[Senate Hearing 110-56]
[From the U.S. Government Publishing Office]
S. Hrg. 110-56
MEDICARE PART D:
IS IT WORKING FOR LOW-INCOME SENIORS?
=======================================================================
HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
JANUARY 31, 2007
__________
Serial No. 110-1
Printed for the use of the Special Committee on Aging
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
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SPECIAL COMMITTEE ON AGING
HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon GORDON SMITH, Oregon
BLANCHE L. LINCOLN, Arkansas RICHARD SHELBY, Alabama
EVAN BAYH, Indiana SUSAN COLLINS, Maine
THOMAS R. CARPER, Delaware MEL MARTINEZ, Florida
BILL NELSON, Florida LARRY E. CRAIG, Idaho
HILLARY RODHAM CLINTON, New York ELIZABETH DOLE, North Carolina
KEN SALAZAR, Colorado NORM COLEMAN, Minnesota
ROBERT P. CASEY, Jr., Pennsylvania DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri BOB CORKER, Tennessee
SHELDON WHITEHOUSE, Rhode Island ARLEN SPECTER, Pennsylvania
Julie Cohen, Staff Director
Catherine Finley, Ranking Member Staff Director
(ii)
C O N T E N T S
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Page
Opening Statement of Senator Herb Kohl........................... 1
Statement of Senator Gordon Smith................................ 3
Prepared Statement of Senator Larry Craig........................ 35
Panel I
Beatrice Disman, new york regional commission, Social Security
Administration, New York, NY................................... 4
Larry Kocot, senior advisor to the Administrator, Centers for
Medicare and Medicaid Services (CMS), U.S. Department of Health
and Human Services, Washington, DC............................. 17
Panel II
Howard Bedlin, vice president for public policy and advocacy,
Access to Benefits Coalition, Washington, DC................... 41
Ellen Leitzer, J.D., executive director, Health Assistance
Partnership, Washington, DC.................................... 116
APPENDIX
Questions from Senator Lincoln for Beatrice Disman, SSA.......... 139
Questions from Senator Carper for Beatrice Disman, SSA........... 140
Questions from Senator Kohl for Larry Kocot, CMS................. 141
Questions from Senator Lincoln for Larry Kocot, CMS.............. 141
Questions from Senator Carper for Larry Kocot, CMS............... 144
Questions from Senator Lincoln for Ellen Leitzer, HAP............ 145
Statement submitted by Center for Medicare Advocacy, Inc......... 147
Statement submitted by America's Health Insurance Plans.......... 173
Statement submitted by David Kyllo, executive director, National
Center for Assisted Living..................................... 181
Statement submitted by National Senior Citizens Law Center....... 184
Statement submitted by AARP...................................... 190
(iii)
MEDICARE PART D: IS IT WORKING FOR LOW-INCOME SENIORS?
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WEDNESDAY, JANUARY 31, 2007
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The Committee met, pursuant to notice, at 10:35 a.m., in
room SD-562, Dirksen Senate Office Building, Hon. Herb Kohl
(chairman of the committee) presiding.
Present: Senators Kohl, Smith, Craig, Carper, Lincoln,
Nelson, Casey, and Whitehouse.
OPENING STATEMENT OF SENATOR HERB KOHL
The Chairman. Good morning. This hearing will commence now.
We welcome all of our witnesses.
Before we begin, I would like very much to thank Senator
Gordon Smith for the great work that he has done as Chairman of
this Committee over the past few years.
Senator Smith, this Committee was thoughtful, diligent and
very active under your stewardship, and we applaud your
leadership and your enthusiasm, and we will try to build on
much of the work that you started. As you know, our Committee
has a history of bipartisanship, and in that spirit we look
forward to working together.
Even though most of us mark the passage of a year with cake
and ice cream, I don't know anyone who says growing older is
really a piece of cake, and that is why this Committee's work
is so important. We are charged with finding solutions to the
pressing problems that seniors face, and our agenda for the
110th Congress will tackle many of them.
For example, we must rein in health-care costs, and we
ought to start by promoting affordable generic drugs. We also
must improve nursing-home oversight to make sure seniors get
safe and quality care. With the baby-boom generation set to
retire en masse, we have to make sure older Americans can stay
in the workforce longer, if they so choose, and we must also
help people prepare for their long-term care needs.
Finally, we intend to hold a series of hearings to fix the
problems with Medicare's prescription drug program, so that
seniors can finally enjoy a simple, affordable benefit. Today,
more than 24 million people are receiving their drug coverage
through Medicare Part D, and we have a responsibility to make
sure that the program works for all seniors.
To start today's hearings, we will explore problems with
the low-income subsidy benefit and identify practical
solutions. It is worth noting that this extra help for low-
income seniors was one of the major selling points cited by
supporters of the law when it passed, and, so far, that reality
is far from the promise.
Last year got off to a rocky start, as many low-income
seniors were denied the drugs they needed at the pharmacy.
While some of those problems were resolved, serious challenges
remain that are preventing low-income seniors from getting the
low-income subsidy.
First, many prescription drug plans have changed their
benefit, and not all participate in the low-income subsidy
program. Some seniors did not receive the letters notifying
them that they need to choose a new plan. So many are showing
up at the pharmacy confused and frustrated.
Some seniors did switch plans, but their pharmacy has not
been given an up-to-date record, so these seniors are being
charged incorrect copays, or leaving without their drugs.
Seniors faced many of these same problems last year, and we
believe they should have been fixed by now.
So I believe it is time for CMS to put together a
comprehensive plan and report back to this Committee on how
they intend to fix these problems. Second, I am also concerned
about the more than 3 million seniors who are projected to be
eligible for the low-income subsidy, but are not receiving it.
In November 2006, Health and Human Services' Inspector
General recommended that the Social Security Administration
have access to IRS data so that they can better target
potentially eligible low-income seniors. I am working on
legislation to fix this, and I hope my colleagues on the
Committee will join me.
Finally, some 600,000 poor seniors are losing the subsidy
altogether. Some may still be able to obtain extra help, but
they will need to apply, and since the application process is
so onerous, we know that some seniors simply give up. The
Administration needs to do everything in its power to find
eligible seniors and make the application process a simple one.
We also need to take a serious look at the asset test to
make sure that it is fair, easy to navigate and does not
exclude seniors who are truly low-income and need extra help
with their drug costs. As we enter the second year of the
Medicare drug benefit, we have an obligation to make sure it is
working for all seniors, but particularly for our poorer
seniors, who need the help most.
The recommendations from our witnesses can lead to real
solutions, and, of course, we all hope and trust and expect
that the Administration is willing to work with us to implement
them.
Again, we thank you all for being here.
We turn now to Senator Gordon Smith for his statement.
OPENING STATEMENT OF SENATOR GORDON H. SMITH
Senator Smith. Thank you, Senator Kohl. It was a pleasure
to work with you last Congress, and it will be so in this, as
well. Our bipartisan tradition on this Committee will certainly
continue on my account. So I appreciate very much your calling
this important hearing.
