test. The asset test 
for the Medicare Savings Program is frozen at a number that was 
chosen in 1988 based on an existing number in the SSI program 
that had never been indexed.
    If we expanded the MSP programs so they were aligned with 
LIS and increased the assets so those were aligned, we would 
then be in a position where either program would be a way to 
get into the other program.
    What your legislation does is recognize that there are a 
lot of people who have very low incomes who have just a little 
more assets than we allow, and that it is important to reach 
those people to get that asset test at least higher.
    As you know, we along with AARP and other groups, support 
the elimination of that test because the very existence of it 
can be a barrier to enrollment.
    Increasing it we know will bring some more people in who 
are very low income people.
    Ms. PAYNE. Mr. Doggett, I will simply make two points. We 
think it is incredibly reasonable to simplify the process, 
streamline the application, remove the asset test, to reach out 
to those low income communities, as I said earlier, that need 
these services so desperately, and to look at better alignment 
between the programs.
    We think it is incredibly simple to identify those 
individuals. Social Security is already making that information 
available or IRS is making the information available to Social 
Security. They are using it for Part D premiums.
    Why can we not use the same process for identifying poor 
people? We think again that it is a reasonable step. Your bill 
opens the door for all kinds of opportunities for those that 
are most vulnerable, and there are some very simple techniques 
that we can use.
    Social Security has been very good at protecting privacy. 
We think they can play a much greater role in ensuring a 
process, a simple process, for identifying those who need these 
services.
    Mr. DOGGETT. Thank you very much for all you have 
contributed this morning and what you are doing in your 
individual professional capacities, and thank you, Mr. 
Chairman, for focusing attention on this major problem.
    Chairman STARK. Thank you, Mr. Doggett, for your efforts. I 
want to thank all the witnesses for being here with us today.
    Ms. Santiago-Herrera, is this your first trip to 
Washington?
    Ms. SANTIAGO-HERRERA. Yes, sir.
    Chairman STARK. Pretty exciting, is it not?
    Ms. SANTIAGO-HERRERA. Yes, sir.
    Chairman STARK. Are you going to do some sightseeing?
    Ms. SANTIAGO-HERRERA. Yes.
    Chairman STARK. Nice of you to be here.
    This meeting is adjourned.
    [Whereupon, at 1:32 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]
               Statement of the National Council on Aging
    The National Council on Aging (NCOA) is the nation's first 
organization formed to represent America's seniors and those who serve 
them. Founded in 1950, NCOA's mission is to improve the lives of older 
Americans. Our programs help the nation's seniors improve their health, 
find jobs and job training, discover meaningful opportunities to 
contribute to society, enhance their capacity to live at home, and 
access public and private benefit programs. Our members include senior 
centers, area agencies on aging, faith-based service agencies, senior 
housing facilities, employment services, and consumer organizations. 
NCOA also includes a network of more than 15,000 organizations and 
leaders from service organizations, academia, business and labor who 
support our mission and work.
    NCOA chairs the Access to Benefits Coalition (ABC),\1\ comprised of 
national and community-based organizations dedicated to ensuring that 
Medicare beneficiaries with limited means know about and make the best 
use of resources available to access their needed prescription drugs 
and reduce their prescription drug costs. Established in 2004, the 
Access to Benefits Coalition has involved hundreds of community-based 
nonprofits through 55 local coalitions in 34 states and the District of 
Columbia, in educating and enrolling tens of thousands of beneficiaries 
in the Medicare Part D Low-Income Subsidy (LIS) and other prescription 
savings programs.
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    \1\ www.accesstobenefits.org.
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    ABC and its network of local organizations use powerful web-based 
tools such as NCOA's BenefitsCheckUp' decision support tool 
\2\ to help beneficiaries--as well as family caregivers and 
organizations who wish to assist them--to understand, apply for, and 
enroll in public and private prescription savings programs. 
BenefitsCheckUp' also helps determine if individuals qualify 
for the LIS, Medicare Savings Programs (MSPs), and other prescription 
savings programs with application forms available on the site, or 
enabling users to apply online for some of the benefits.
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    \2\ www.benefitscheckup.org.
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    NCOA is committed to finding and enrolling low-income Medicare 
beneficiaries in the available needs-based benefits programs for which 
they are eligible. We are pleased to submit this statement to the 
Subcommittee to highlight the need to simplify and streamline both the 
LIS and MSP. The statement also includes discussion of cost-effective 
strategies for finding and enrolling qualified eligibles in needs-based 
benefits programs.
The Medicare Part D Low-Income Subsidy (LIS) and the Medicare Savings 
        Programs (MSPs)
    The LIS and MSP programs provide substantial financial assistance 
to low-income Medicare beneficiaries both in accessing their needed 
prescription drugs and paying their Medicare premiums and cost-sharing. 
Although this assistance is available, enrollment rates in both 
programs remain unacceptably low. Some of the reasons for the low 
enrollment rates include confusing and difficult applications and 
eligible people not knowing the programs exist. Removing these barriers 
to enrollment is critical to increasing enrollment rates and providing 
low-income Medicare beneficiaries with the assistance they need.
The Low-Income Subsidy
    It has been estimated by the U.S. Department of Health and Human 
Services that at least 75 percent of the Medicare beneficiaries still 
without any prescription drug coverage are eligible for the Low-Income 
Subsidy.\3\ NCOA estimates that only between 35 and 42 percent of 
Medicare beneficiaries who needed to voluntarily file an application 
with SSA in 2005 and 2006 to receive LIS have successfully done so (2.2 
million out of 5.2 or 6.2 million). The remaining 58 to 65 percent are 
not receiving the assistance for which they are eligible. It is 
important that efforts to find these people continue as the remaining 
LIS eligibles stand to gain the most from the prescription drug benefit 
and are least likely to have had prescription drug coverage before Part 
D began.
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    \3\ Statement of Michael Leavitt, Secretary of U.S. Department of 
Health & Human Services, May 2006.
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    To find the remaining LIS eligibles, certain changes need to be 
made to the Part D LIS program. NCOA and the Access to Benefits 
Coalition (ABC) released a report entitled The Next Steps: Strategies 
to Improve the Medicare Part D Low-Income Subsidy \4\ in January 2007. 
The report outlined legislative, administrative and regulatory changes 
that should be made to the LIS program to improve access for low-income 
beneficiaries. The most important legislative recommendations include:
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    \4\ http://www.accesstobenefits.org/library/pdf/TheNextSteps.pdf.