It is the first for the Aging Committee in the 110th
Congress, on the issue of low-income subsidy. LIS is one of the
best features of Medicare's new prescription drug benefit.
Millions of seniors now have access to affordable prescription
drug therapies, many for the first time.
Last year, the Committee looked at the difficulties many
dual-eligible beneficiaries had in transitioning to the new
program. I look forward to revisiting some of the issues that
were raised at that hearing.
Since Medicare Part D became effective last year, the
Centers for Medicare and Medicaid Services and the Social
Security Administration have made a great deal of progress to
ensure that the benefit is working well for all beneficiaries.
However, there are still a number of improvements that can be
made to the program, especially to the LIS benefit.
Ultimately, it is Congress's responsibility to ensure that
all low-income seniors who have difficulty paying for
prescription drug costs get the help that they need and the
help that we intended they have. Last spring, I filed
legislation to create a special enrollment period for newly
eligible LIS beneficiaries and to waive their late-enrollment
penalty.
Fortunately, CMS made changes administratively, but I would
like to write the changes they made into law. Giving low-income
seniors additional time to enroll in Medicare Part D ensures
they are able to choose a plan that best fits their health-care
needs.
Despite this progress, I do find it troubling that recent
estimates still show that there may be at least 3 million
seniors eligible for LIS who have yet to apply for it. It is
essential that CMS and SSA and their community partners
continue working to capture these seniors through targeted
outreach efforts.
I expect we could help many more seniors with their drug
costs, if only they knew extra help was available to them. In
addition to this, there are a number of things we can do in
Congress to help ensure that all seniors who legitimately need
help with their drug costs get it.
So, in the coming weeks, I will introduce legislation with
my colleague on the Finance Committee, Senator Bingaman, that
will reform the asset tests used to determine eligibility for
low-income subsidy. Our proposal, which was developed with
input from groups like AARP and the National Council on Aging,
aims to make it easier for seniors to meet some of the current
test's requirements and remove unnecessary administrative
burdens.
I believe the existing LIS application is too complex and
it is preventing seniors from getting the help that they need.
I also plan to reintroduce a bill filed last Congress that
creates parity in the cost-sharing charged beneficiaries living
in nursing homes and assisted-living facilities.
Our current policy weighs the cost sharing for
beneficiaries in nursing homes, but those who live in assisted-
living and other community-based facilities illogically have to
pay for it. Frankly, I find it unacceptable. I was pleased to
be joined by colleagues on the Aging Committee, specifically
Senators Nelson, Clinton and Lincoln, as cosponsors of that
measure. I am glad they have agreed to work with me again this
year.
I look forward to hearing an update from CMS and SSA on how
well the LIS benefit is working. While these two agencies have
had some difficulty in sharing information in the past,
particularly with determining subsidy eligibility and Medicare
Part D premium withholding, I am confident they are putting
forth all kinds of good faith and their best efforts to make
this new benefit work for our seniors.
I thank them for that work and what they did on a rushed
basis last year to make a difficult situation easier.
I am hopeful our discussions today will provide the
Committee useful insights on how Congress can ensure that all
beneficiaries in need, all those who are eligible, get the help
they deserve with their drug costs.
So, thank you, Mr. Chairman. Let's carry on.
The Chairman. Thank you, Senator Smith.
We are pleased to welcome the first panel here today.
Our first witness will be Beatrice Disman of the Social
Security Administration. Ms. Disman has served for over a
decade as SSA's regional commissioner of the New York region.
In 2003, Ms. Disman became chair of SSA's Medicare Planning and
Implementation Task Force. This task force is responsible for
implementing SSA's role in the Medicare Modernization Act.
She will be followed by Larry Kocot of the Centers for
Medicare and Medicaid Services, CMS. Mr. Kocot serves as senior
advisor to the administration of CMS. In this capacity, he has
worked closely with the administrator in the implementation of
the Medicare Part D low-income subsidy benefit.
So we welcome you both, and we look forward to your
testimony.
Ms. Disman.
STATEMENT OF BEATRICE DISMAN, NEW YORK REGIONAL COMMISSIONER,
SOCIAL SECURITY ADMINISTRATION, NEW YORK, NY
Ms. Disman. Thank you so much, Mr. Chairman.
Thank you so much, Senator Smith.
Thanks for inviting Social Security today to discuss our
ongoing efforts under the Medicare Prescription Drug Program to
sign up Medicare beneficiaries for the low-income subsidy
(LIS), or, as we commonly call it, ``extra help''.
As you indicated, I am Bea Disman. I am the Regional
Commissioner of the New York region, and I was really given
this incredible opportunity to share the implementation of a
very vital program to the American public.
In this role, I have seen the dedicated efforts of so many
Social Security employees and partners within and outside of
Government, as they have reached out to those individuals who
could benefit from the low-income subsidy. I am pleased to be
able to share our story.
I am also pleased to be here with our colleagues, who have
played an important role in implementing this new program.
In the past year, Social Security has continued its
intensive efforts to locate low-income Medicare beneficiaries,
and provide them with an opportunity to file for this important
benefit. We have used targeted mailings, personal phone calls,
computer data matches, community forums, partnerships with
State agencies and nonprofit organizations, fact sheets, word
of mouth--in short, any and all means at our disposal--to reach
those eligible for the ``extra help''.
Throughout 2005 and 2006, Social Security provided a number
of alternatives for beneficiaries who applied for ``extra
help'' assistance. Scanable paper applications, in office
applications, community application-taking events, Internet and
media telephone applications all have been a part of this
effort.
Even though means testing, by its very nature, is complex,
Social Security created an application which allows individuals
to apply for the ``extra help'' as quickly and as easily as
possible.
During these past 2 years, Social Security held or
participated in more than 76,000 Medicare Part D/LIS outreach
events. In many of these events, we were joined by Centers for
Medicare and Medicaid Services (CMS) and other partners,
including my colleagues who will testify later this morning.
We have been in the communities, in senior citizen centers,
pharmacies, public housing, churches any place where we thought
senior citizens or the disabled were likely to be found.
We worked with State pharmaceutical programs, State Health
Insurance Programs, Area Agencies on Aging, local housing
authorities, community health clinics, prescription drug
providers and others to identify people with limited income and
resources who might be eligible for the ``extra help''.
Throughout these efforts, Social Security's goal has been
to reach every potentially eligible Medicare beneficiary
multiple times, in a variety of ways. As you know, there are
many estimates out there as to the size of the eligible
population, but whether there are 300 or 3 million people,
Social Security's job is the same--find them. Find them where
they live, find them in the communities where they work, and
find them any way we can.
Our message is simple: if you could possibly benefit from
the program, SSA will help you apply. As you may recall, during
the initial launch phase of the ``extra help'' program in the
spring of 2005, we mailed almost 19 million applications. We
cast a very wide net.