          Eliminate the asset eligibility test. The asset test 
        is the single-most significant barrier to the LIS for low-
        income seniors and people with disabilities. The asset test 
        penalizes retirees who did the right thing by creating a modest 
        nest egg to provide some security in their old age. People who 
        manage to save a modest sum for retirement and still have very 
        limited incomes should be encouraged and rewarded, not denied 
        the extra help that they need. Of the LIS applications filed, 
        the Social Security Administration (SSA) reports 41 percent of 
        denials were because the asset limits were exceeded. 
        Eliminating the asset test would provide coverage through the 
        ``donut hole'' for 1.8 million low-income beneficiaries in 
        greatest need of help.
          Fund the National Center on Senior Benefits Outreach 
        and Enrollment and support organizations that use a person-
        centered approach to outreach, which has been shown to be one 
        of the most efficient ways to find and enroll LIS eligibles. 
        Finding and enrolling seniors and people with disabilities with 
        limited resources in needs-based benefits programs has been a 
        significant challenge for many years. The Older Americans Act 
        (OAA) includes an authorization for the National Center on 
        Senior Benefits Outreach and Enrollment that will use cost-
        effective, person centered approaches to reach the remaining 
        LIS eligible beneficiaries. We recommend that $4 million be 
        provided to support the work of the National Center to create 
        Benefits Enrollment Centers that will: maintain web-based 
        decision support tools; develop and maintain an information 
        clearinghouse on best practices; and provide training and 
        technical assistance.
          Permit beneficiaries to apply for LIS and enroll in a 
        plan at any time without penalty. We are grateful to the 
        Centers for Medicare & Medicaid Services (CMS) for extending 
        the Special Enrollment Period (SEP) and waiving the Late-
        Enrollment Penalty (LEP) for LIS eligibles through 2007. 
        However, we urge Congress to make these protections permanent. 
        Finding the remaining LIS eligibles will take time, as the 
        experience in other needs-based benefits programs indicates. 
        Under Medicare Part B, low-income beneficiaries eligible for 
        Medicare Savings Programs can enroll any time and are exempt 
        from penalties. The Part D rules should be made to be 
        consistent with the Part B rules. Remove the LIS application 
        questions on the cash surrender value of life insurance 
        policies, and the value of in-kind support and maintenance 
        (ISM). Many beneficiaries do not have this information and 
        paperwork readily available. Insurance policies often are no 
        longer held by the company they were originally purchased from, 
        making it difficult to track down the company currently holding 
        the policy. Beneficiaries also often plan for their families to 
        use the life insurance benefit to pay for their burial 
        expenses. Questions on ISM should also not be included because 
        the amount is very difficult for applicants to estimate, due to 
        its fluctuating nature and if people had assistance with their 
        prescription drug costs they often would not have to rely on 
        ISM.
          Do not count funds in retirement savings plans such 
        as 401(k) accounts as assets. Forcing people to cash in their 
        401(k) plans to become eligible for LIS penalizes seniors for 
        doing the right thing by saving for retirement. Defined benefit 
        pensions are not counted as an asset when determining LIS 
        eligibility. For most of those without a defined benefit 
        pension plan, the resources in their 401(k) are their only 
        retirement savings. It makes no sense to discriminate against 
        those who rely on their 401(k) plan. Periodic distributions 
        from 401(k) accounts may constitute the only income people have 
        to supplement their Social Security benefits.
          Index the copayments for people between 100 and 150 
        percent of the Federal Poverty Level to the Consumer Price 
        Index (CPI), not Part D drug cost increases. LIS-eligible 
        people with incomes below 100 percent of the FPL have their 
        prescription drug copayments increased each year according to 
        the CPI. This roughly corresponds with beneficiaries Social 
        Security cost-of-living adjustment (COLA) reflecting 
        beneficiaries' ability to pay. However, for LIS-eligible 
        beneficiaries with incomes between 100 and 150 percent of 
        poverty, their co-payments are indexed to increases in Part D 
        prescription drug costs, which rise at twice the rate of 
        beneficiaries COLAs. Therefore, copayments become increasingly 
        unaffordable and the value of the benefit for people between 
        100 and 150 percent of the FPL diminishes significantly over 
        time.
          Require the Internal Revenue Service (IRS) to provide 
        SSA with tax-filing data to better target outreach efforts, 
        while recognizing privacy concerns. Strategic partnerships 
        among federal agencies, such as SSA, CMS, and IRS, will allow 
        for targeted outreach directly to the people who are most 
        likely eligible for LIS. CMS and SSA should have access to 
        income and resource data contained in IRS files, thereby 
        allowing them to more accurately identify potential LIS 
        eligibles. This information would allow these agencies to 
        target their outreach and enrollment efforts and would result 
        in increased enrollment in the LIS program. Such data sharing 
        has been permitted for the Medicare-approved drug discount card 
        Transitional Assistance (TA) program and for administering Part 
        B income related premiums.
          Do not count prescription drug LIS assistance when 
        determining benefits under other benefits programs. The effect 
        of the LIS is compromised when reductions are made in other 
        needs-based assistance, due to receipt of the LIS benefit. 
        Congress should pass legislation to ensure that benefits under 
        other needs-based programs, such as food stamps, Section 8 
        housing, and the Medicaid Medically Needy program, are not lost 
        or reduced on account of receiving LIS benefits. Low-income 
        beneficiaries should not be forced to choose between their 
        housing or food needs and receiving help to pay for their 
        prescription drugs. The Medicare Modernization Act (MMA) 
        included this type of provision for the $600 TA under the 
        Medicare-approved drug discount cards.
          Have SSA screen LIS applicants for participation in 
        the Medicare Savings Programs (MSPs). State Medicaid offices 
        are required to screen for MSPs when a person applies for the 
        LIS. However, most LIS applications are not filed at state 
        Medicaid offices, but instead are processed by SSA. SSA should 
        also be required to screen for MSP eligibility at the time of 
        the LIS application. Participation in any of the MSPs 
        automatically qualifies a person to participate in the full 
        LIS. Since SSA already is collecting income and asset 
        information for the LIS application, it would be relatively 
        easy to screen for MSP eligibility at the same time. A study by 
        the Access to Benefits Coalition found that 71 percent of the 
        people who were found eligible for LIS also screened eligible 
        for one of the MSPs. There is precedent for this as SSA already 
        enrolls Medicare beneficiaries who receive Supplemental 
        Security Income (SSI) in Medicaid in 32 states and the District 
        of Columbia.

The Medicare Savings Programs
    MSP is a joint Federal and State program that provides needed 
financial assistance to Medicare beneficiaries with their premiums and 
cost-sharing. There are four MSP programs: the Qualified Medicare 
Beneficiary program (QMB) pays Medicare premiums and cost sharing for 
people under 100% of the Federal Poverty Level (FPL); the Specified 
Low-Income Medicare Beneficiary program (SLMB) pays Part B premiums for 
people between 100 and 120% of FPL; the Qualifying Individual program 
(QI) pays Part B premiums for people between 120 and 135% of FPL, and 
the Qualified Disabled and Working Individual program (QDWI) pays Part 
A premiums for people with Medicare who are under age 65 and disabled, 
whose incomes are at or below 200% FPL and who no longer qualify for 
premium-free Medicare Part A only because they returned to work. 
Additionally, people eligible for QMB, SLMB or QI are automatically 
eligible for the LIS. Although MSPs provide much needed assistance, 
enrollment rates in the program are low. Only 33 percent of people 
eligible for QMB and 13 percent eligible for SLMB are enrolled.
    QMB and SLMB are entitlement programs jointly financed with both 
Federal and State money. This means that anyone who meets the 
qualifications can enroll in the program. QI, however, is not an 
entitlement program and is entirely financed by a grant from the 
Federal Government to the states. Because QI is not an entitlement 
program, people who are otherwise eligible may not be able to receive 
the benefit if the money available to the states through the Federal 
grant is used up. Additionally without Congressional action, the QI 
program is set to expire at the end of Fiscal Year 2007.
    Changes to simplify the MSP application and align the program with 
the LIS would increase the number of people enrolled in the program. 
Some of the recommended changes to the MSP program include:

          Merge the QI program with the SLMB program to make QI 
        permanent, and provide funding to the states for SLMB at the 
        increased SCHIP rate.
          Eliminate the asset test for MSP eligibility. If this 
        cannot be done, we support increasing and aligning both the MSP 
        and LIS asset tests to be more reflective of people with 
        limited incomes who have managed to save a modest amount of 
        money for retirement. More closely align MSP and LIS programs 
        (see earlier LIS recommendations on life insurance, in-kind 
        support and maintenance, 401(k)) by gradually increasing income 
        eligibility to 150 percent of the Federal Poverty Level. Also 
        deeming should take place between both programs--those eligible 
        for LIS should automatically be eligible for MSP.
          Do not require face-to-face interviews for MSP 
        eligibility, as it deters people from seeking assistance under 
        the program. In addition, the MSP application should be 
        available both in multiple languages and online in all states 
        to encourage potential eligible beneficiaries to apply.
          State Health Insurance Assistance Programs (SHIPs) 
        should be given $1 per Medicare beneficiary to conduct outreach 
        and education. In addition, first year funding of $4 million 
        should be provided for the National Center on Senior Benefits 
        Outreach and Enrollment authorized under the OAA. Funding 
        should be targeted to MSP and LIS eligibles. Eliminate estate 
        recovery for the MSP program in all states that have not 
        already done so on their own. It does not amount to a 
        significant amount of money for the states, it is 
        administratively expensive, and it serves as a barrier to MSP 
        enrollment for people who need the assistance offered under the 
        program.
          The SSA Commissioner should include information on 
        MSP for those people who are likely eligible when the letters 
        for newly eligible Medicare Parts A and B beneficiaries are 
        sent. One of the reasons MSP enrollment numbers remain low is 
        that most people do not know the programs exist. In addition to 
        sending letters, other outreach efforts need to be made to 
        increase awareness of the program.
          IRS data provided to SSA for the indexing of Part B 
        premiums should be used by SSA to screen potential eligibles 
        for participation in MSPs and LIS.
          We support three months of retroactive eligibility 
        for people found eligible for QMB, as it is for both the SLMB 
        and QI programs.
          NCOA supports extending the LIS rule for determining 
        family size to the MSP program. This would allow those with 
        larger families to have more resources, making it consistent 
        with their larger family responsibility. Many states currently 
        do not take into account family members in addition to the 
        spouse.

    Simplifying and aligning the LIS and MSP programs will encourage 
low-income Medicare beneficiaries to enroll in the programs as people 
eligible for one of the programs are likely eligible for the other.
Cost Effective Strategies fo Enrolling Beneficiaries in Needs-Based 
        Benefits
    Over the past three years, NCOA has been testing a variety of 
strategies for increasing enrollment in the LIS and other key needs-
based public benefits. Various pilot projects have been funded 
primarily by The Commonwealth Fund, The Atlantic Philanthropies, CMS, 
and Kaiser Permanente.
    Over the past year, four evidence-based strategies have emerged 
that are particularly cost-effective for finding and enrolling low-
income beneficiaries in available Medicare programs for low-income 
beneficiaries:

        1.  Use comprehensive, person-centered approaches to outreach 
        and enrollment (rather than focusing solely on a single 
        benefit).