Such agency mailings continue to be a valuable tool in our
efforts to inform the public. For example, the annual cost of
living adjustment notices, sent to over 50 million Social
Security beneficiaries, as well as our annual notice to
individuals potentially eligible for the Medicare Savings
Programs, included ``extra help'' information.
Also, Social Security identified approximately 1.5 million
disability beneficiaries who received an ``extra help''
application, but did not return it. We mailed a special follow-
up letter to these beneficiaries in the spring of 2006,
explaining that ``extra help'' will not reduce their disability
payments.
In addition, Social Security contracted with a vendor, who
made more than 9 million follow-up calls. Subsequently, Social
Security personally called 400,000 beneficiaries who the vendor
identified as needing assistance. In another outreach, we
personally called over 300,000 beneficiaries who had previously
received the Medicare $600 assistance under the Medicare drug
discount card but had not applied for the ``extra help''.
Social Security has also reached specific beneficiary
communities, those with representative payees, those who speak
Spanish, Asian-American and African-American households and
those aged 79 and older. Social Security has made special
efforts to help the recipients who have lost their deemed
status.
In September 2006, Social Security and CMS together mailed
more than 600,000 applications, with notices to the Medicare
beneficiaries who were no longer automatically eligible. To
date, more than 230,000 have reapplied. This is in addition to
those who have regained automatic eligibility through the
States.
Social Security has started a pilot to personally call
10,000 individuals who have lost their deemed status and have
not yet filed for ``extra help''. The results of the pilot will
guide our approach in following up with the rest of the
population.
Social Security also sends out between 120,000 and 130,000
``extra help'' applications each month to individuals who are
newly enrolled in Medicare. As of mid-January 2007, Social
Security has found more than 2.3 million individuals eligible
for ``extra help''.
Just as important, we continue to receive between 30,000
and 40,000 applications for ``extra help'' almost every week,
over 600,000 since the beginning of the fiscal year. While SSA
employees across the Country continue to promote this valuable
benefit, we realize our job is not completed and we continue to
look for more ways to reach those eligible for the ``extra
help'' program.
In conclusion, I want to express my personal thanks to this
Committee for their continuing support of the agency. As you
know, Social Security is operating under a continuing
resolution, with funding levels significantly below the
President's request.
This means Social Security faces considerable challenges in
managing all of our vital workloads. However, I can tell you
from my own experience that the dedicated employees of Social
Security will continue to do our very best, not only in
administering the low-income subsidy, but also in providing our
important traditional services.
We look forward to our continuing dialog with
organizations, advocacy groups and, of course, the Committee.
Thank you, and I will be glad to answer any questions you
have.
[The prepared statement of Ms. Disman follows:]
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The Chairman. Thank you for your testimony.
Mr. Kocot.
STATEMENT OF LARRY KOCOT, SENIOR ADVISOR TO THE ADMINISTRATOR,
CENTERS FOR MEDICARE AND MEDICAID SERVICES (CMS), U.S.
DEPARTMENT OF HEALTH AND HUMAN SERVICES, WASHINGTON, DC
Mr. Kocot. Thank you, Chairman Kohl, Senator Smith and
distinguished members of the Committee. I am Larry Kocot. I am
senior advisor to the Administrator of the Centers for Medicare
& Medicaid Services. As you mentioned, Mr. Chairman, I have
been deeply involved in policy development and implementation
of Medicare Part D.
Yesterday, CMS released the latest enrollment numbers for
the Medicare prescription drug benefit. More than 1.4 million
beneficiaries have enrolled in Medicare's Part D program since
June 2006, bringing the total number of people with
comprehensive prescription drug coverage to more than 39
million.
Over 90 percent of all people eligible for the Medicare
prescription drug benefit are receiving the prescription drug
coverage they need. Five separate surveys have reported
independently that more than 75 percent of beneficiaries are
satisfied with the program.
Without question, Part D has been a positive change to the
lives of Medicare beneficiaries, especially for the people who
receive the Medicare low-income subsidy. One of the main
objectives, as you mentioned, of the Medicare Modernization
Act, was to provide the greatest assistance through access to
prescription medication to those with the greatest need. That
is what CMS is doing today.
The low-income subsidy provides substantial help to
Medicare beneficiaries with limited incomes, including a
Federal subsidy ranging from 25 to 100 percent of the monthly
premium cost for qualified plans and minimal cost sharing for
covered drugs. Recognizing the importance of this benefit to
this vulnerable population, CMS began taking steps to reach out
to beneficiaries with limited incomes immediately after the
bill was signed.
As of today, nearly 10 million low-income beneficiaries are
getting comprehensive drug coverage for little or no cost. 6.9
million were enrolled through our automated processes and an
additional 2.3 million enrolled beneficiaries submitted
applications that were approved by SSA.
In comparison with other means-tested programs, the
Medicare low-income subsidy benefit enrollment numbers are
impressive. However, we will not rest until we have reached and
assisted every beneficiary that qualifies and wants to apply
for the low-income subsidy.
With the recently extended special election period that
allows low-income subsidy-approved beneficiaries to enroll
through the end of 2007 without a penalty, these numbers should
continue to grow. Additionally, as Ms. Disman mentioned, of the
632,000 beneficiaries who lost their low-income eligibility
status for this year, so far about 35 percent have regained
their eligibility and now qualify for the low-income subsidy.
People who are receiving the low-income subsidy are very
satisfied with the coverage they received. According to a
recent survey, 87 percent of dual eligibles--that is,
beneficiaries eligible for both Medicare and Medicaid--who are
receiving benefits through Part D feel peace of mind now that
they are enrolled in Part D.
More than nine out of 10 dual eligibles are satisfied.
Forty-six percent of the people who reported skipping or
splitting dosages prior to Medicare's prescription drug
coverage say they no longer have to do so because of Part D.
Nevertheless, as I said, we still need to reach people who
may be eligible, but have not applied for the low-income
subsidy. Our work to identify and enroll these beneficiaries
has been a multifaceted, continuous effort that did not stop
with the end of the first enrollment period.
Given that many beneficiaries are difficult to reach
through traditional means, CMS has ongoing special initiatives
targeting beneficiaries in areas which may be isolated from the
general community outreach efforts.
We are working closely with over 40,000 partners who have
sponsored and participated in the 12,700 events that we have
held to date. Some of our strongest partners include the
organizations represented here today, the Access to Benefits
Coalition, the Health Assistance Partnership, the National
Council on Aging and our sister agency, the Social Security
Administration.
The one-on-one counseling and personalized attention that
these partnerships made possible enabled CMS to reach tens of
millions of people, one person at a time. Another critical
component of CMS's outreach initiatives has been the direct
engagement of the provider community and especially the tens of
thousands of pharmacists who did so much to get this program
off the ground.
One year ago, with the startup of the most significant
change in Medicare since its creation in 1965, CMS faced a
number of systems and process issues that, if left unaddressed,
would have curtailed some Part D enrollees access to covered
drugs.
CMS has worked hard to find and fix the problems and
improve this program, and we will continue to do so. As a
result, better communications between plans and pharmacies,
enhancements to file and data exchange with plans, SSA and the
States and other systems and process improvements, have enabled
us to take steps early to avoid similar issues in 2007. What a
difference a year makes.
Well before the year began, CMS worked with pharmacies and
drug plans to closely monitor the program as it entered its
second year. Though we continue to look for, and we are ready
to solve, any problems that do arise, hundreds of thousands of
newly enrolled beneficiaries have gone to pharmacies for the
first time without a hitch in January.
We continue to see operations run smoothly. Whether it is
pharmacists at the drugstore or beneficiaries filling their
prescriptions, very few of the problems that people encountered
at the program's implementation have been experienced this
year.
Thank you, again, Senator, Mr. Chairman, and thank you for
this opportunity to be here with you today. I am happy to take
any questions you might have.
[The prepared statement of Mr. Kocot follows:]
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The Chairman. Thank you very much.
More that 600,000 poor seniors are losing the low-income
subsidy that covered nearly all of their drug costs last year.
Some may still be able to obtain extra help, but they need to
apply, as we know. Of the 600,000, how many have reapplied this
year and are continuing to receive a low-income study.
Ms. Disman. Within the Social Security Administration, of
the 230,000 that have applied at Social Security, at this point
in time we have 132,000 that have been found eligible of the
191,000 that we have processed.
The Chairman. Well, it is my understanding, as you point
out, that these seniors receive letters notifying them that
they were no longer automatically eligible. The question I ask
is wouldn't it have been easier, or simpler, if you had just
started the applications for them and asked them to provide the
necessary information to determine their true eligibility,
instead of automatically removing them from the program?
Ms. Disman. I will have to yield to my colleague in the
Centers for Medicare and Medicaid Services, since that is
within their jurisdiction.
Mr. Kocot. Well, Senator, as you know, we can only serve
beneficiaries who are qualified for the low-income subsidy.
Those beneficiaries that did lose some status in MSP or SSI,
other than Medicaid, once they do drop off those rolls, we are
required to have them apply for the subsidy and qualify for it,
so we really have to have them qualified and applied for.
We are required to get them to provide evidence that they
do qualify, the burden of proof really shifts to them.
The Chairman. Well, yes. What I have said is wouldn't it
have been better to simply send them the application, along
with the notification that they need to reapply?
Mr. Kocot. Well, Senator, that is exactly what we did. We
sent them a letter telling them that they were no longer
automatically going to qualify and that they should apply as
soon as possible and, in fact, many did.
Ms. Disman. The application was with the notice that we
wound up jointly drafting and sending.
The Chairman. So the application went out with the
notification that they are no longer eligible.
Mr. Kocot. That is right. That they are no longer
automatically eligible.
The Chairman. Right.
Mr. Kocot. It did encourage them. As a matter of fact, many
of these people probably are eligible, but they do have to
apply.
Senator, if I might add, we also followed up with plans,
and CMS itself followed up with a lot of different
communication, as did a lot of other outreach groups,
pharmacies and plans working cooperatively to reach these
people one-on-one. We have really taken on quite a bit of
effort to get them to reapply and, as a result, many have. But
this, we acknowledge, is the hardest population to reach and
the hardest population to spur to action, but we will continue
trying.
The Chairman. Well, with so many who have not been able to
regain their admission to the program, what is it that you
intend to do to reach them that we haven't done yet? What are
your ideas for improving on your ability to reach these people?
Mr. Kocot. Well, we are working with many of our partners
that we have been working with over the last 2 years, and many
are submitting ideas to us and we will be working with them to
come up with an action plan to reach the rest of these
beneficiaries. As a matter of fact, Senator, many of these
beneficiaries--our experience doesn't show a large number, but
some are showing up at pharmacies, some are telling us they
didn't know.
What we are doing is we are getting them into the process,
having them apply and working with the plans to take care of
their immediate needs if they are emergency needs. So we are
taking these on a one-by-one, case-by-case basis so that no one
falls through the cracks.
Ms. Disman. Senator, we have had the opportunity on the
local level, with the Regional Commissioners, to work with
various States, to help identify these people and to have them
file. We are also personally now going to start calling these
people.
Many of them will not qualify, because they have too much
resources, but we are really attempting to reach out on a one-
on-one basis, and all of our offices are aware that if anyone
comes in and says that they just realized that they don't have
the low-income subsidy, that they are to take the application,
and we actually have a special procedure between Social
Security and CMS to really track that individual.
The Chairman. Last year, some seniors opted to have their
Medicare Part D plan premiums automatically withheld from their
Social Security checks. As a result of confusion between drug
plans, CMS and SSA, some seniors had too much money withheld
and will be receiving refunds next month, while others had too
little withheld and are being asked to pay more.
What has been done to ensure that this confusion will not
happen again this year?
Ms. Disman. Well, Senator, I am pleased to report that,
looking at the data exchange between CMS and SSA this year,
there has been much improvement. We are looking at new
enrollments. It has been more timely and more accurate. We
actually have our staffs working very closely together, looking
at how we hand off data between each other, looking at all of
the various exchanges. We are all focusing on what the issues
are and ways that we can make improvements.
We are as concerned with the individuals not having the
correct premiums, the impact on their Social Security benefits,
and we are very concerned that it be done in a timely and
accurate manner. We have had a process of us getting the data
back to CMS after they transmit something to us within 2 days,
so that we tell them whether or not it has been successful or
there has been a problem with the data.
So our staffs are extremely focused on that, and it is our
commitment to try to really deal with the issue.
The Chairman. Senator Smith.
Senator Smith. Thanks, Senator Kohl.
Beatrice, I have heard a number of reports that some
beneficiaries have difficulty accurately reporting in-kind
contributions for the asset test that goes with this benefit.
Obviously, given that misrepresenting assets is a Federal
offense, I can understand why some might be dissuaded from
applying.
I wonder if you have any thoughts about how we can make it
easier to report in-kind contributions so this is not an
unnecessary deterrent.
Ms. Disman. Well, Senator, I think as you know, when the
legislation was enacted, it really had reference to the
Supplemental Security Income (SSI) program and the various
income levels and in-kind support and maintenance is certainly
one of the areas. Anything that can be done to simplify the
categories certainly simplifies the application and simplifies
the understanding and the administrative aspects of it.
We actually try to approach this area of in-kind support
and maintenance by having just one question on the application,
by having the person estimate, by us not verifying the
information and by us setting up a flat amount if it was over a
certain amount. But we did that within the structure of what
the statute is at this point in time.
Senator Smith. I doubt that beneficiaries are--maybe some,
but many are deliberately trying to misrepresent their assets.