    People who are eligible for one means-tested public benefit are 
highly likely to also be eligible for, but not receiving other key 
public benefits. Many people who are applying for LIS are also eligible 
for other public benefits and vice versa.
    A major benchmarking study by The Bridgespan Group and NCOA 
examining more than 30 different single-benefit outreach and enrollment 
projects shows that, consistently, about 55 percent of the total costs 
per enrollment are related to identifying qualified individuals and 
persuading them to apply and only 45 percent of the costs relate to 
actual assistance with applications.\5\
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    \5\ http://www.accesstobenefits.org/library/pdf/
PathwaysToSuccess.pdf
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    Most federal agencies are limited by statute and/or practice from 
conducting outreach for more than a few benefits (e.g., USDA conducts 
Food Stamps outreach; SSA conducts LIS and SSI outreach; CMS conducts 
Medicare Part D outreach). As a result, the government is incurring the 
same costs of identification and persuasion over and over again. Much 
more could/should be done to increase the cost-effectiveness of 
government-sponsored outreach and enrollment efforts by encouraging/
requiring screening for multiple benefits.

        2.  Invest in the aging network and trusted, non-profit 
        community-based organizations that can create broad-based 
        networks to efficiently connect people who are likely eligible 
        for needs-based benefits to enrollment specialists who will 
        help them apply.

    The ``aging network'' and other community-based non-profit 
organizations are well-suited to find and enroll low-income Medicare 
beneficiaries because they: are client-focused and person-centered; 
have trusting relationships with many beneficiaries; can create 
community-wide referral systems; and are able to leverage funding from 
multiple sources.
    The most cost-effective, community-based approach seems to be to 
create referral networks in which key organizations (such as drug 
stores, health plans, health centers, social service agencies, etc.) 
efficiently refer people seeking assistance and who are likely eligible 
to specialty enrollment centers. Ideally, these referrals should be 
``warm transfers'' (i.e., the ``real-time'' transfer of a caller who 
has been identified in some way as having a specific need) to a 
helpline dedicated to assisting them with the applications.
    Warm transfers to LIS enrollment centers result in the highest 
numbers of actual applications and are, on average, almost five times 
more cost-effective than direct mail and three times more cost-
effective than outbound calls. In every community, there is a need for 
some targeted funding, particularly to focus on enrollment assistance 
(helping people to fill out the application forms once they have been 
identified).

        3.  Promote the widespread use of person-centered, online 
        screening and enrollment services (such as the BenefitsCheckUp) 
        that enable consumers and organizations to screen for multiple 
        benefits and directly file LIS applications;

    Online screening and enrollment services have the potential to help 
two different groups of low-income Medicare beneficiaries: consumers 
who can successfully use the Internet to get benefits for themselves or 
family members; and consumers who need the assistance of intermediary 
organizations to learn about and enroll in benefits.
    There are many advantages to online screening and enrollment tools, 
including: they can be easily accessed by both consumers and 
intermediary organizations and they can simultaneously screen for and 
facilitate enrollment in multiple benefits. Online filing for LIS 
significantly reduces processing costs for SSA.
    The BenefitsCheckUp' program, which is supported by 
foundations and corporations, served 232,000 clients in 2006 and its 
consumer edition (serving people and/or their caregivers directly 
accessing the site) is currently producing enrollments in major public 
benefits at a cost $15 per benefit. If the online service was sponsored 
and/or promoted by government, it could reach and serve many more 
people and would likely achieve enrollments for $7--$10 per major 
benefit. Online tools also increase the efficiency and effectiveness of 
community-based organizations. Enrollment centers that assist consumers 
by filing online for LIS (either directly to SSA or through 
BenefitsCheckUp') are more cost-effective than organizations 
filling out application forms and mailing them in. Online tools make 
person-centered screening (for multiple benefits) and application 
filing much easier to do.

        4.  Encourage states to work across departments and use cross-
        matched state lists of people already enrolled in other public 
        benefits to identify individuals eligible for and not receiving 
        LIS and MSP.