But, for example, for anyone who may be interested in what I am
talking about, for example, if a senior is getting Meals on
Wheels, is that an asset for purposes of the asset test? If so,
what kind of value do you put on it in terms of meeting the
qualifications?
Ms. Disman. Well, Meals on Wheels, Senator, is not an
asset.
Senator Smith. OK.
Ms. Disman. But I think what you are talking about with the
in-kind support and maintenance is if a relative provides for
the telephone bill. Let's say they elect to pay a telephone
bill.
Senator Smith. What I was referring to is in-kind
contributions come in under the asset test, as I understand it.
Ms. Disman. They come in under the income test.
Senator Smith. OK, so for purposes of the income test, even
that, people don't want to misrepresent it. But what would
Meals on Wheels be for purposes of the income test?
Ms. Disman. It wouldn't. Meals on Wheels do not count as
income.
Senator Smith. OK.
Ms. Disman. There is a whole list of income that doesn't
count.
Senator Smith. I appreciate the clarification.
Larry, current law waives the cost share requirement for
certain low-income beneficiaries who receive long-term care
services in nursing homes. But, as I stated in my opening
statement, those who receive services in community-based
settings, like assisted living facilities, don't get that.
My question is, what steps can CMS take to help these
beneficiaries with their drug costs until Congress enacts a
more permanent solution to the problem?
Mr. Kocot. Well, as you know, Senator, this is kind of a
statutory problem for us in the interpretation of
institutionalized beneficiaries. It does not include those
facilities that you had talked about.
We are doing everything we can to try to facilitate, as you
know, people into the community. For all the right reasons, the
reasons that you had stated, we want to actually incentivize
people to use the assisted living facilities and so forth
rather than having to resort to go to long-term care
facilities.
Senator Smith. It doesn't make much sense, does it, that
there is this inherent bias toward one versus the other, when
the other may actually save a lot of money.
Mr. Kocot. We certainly agree with you that the incentives
should be aligned for people to have choices that give them
alternatives that are other than a long-term care
institutionalized setting.
Senator Smith. But, to be clear, you don't really have a
lot of administrative elbow room under the current statute?
Mr. Kocot. I don't think we do, Senator.
Senator Smith. So Congress needs to act.
Mr. Kocot. We can certainly investigate and report back to
you on what administrative relief we think that we can provide.
We understand your concerns regarding the imposition of
cost sharing on the full benefit dual eligible population
enrolled in home and community-based settings. However, we do
not believe we have latitude to treat home and community-based
recipients as institutionalized for the purpose of the cost
sharing exemption.
Senator Smith. I would appreciate it if you would do that,
because obviously the sooner Congress acts, the better, but the
sooner the Government acts in a general sense, better still.
If you do have any administrative flexibility to get rid of
this distinction, this bias, that is really counterproductive
to our own bottom line, I would appreciate knowing what you----
Mr. Kocot. I am not aware of any, but we will get back to
you, Senator.
Senator Smith. Thank you, Mr. Chairman.
The Chairman. Senator Craig.
Senator Craig. Mr. Chairman, again, I haven't had yet the
opportunity to publicly say congratulations on becoming the
Chairman of this Committee. I, sometime back, was Chairman and
enjoyed it a great deal. It can be an extremely valuable tool
to do exactly what you are doing today, and I appreciate that.
Let me ask for unanimous consent that my full opening
statement be a part of the record.
The Chairman. It will be done.
[The prepared statement of Senator Craig follows:]
Prepared Statement of Senator Larry Craig
Mr. Chairman, I know that others have made their statements
and we have several witnesses who we want to hear from, so I
will be brief in my comments. First of all, Senator Kohl I want
to thank you for calling your first hearing as Chairman about
this important issue. There is no question that Medicare Part D
has had an enormous impact on the everyday lives of our
seniors.
However, I think it is worthwhile to note that this program
has had an incredibly positive impact on the lives of our
seniors. I have to admit that initially I was skeptical about
the prescription drug program. I ultimately supported it
because access to affordable prescription drugs is vital for
our seniors. Since then, I have been pleasantly surprised at
the level of success Medicare Part D has achieved--both in
terms of beneficiary satisfaction and in decreased cost to the
federal government. Recent reports indicate that Medicare Part
D enjoys an 80 percent approval rating among beneficiaries is
saving over $1100 per year in out of pocket costs for
medications.
As for the focus of this hearing--low-income
beneficiaries--I think Medicare Part D has performed well in
this respect as well. In May 2006, the Centers for Medicare and
Medicaid Services (CMS) estimated that 3.2 million of 13.2
million persons eligible for low-income subsidies did not have
prescription drug coverage through Medicare Part D or another
source. This means that approximately 75 percent of low-income
beneficiaries are receiving prescription drug coverage. When
considering that this population is much more difficult to
reach than the general Medicare population, it is impressive
that the efforts to enroll these individuals in the program
were this successful. CMS and the Social Security
Administration (SSA) have taken steps to further encourage
enrollment by these individuals.
I wanted to take a moment to recognize the successes of
Medicare Part D, but I am not under the illusion that the
program is perfect. As our witnesses have discussed in their
testimony, there have been problems with implementation,
particularly for ``dual-eligible'' individuals who previously
received prescription drugs through Medicaid. Our witnesses
have also highlighted that one source of these problems are
delays in sharing data among CMS, SSA, and private prescription
drug plans.
Unfortunately, these kinds of problems are not unique to
CMS and SSA. As Chairman, and now as Ranking Member, of the
Veterans Affairs Committee I have examined the issues of data
sharing between the Department of Defense (DoD) and the
Department of Veterans Affairs (VA). DoD and VA have come a
long way in terms of sharing data in order to better serve our
veterans but there is still work to be done. This is also true
of CMS and SSA. Improved data sharing will go a long way
towards resolving many of the difficulties that beneficiaries
are currently experiencing. I am hopeful that both agencies
recognize the importance of this issue and are working to
improve data sharing.
With that said Mr. Chairman, I want to again thank you for
holding this important hearing. I want to welcome our witnesses
and I look forward to hearing from them.
Senator Craig. But I think in that statement I would be
remiss if I didn't say that Part D is a roaring success. That
is coming from the skeptic that I was thinking, that we could
not make it as successful as it has become, and today it has
nearly an 80-plus percent favorable rating amongst
beneficiaries. For a new Federal stand-up program, in the short
time that it has been in existence, that is a pretty darn good
record.
I know we struggle with trying to be as inclusive as
possible, Mr. Chairman, but there is also a reality, at some
point it becomes the personal responsibility of the individual
involved here, because enrollment is voluntary. While we can
push as much information at them as possible, sometimes you
can't force them to do something that is voluntarily their
responsibility.
Having said that, let me move in this line of questioning.
Some individuals, including both members on the next panel of
witnesses, have suggested that SSA be given access to IRS data
to target outreach to low-income beneficiaries.