    State benefit lists are a valuable resource that should be utilized 
to maximize enrollment in LIS and other benefits. The potential of this 
approach is being demonstrated in Pennsylvania. For the past three 
years, the State Department on Aging has been contracting with Benefits 
Data Trust to locate and apply individuals for the PACE/PACENET 
(Pharmaceutical Assistance Contract for the Elderly) program as well as 
the State of Pennsylvania Property Tax and Rent Rebate Program (PTRR) 
and MSP. This partnership exemplifies how this strategy can work to 
successfully locate, contact and enroll individuals into benefits they 
are eligible to receive.
    By cross-matching a list of 300,000 PACE enrollees with a list of 
250,000 Property Tax and Rent Rebate program enrollees (list came 
through Department on Aging from Department of Revenue), the State 
identified 100,000 Property Tax and Rent Rebate program enrollees that 
were likely eligible for and not receiving PACE. By cross-matching the 
250,000 Property Tax and Rent Rebate program enrollees against the list 
of 300,000 individuals receiving PACE/PACENET, the State identified 
90,000 PACE/PACENET enrollees who were likely eligible for and not 
receiving Property Tax and Rent Rebate. By cross-matching the 300,000 
PACE file with the Department of Public Welfare (state Medicaid office) 
file, the State identified 100,000 PACE enrollees who were likely 
eligible for and not receiving MSP benefits).
    Using state lists of people enrolled in other public benefits has 
resulted in higher percentages of people who apply for and, ultimately 
receive, other benefits, as compared to lists that have less accurate 
income and contact information (i.e., people ``believed to be'' 
eligible). Response rates and application conversion rates are higher 
when outreach efforts are able to use pre-existing benefit lists. 
Accuracy of both the financial and contact information provided by the 
Property Tax/Rent Rebate program has resulted in response rates for 
benefits application that are 250% greater than those resulting from 
efforts using purchased commercial lists. From an economic perspective, 
this means the cost of getting people into the benefits is also two and 
a half times less when using a well-targeted list. In other words, for 
the same fixed cost, more people are being helped at a much lower cost 
when efforts are much more targeted. Furthermore, the residual effect 
is that people who were in just one public benefit program in the 
beginning potentially end up being enrolled into three programs.
The National Center on Senior Benefits Outreach and Enrollment
    A more focused, coordinated effort that utilizes person-centered 
assistance, web-based decision-support tools, and sophisticated lists 
of likely eligibles is needed to find and enroll low-income 
beneficiaries. Drawing directly on these strategies, the recently 
reauthorized Older Americans Act now provides a clear path to solving 
the problem by harnessing the potential of the aging network, new 
technology, and best practices based on lessons learned. The OAA 
includes new authorization for a National Center on Senior Benefits 
Outreach and Enrollment that will:

          maintain and update web based decision support and 
        enrollment tools and integrated person-centered systems;
          utilize cost-effective strategies to find those with 
        greatest economic need;
          support efforts for community-based organizations and 
        coalitions to serve as benefit enrollment centers;
          develop and maintain an information clearinghouse on 
        best practices; and
          provide training and technical assistance regarding 
        the most effective outreach, screening, enrollment and follow-
        up strategies.

    Now that the Center is authorized, initial funding of $4 million is 
needed to:

          Work with trusted, experienced community-based and 
        state organizations to support 25 Benefits Enrollment Centers 
        (BECs) across the country with funding at $100,000 per Center. 
        [$2.5 million]
          Conduct pilot projects on list strategies, call 
        centers, and other innovative strategies to test the most cost-
        effective outreach and enrollment methods. [$500,000]
          Maintain and update web-based decision support and 
        enrollment tools and integrated, person-centered systems that 
        are available to BECs, the entire aging network and directly to 
        consumers. [$500,000]
          Train and provide technical assistance to the BECs 
        and to the rest of the aging network, administer the pilot 
        projects and begin to develop an information clearinghouse on 
        cost effective best practices. [$500,000]
Conclusion
    Congress created the MSP and LIS programs to provide needed 
assistance to low-income Medicare beneficiaries in paying for their 
health and prescription drug costs. Unfortunately, enrollment in these 
programs has historically been low. To increase enrollment, needed 
changes should be made to the programs, including simplifying and 
aligning them, to increase access for Medicare beneficiaries with 
limited incomes. Cost-effective best practices should be used in 
outreach and enrollment efforts for needs-based benefits.
    Thank you for the opportunity to submit this statement on behalf of 
the National Council on Aging. If you have any questions please contact 
Howard Bedlin, NCOA's vice-president for Public Policy & Advocacy at 
(202) 479-6685 or howard.bedlin@
ncoa.org.


                                 

                  Statement of Senior Citizens League
    On behalf of the approximately 1.2 million members of The Senior 
Citizens League (TSCL), a proud affiliate of The Retired Enlisted 
Association (TREA), thank you for the opportunity to submit a statement 
regarding low-income programs available to eligible Medicare 
beneficiaries. TSCL consists of active senior citizens, many of whom 
are low income, concerned about the protection of their Social 
Security, Medicare, and veteran or military retiree benefits.
    Some estimates suggest that as many as two-thirds of those eligible 
for certain low-income programs do not participate--often because they 
are not aware that such programs exist or believe they will not qualify 
based on out-of-date information. Frequently, our members contact our 
office with concerns over having to choose between purchasing 
prescription medications and paying bills. In some cases, these 
individuals are eligible for low-income programs but were not aware of 
the programs' existence.