First of all, how helpful would this be in your attempt to
reach these low-income individuals? Secondarily, if we are
going to start deciding that IRS can now distribute information
for purposes of marketing a voluntary program, isn't that a
little bit of big brother and a step too far?
Beatrice, do you want to tackle that one?
Ms. Disman. I will tackle part of it, Senator.
Certainly, I think when we talk about the ``extra help''
and the low-income subsidy, I think you know we went to great
lengths to identify the population that might be eligible for
the ``extra help''. We cast a very wide net to be able to do
that.
Our approach really would be the same, using multiple ways,
a variety of ways of contacting people, whether it be the
mailings, the personal phone calls, the community events, the
telephone, the Internet.
However, having information as to what people's tax
information or pensions and things that we don't have
available, would have allowed us to more efficiently target
this population.
So, for example, our initial launch was 19 million people
that we sent low-income subsidy applications to. We knew that
this was a very wide net, but because we did not have access to
information that could have given us resource information on
individuals or other kinds of income, we cast such a wide net,
not to exclude anyone.
So it certainly would help to have a more efficient
targeting, but there is sensitivity on using----
Senator Craig. So you are suggesting that big brother it
might be, but it will be at least an efficient big brother?
Ms. Disman. Well, I am also suggesting the sensitivity on
using tax information for non-tax purposes.
Senator Craig. I would hope so.
Ms. Disman. I really do think that both the Administration
and Congress have to look at it and see what it is. But,
certainly from a programmatic point of view and where I am as
operationally administrating the program, it would have helped
us to be more efficient.
Senator Craig. OK. Maybe to both of you, a common problem
that I hear from my constituents about Medicare Part D, and one
that our second panel has cited, is a delay in data sharing
amongst CMS and SSA and private plans. We know that CMS and SSA
are both Federal agencies.
Questions would be, what is being done to make it easier
for these two entities to share information, and what can be
done to improve data sharing between the public and the
private?
Mr. Kocot. Well, Senator, we have come to know quite a bit
about data sharing due to some of the problems that we
encountered last year, and we have done everything that we can
to work with plans to streamline that data sharing. In
addition, we have worked with SSA to streamline data sharing.
But one of the things that is a reality that we face, and
not only with SSA, but also with plans, is that people are real
time, but, unfortunately, benefits administration is not.
It does take time for data to be collected, for example,
from a plan, and to be transferred to CMS, as in the case of
the withholding from Social Security. It then has to go to
Social Security. It has to be checked, it has to be verified.
If there are problems, it is sent back and then it is sent back
again and then it goes into a Social Security check, done by
the Treasury Department.
So, in that process, not only do you have to have every
piece of data correct and amounts that are correct, but also
you have to have enough lead time so that you can get it into,
for example, taking it out of a Social Security check. You have
to have lead time to get it all confirmed and verified, so
there is a time frame built into any process for benefits
administration.
We are doing everything we can. We have been working hand-
in-hand with Social Security to look at all of their processes,
and all of our processes, to try to streamline and cut out
steps along the way. We have been successful in doing that, and
we will continue to do that.
We have done the same thing between plans and pharmacies,
and we have cut down a lot of that time and we have cut down a
lot of the margin of error that can happen in those processes.
This is a new program. We are learning and we will continue to
learn, streamline and improve.
Senator Craig. Thank you.
Thank you, Mr. Chairman.
The Chairman. Senator Whitehouse.
Senator Whitehouse. Thank you, Mr. Chairman.
I have just come off a very energetic campaign season that
lasted about 2 years. I am from Rhode Island. As you may know,
Rhode Island has the third-highest population of seniors in the
Country, and the only two that are ahead of us are Arizona and
Florida, which are destination States for well-off seniors.
So I would submit that we have the highest population of
people who are likely to be needing the Part D services of any
State in the Country, and I have to tell you that our
experience is very different than Senator Craig's in Idaho.
I could not go into a senior center and mention Part D
without hearing hisses and boos spontaneously from the crowd.
Over and over again, I was approached by people telling me
stories that were heartbreaking. A fellow came to one of my
community dinners and his 93-year-old grandmother was going to
lose her apartment--she had been independent her entire life--
because she had fallen into the donut hole and could not afford
her medication and her apartment any longer.
Every week we had another heartbreaking story come through
the door. I know that there are people for whom life is better
as a result of Part D. But, at least in Rhode Island, where
many seniors gather together at senior centers, live in senior
high rises, there is a lot of concern and sense for those whom
the system has failed, who couldn't fight their way through the
extraordinary confusion and profusion of options and gave up,
who fell into the donut hole.
The seniors talk to each other about that, and we have a
very, very contrary experience in Rhode Island. I think ``Part
D stands for disaster'' was a phrase we heard all the time, and
``Part D, they gave it the right grade,'' is a phrase that I
heard all the time. So I come at this from a different
perspective than, I guess, Idaho projects.
There are a number of issues that concern me about this,
but I think I really want to hear from you on two.
One is, in terms of outreach, to help seniors who may or
may not have their full faculties with them, fight their way
through the complexity, fight their way through the forms,
fight their way through the asset tests, fight their way though
the multiple burdensome, confusing, often conflicting mail they
are getting from the Government and the different programs.
What is the best way you think that we can streamline this
so people can make a simple up-down decision, or at least maybe
two or three simple up-down decisions to escalate this? That is
question one.
Question two is that, in Rhode Island and I think in many
other States, we had a pharmaceutical assistance program for
the elderly that was State-supported. It is called RIPAE in
Rhode Island, R-I-P-A-E. What happened was that, as soon as
Part D went into effect, the Administration proposed cutting
that benefit in half, because they were being told by the folks
involved that the benefit was going to be far less utilized.
The reason it was going to be far less utilized was that it was
an add-on benefit.
When you have got 17 different programs and 17 different
formularies and, at the time, the companies were free to change
the formulary midstream and dump people off medications that
they had taken the program just to get access to, when you had
that fluid an environment in Part D, there was nothing secure
enough for RIPAE to attach itself to fill the gap.
Consequently, the proposed reduction.
Are you seeing that in other places, where the State
additional benefit is being reduced, or its application has
been made a lot more difficult, as a result of all the
complexity of Part D? Is there a way to recapture the funds
from the States and coordinate them better with the Part D
benefit?
So, simplicity and better coordination with existing State
programs would be the two questions I would have for you.
Mr. Kocot. Would you like me to start?
I think, Senator, it is important to note that there are
two parts to your question, and one is application for the
benefit, or enrollment in the benefit, and then application for
the low-income subsidy. We will probably want to answer them
separately, because I think you are asking two separate
questions.
With regard to enrollment in the benefit, which I will take
first, we have relied on the outreach, the one-on-one
partnership and the help of many in the community to assist
people through the application process, understanding their
plans and so forth. As a matter of fact, one of our most active
partners, and one of the most successful partners, has been one
of your constituents, CVS.
They were, early on, an active participant with us in
educating seniors and reaching out to them, holding events at
senior centers. They actually developed a tool to help
beneficiaries understand their choices and define what choice
is best for them. They also were with us early in 2005 as one
of the primary organizations that sponsored low-income subsidy
application fairs and reaching out to all of their applicants,
and all of their customers, even prior to the drug benefit even
taking place.
So we have a lot of partners in the community who are
working with us, many very successfully, touching people like
no other people can, for example, like pharmacists do. People
rely and trust their pharmacists, and we have been utilizing
that asset.
You asked a question about better utilizing and better
coordinating with State programs, and I want to answer that,
but I wanted to correct one thing you said. You said that
people were switching formularies midstream. I can tell you
that we have a policy and no plan can switch a formulary that
will have a negative impact on a beneficiary.
So any plan that is switching formularies midstream and a
beneficiary is hurt by that, they have to grandfather those
people if they are in that plan and relied on that plan's
information for that formulary, so we want to hear about it. I
don't think that any exist, but I would like to hear about
them, if they do.
Senator Whitehouse. OK, I will follow up.
Mr. Kocot. In terms of better coordination with the States,
certainly, we can always coordinate better with the States. I
haven't heard, and I don't know the specifics about Rhode
Island, but I haven't heard of any benefit coming less from a
State.
Indeed, the whole point of the program was to allow the
States to add on to the benefit that Part D offers so that they
could enhance their seniors' benefits with qualified SPAPs and
other programs.
So, again, I don't know the specifics of Rhode Island. I
would like to hear more about that, because they should be able
to augment what seniors are getting in Rhode Island, not take
away from it.
Senator Whitehouse. Although you can understand how it
might be hard for a State program to provide a supplement to,
in our case, 17 different formularies or even more formularies
in other States, and to those that change on an annual basis.
Mr. Kocot. Well, actually, Senator, we have a process for
States to work within so that they can utilize the most and get
the most out of the benefit, and we would be happy to work with
the folks in Rhode Island to get them to the same place where I
believe it is 22 other States are with qualified SPAPs.
Senator Whitehouse. We would love that, because obviously
we have got a significant population and a very unhappy one.
Ms. Disman. Senator, let me address the question about the
``extra help'' application and how we can work together to
simplify. But, before I do, let me comment that certainly
Social Security has worked very closely with Rhode Island.
Rhode Island itself has mandatory filing for the ``extra help''
application, because of their pharmaceutical assistance
program.
So, as a result, our colleagues on the ground in Rhode
Island have been really instrumental in being in the community,
and certainly in being at CVS and we have actually participated
in much of this on-the-ground pharmaceutical and outreach kind
of effort.
Senator Whitehouse. Yes, there clearly has been an enormous
effort to try to overcome the hurdles.
Ms. Disman. I think when you look at a program that is very
complex and that really has income and resource requirements
that are tied to the SSI program, that of its very nature
becomes a program that is more difficult for a beneficiary to
understand, as well as for administration. No matter how we
have tried to simplify the program, certainly there are some
difficult concepts in a means-tested program.
I would say to you that there are many proposals that are
on the table. We certainly have not had an opportunity to look
at it or to look at the cost of the proposals. But, certainly,
we would be willing to work with CMS, as well as with the
Committee, to take a look at what a number of approaches could
be.
Senator Whitehouse. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Whitehouse, and we thank
you very much. You have been very informative and helpful, and
we look forward to working with you.
Senator Whitehouse. Thank you.
The Chairman. We call now our second panel.
Our first witness on this panel will be Howard Bedlin, who
is vice president for public policy and advocacy for the
National Council on the Aging. National Council on the Aging
chairs the Access to Benefits Coalition, which is comprised of
National and community-based organizations who are dedicated to
ensuring that low-income Medicare beneficiaries have access to
needed prescription drugs at the most affordable cost.
The Access to Benefits Coalition has developed a report on
low-income beneficiaries and the obstacles they are facing in
Medicare Part D. That report is being released today, and Mr.
Bedlin is here to discuss it with us.
The second witness will be Ellen Leitzer. Ms. Leitzer is
the executive director of the Health Assistance Partnership.
HAP is an advocate for the Nation's State health insurance
assistance program and the beneficiaries that they serve. Ms.
Leitzer is here to discuss the challenges HAP has seen in
assisting Medicare beneficiaries to negotiate Medicare's Part D
low-income subsidy benefit. She will also have recommendations
on how we can make the benefit run more smoothly, so we welcome
you both here today.
We will begin with you, Mr. Bedlin.
STATEMENT OF HOWARD BEDLIN, VICE PRESIDENT FOR PUBLIC POLICY
AND ADVOCACY, ACCESS TO BENEFITS COALITION, WASHINGTON, DC
Mr. Bedlin. Good morning. I appreciate the opportunity to
be here before you. I am Howard Bedlin, vice president for
public policy and advocacy with the National Council on Aging,
the nation's first organization formed to represent America's
seniors and those who serve them.
NCOA also chairs the Access to Benefits Coalition,
comprised of 104 National members and hundreds of community-
based nonprofits and up to 55 coalitions in 34 States. We
appreciate the opportunity to testify before you today on
improving the Medicare prescription drug low-income subsidy, or
LIS.
Many aspects of the Part D program implementation have been
quite successful, due to the hard work of CMS and SSA and the
Administration on Aging and their private-sector and nonprofit
partners. However, there is still much work to be done on
behalf of those in greatest need of help.
The LIS makes it possible for those who qualify to receive
the most generous prescription drug coverage, with no donut
hole, no deductible and low or no premiums and copayments.
However, an estimated 75 percent of the Medicare beneficiaries
still without any prescription drug coverage are eligible for
the LIS. We estimate that between 35 and 42 percent of those
who needed to initially file an LIS application successfully
did so, and also that 3.4 to 4.4 million beneficiaries eligible
for the LIS are still not receiving it.
As you mentioned, an immediate concern is the approximately
400,000 beneficiaries who lost their automatic LIS eligibility
and still need to apply. Because this problem will reoccur
every year, it is important to minimize potential harm for this
population.
As Congress considers improvements in the Medicare
Modernization Act and drug program this year, priority should
be given to helping those vulnerable beneficiaries in greatest
need. We would appreciate this Committee's support and
recognition that it will require a robust and sustained effort
to assist those remaining low-income beneficiaries.
The promise of MMA will not be fully realized until we
invest in cost-effective strategies to find and enroll all of
those people who are eligible for, and not receiving, the extra
help available.
We have tested and analyzed various approaches for
increasing enrollment in the LIS and other needs-based
benefits, and four cost-effective strategies have emerged.
First, use comprehensive, person-centered approaches,
rather than focusing on a single benefit.
Second, invest in the aging network and trusted community-
based organizations that can create broad-based coalitions.
Third, promote the use of online tools that can screen for
multiple benefits and directly file applications.
Fourth, encourage States to use cross-matched lists people
already enrolled in other public benefits to identify eligible
individuals.