    MEDICARE SAVINGS PROGRAM (MSP)

    With three separate programs for Medicare Part B assistance, the 
first task seems to be determining which one applies for an individual. 
For individuals with an annual income level of $10,452 ($871 per 
month), or $13,932 ($1,161 per month) for couples, the Qualified 
Medicare Beneficiary (QMB) program exists. Asset levels are set at 
$4,000 for individuals and $6,000 for a couple. Persons in the QMB 
program have their Part B premiums, deductibles, and all Medicare cost 
sharing paid by their state Medicaid program. According to a May 2004 
report by The Commonwealth Fund, it is estimated that 4 million seniors 
are eligible, based on income alone, for this program.
    Specified Low-Income Medicare Beneficiaries (SLMB) are persons 
whose annual income is at or below 120% of the federal poverty level, 
or $12,492 ($1,041 per month) for an individual, and $16,668 ($1,389 
per month) for a couple. SLMB are subject to the same asset limits as 
QMB. State Medicaid programs pay SLMB's Medicare Part B premiums.
    The third MSP grouping is Qualifying Individuals (QI). Individuals 
with an annual income between 120% and 135% of the federal poverty 
level fall into this category. To qualify, individuals must have an 
annual income of no more than $14,028 ($1,169 per month), or couples 
must have an annual income of no more than $18,720 ($1,560 per month). 
Asset levels remain the same for this group as for the SLMB and QMB. 
The Federal Government, and not the state, pays Medicare Part B 
premiums for persons designated QI.
    The Federal Government sets the income limits for eligibility, 
application procedures and asset limits. Although income limits are 
adjusted annually, asset limits, which were set in 1989, have not been 
indexed since then, according to The Commonwealth Fund, May 2004 issue 
(``How Asset Tests Block Low-Income Medicare Beneficiaries from Needed 
Benefits''). The asset limits are burdensome, outdated, and 
intimidating. Personal disclosure of one's incomes and assets can also 
be a major hurdle for many elderly individuals. When asked about the 
cash value of in-kind contributions and the cash value of life 
insurance policies, applicants either do not know the value or are 
embarrassed to report such assistance. Counting the ``in-kind'' value 
of meals and support supplied through the generosity of others 
penalizes the neediest of seniors, and disregards the contributions of 
those who kindly supply the most basic of needs. In some instances, 
applicants do not disclose requested information for fear of 
incarceration, which is mentioned on the application.
    Asset limits vary by state. It should also be noted there are a few 
states that have eliminated or adjusted asset levels for the QMB and 
SLMB. States also have the option of using less restrictive measures 
for income and asset levels when determining Medicaid eligibility. In 
these instances, an individual who does not meet federal asset levels 
may be eligible for the MSP assistance.
    In the vast majority of cases, low-income seniors are not aware 
that programs exist to assist with premiums. Indeed, just learning the 
income limits to prepare this statement for the record proved a 
difficult challenge. When this statement was prepared, there was no 
link to Medicare Savings Programs posted on the homepage of 
www.medicare.gov. Information pulled up by use of the website search 
engine was more than one year old and the income limits out-of-date. By 
using the search engine for the `Frequently Asked Questions,' only one 
answer even mentioned MSPs, and it directed us to our state Medicaid 
office, with no income information. The website for the Centers for 
Medicare and Medicaid Services (CMS) is not designed for seniors or 
easy to use by the general public. It also failed to readily supply 
current income information. In fact, in order to prepare this 
statement, we relied on income information from other Medicare 
advocates, the Medicare Rights Center.
    Improved outreach is obviously needed and could be simply supplied 
starting with links to information about the program on the homepage of 
Medicare.gov. In addition, adequate funding must continue for seniors' 
counseling provided by Area Agency on Aging offices; local 
organizations that already reach out to low income individuals; and 
state insurance (Medicaid) offices. In recent years, the need for these 
services has been rapidly growing, but funding has not kept pace.

    LOW INCOME SUBSIDY (LIS) PROGRAM FOR PRESCRIPTION DRUGS

    For persons enrolled in a Medicare Part D prescription drug plan, 
depending on income and asset levels, financial assistance, known as 
`Extra Help,' is available. Enrolling in Extra Help, the Federal 
Government's low income subsidy (LIS), is simpler than MSPs. For 
instance, applications can be submitted on-line, at the state Medicaid 
agency office, through a local Social Security Administration (SSA) 
office, or by deemed status (dual eligible). Persons enrolled in a MSP 
and who receive SSI, or ``Dual Eligibles,'' are automatically enrolled 
in a LIS. Of the 9 million seniors enrolled in a LIS, approximately 6 
million were enlisted automatically, thus they were considered ``dual 
eligibles.'' Seniors not automatically enrolled into a LIS must meet 
the following criteria: annual income is below $15,315 ($1,276 per 
month) single or $20,535 ($1,711 per month) for a couple, with assets 
(bank accounts, stocks, bonds, etc.) of less than $11, 710 (single) or 
$23,410 (couple). Assets do not include house or car values.
    According to a report by the Medicare Rights Center, the SSA found 
that 57% of seniors who applied for extra help were denied due to their 
financial assets, even though they met the income levels. Although the 
income and asset levels are more reasonable with LIS eligibility than 
with MSP, a senior should not be penalized because he or she has 
planned for the future and saved to help pay for unexpected expenses 
associated with older age. TSCL supports eliminating, or at the very 
least updating and indexing, asset tests, especially for MSP 
eligibility.
    Similar to the MSP application, the LIS application is also complex 
and lengthy, which is discouraging to many seniors. Threats of 
imprisonment, questions surrounding the cash value of life insurance 
policies, in-kind support, and bank accounts are intimidating. Some 
estimates suggest there are as many as 5 million seniors eligible for 
Extra Help who have not yet enrolled. TSCL believes this staggering 
number to be the result of long and confusing applications, asset 
testing, and a lack of awareness that Extra Help is even available. The 
SSA reports a person enrolled in Extra Help could save, on average, 
$3,700 annually. This is a huge amount for someone on a limited income.

    SOLUTIONS

    The first step in increasing enrollment numbers for both the MSP 
and the LIS is to make the information more readily available and 
increase outreach. By ensuring the funding for non-federal entities 
such as state Medicaid offices and local SSA offices, more seniors can 
be made aware of these programs. Additional federal grants are needed 
to ensure there are trained Medicare benefits counselors to help 
seniors apply for financial assistance.
    TSCL believes that the asset test should be completely eliminated. 
Basing an individual's eligibility on annual income is sufficient. 
Seniors should not be penalized for saving and planning for the future. 
However, if complete elimination of the asset test is not feasible, 
then, at the very least, increased asset test limits are necessary.
    Another option could be to automatically enroll an MSP beneficiary 
into the LIS, and vice versa. With federal funding supporting both 
programs, the government should consider setting uniform standards 
(including simplified applications) for Medicaid offices to follow when 
determining the eligibility of seniors for the low income programs. 
This would help clear up confusion as to what resources are counted for 
which program and what resources do not need to be disclosed. With 
federal agencies working together with the same end result in mind, 
more eligible seniors would benefit.
    In addition, the government already screens Medicare beneficiaries 
for ``income related'' Part B premiums. TSCL believes many more seniors 
would be enrolled in low income programs if Medicare beneficiaries were 
allowed to permit the Internal Revenue Service (IRS) to share low 
income information with both the SSA and CMS.
    Several pieces of legislation are being, or already have been, 
introduced that offer possible solutions. For example, Rep. Lloyd 
Doggett (TX-25) introduced H.R. 1536, the Prescription Coverage Now 
Act, earlier this year. TSCL fully supports this legislation that 
increases asset test limits from $11,710 to $27,500 for individuals and 
from $23,410 to $55,000 for couples. Rep. Doggett's bill also makes the 
application less intimidating by eliminating questions that ask for 
cash values of life insurance and in-kind assistance received. 
Additionally, H.R. 1536 would authorize the Social Security 
Administration limited use of IRS data, which is already used to 
determine Part B eligibility. Finally, the bill also calls for 
coordination between low income programs in Part B and Part D. TSCL 
encourages Congress to approve this vital legislation.
    TSCL applauds Congress for addressing the low enrollment numbers in 
Medicare assistance programs. With increased outreach, elimination of 
asset test limits, and a less intimidating application process, more 
individuals will be made aware of these programs designed to assist 
with rising healthcare costs. The end result will undoubtedly be 
increased enrollment and better financial stability for seniors in the 
lowest income brackets.
    Thank you.

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