We are pleased to issue a new report today titled, ``The
Next Steps: Strategies to Improve the Medicare Part D Low-
Income Subsidy.'' Copies of the report have been provided to
the Committee and can be found on our Web site. We request that
the full report be included in the hearing record.
I want to highlight briefly eight specific, largely non-
controversial, in my view, relatively inexpensive legislative
recommendations from the report that we urge Congress to
consider and take action on this year to help our Nation's most
vulnerable low-income seniors in greatest need.
I want to thank you, Mr. Chairman and Senator Smith, for
the interest and support that you expressed in your opening
statements on several of these recommendations. We really look
forward to working with you on them.
First, we believe we should eliminate the low-income
subsidy asset eligibility test. It is the single most
significant barrier to the LIS, as it penalizes retirees who
did the right thing, by saving to create a modest nest egg to
provide security in their old age. This is also a cost-
effective way to fill the donut hole for many of those in
greatest need.
Second, Congress should appropriate funds to support the
most efficient and effective ways to find and enroll LIS
eligibles. First-year funding of $4 million, we believe, is
needed to begin the work of a new National Center on Senior
Benefits Outreach and Enrollment that was recently reauthorized
under the Older Americans Act. The center would apply lessons
learned and use cost-effective strategies, create and support
State and local benefits enrollment centers, maintain and
update Web-based decision support tools, develop an information
clearinghouse on best practices and provide training and
technical assistance.
Third, permit beneficiaries to apply for LIS at any time,
without penalty. More time is needed to find and enroll those
still eligible for the extra help. Under Medicare Part B, low-
income beneficiaries can enroll any time and are exempt from
premium penalties. Medicare Part D rules should be consistent
with Part B rules.
Fourth, improve the LIS application form by eliminating
questions on the cash surrender value of life insurance and in-
kind support and maintenance, which Senator Smith mentioned.
Fifth, index all LIS cost sharing by the Consumer Price
Index, not prescription drug costs, so the contributions will
not be increasingly unaffordable for those least able to pay.
Sixth, permit SSA to access IRS tax filing data to better
target outreach efforts while recognizing privacy concerns. I
am sorry Senator Craig is no longer here, because there are
some good precedents for this in the Medicare law now.
Seventh, do not count the value of the LIS when determining
benefit levels for other needs-based programs.
Finally, do not count savings in 401(k) plans when
determining LIS asset eligibility.
In conclusion, now that the first year of the Medicare Part
D prescription drug program has ended, we can look back and see
what worked and where improvements are needed for low-income
beneficiaries. We are grateful for the hard work of CMS and SSA
in implementing Part D and their continued dedication to the
low-income subsidy.
But to fulfill the promise of the prescription drug benefit
for those in greatest need, the public and private sectors
should invest in evidence-based, cost-effective outreach and
enrollment efforts and Congress should enact legislation this
year that includes the recommended changes to the program that
we have outlined.
Thank you. I am happy to provide more detail on these
recommendations or answer any questions.
[The prepared statement of Mr. Bedlin follows:]
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The Chairman. Thank you, Mr. Bedlin.
Ms. Leitzer.
STATEMENT OF ELLEN LEITZER, J.D., EXECUTIVE DIRECTOR, HEALTH
ASSISTANCE PARTNERSHIP, WASHINGTON, DC
Ms. Leitzer. (OFF-MIKE) Sorry. Prior to joining the Health
Assistance Partnership, or HAP, in June 2005, I provided legal
services to senior citizens in Bernalillo County, NM. So on a
daily basis for 22 years, my staff and I provided legal
services and SHIP services, because we also had the SHIP
service contract for the largest county in New Mexico, and, as
you know, New Mexico is one of the poorest States in the
Country.
In addition to supporting SHIP services, HAP also is
supporting the increased funding for the SHIP network. As you
all know, in the past few years, with the enactment of Medicare
Part D, State and local SHIP's programs have been an
extraordinarily valuable resource, but a woefully under-funded
resource, to this Nation's Medicare population.
SHIPs were originally created in OBRA of 1990, and there
are now 1,400 community-based SHIP programs, with 12,000 staff
members and volunteers who counsel Medicare beneficiaries about
their Medicare, their Medicaid, private insurance and other
coverage options.
Each year, SHIPs provide individual assistance to more than
4 million Medicare beneficiaries. Of this Nation's 43 million
Medicare beneficiaries, approximately 27 percent have cognitive
impairments. Thirty-one percent have limitations of activities
of daily living. Almost one-third have not graduated from high
school and 12 percent are over the age of 85.
SHIPs are unique in that they offer one-on-one, in-person
counseling to one of the Nation's most vulnerable populations.
The Federal Government has depended on this Nationwide SHIP
network and their staff of volunteers and paid staff to educate
beneficiaries about Medicare drug plan benefits and costs and
to assist with enrollment decisions that involve mind-boggling
choices between dozens of plans.
Many SHIPs have come to rely on HAP for technical
assistance about complex Medicare issues and help with
resolving difficult cases. Consequently, my organization is in
constant communication with State and local SHIP programs
Nationwide. Most of the requests for assistance in the past
year involve Medicare Part D and the program's impact on the
14.2 million beneficiaries who are eligible for low-income
subsidy, or the LIS program.
Many of these beneficiaries accessed their medications
prior to 2006 through State Medicaid programs. As a result, the
SHIP network has brought many concerns and problems to HAP's
attention. The specific concerns are identified and described
in detail in my written testimony.
But, essentially, Medicare Part D is so complex and so
arcane that it has overwhelmed the systems that CMS, SSA and
hundreds of drugs plans created to implement the program. Those
systems cannot, and do not, properly function. Consequently,
Medicare beneficiaries are leaving pharmacies empty handed and
without their medically necessary medications.
The system failures impact all Medicare beneficiaries, but
the impact falls disproportionately on the LIS population,
because they are the frailest, the most vulnerable, the least
empowered to seek help and the least likely to be able to pay
for their system errors.
Now, let's look at some of these failures. First, the
system for real-time data sharing among CMS, SSA, plans and
pharmacies does not work properly, with data being shared
untimely, inefficiently or incorrectly. This flawed system
results in beneficiaries being charged the wrong cost-sharing
amounts at the pharmacy.
This problem weighs most heavily on LIS beneficiaries who
cannot afford to pay standard deductibles and copayments.
Another result is that when data is not shared in real time,
some beneficiaries find themselves in different plans, or in
more than one plan. Usually, they are unaware of this shift.
Two, all of the drug plans, particularly Medicare Advantage
Plans, are using aggressive marketing tactics to enroll
Medicare beneficiaries, with the LIS population being most
vulnerable. These tactics include enroll and migrate, in which
plans first enroll beneficiaries in stand alone prescription
drug plans and then target the same beneficiaries to later
enroll in Medicare Advantage Plan with Part D.
The dually eligible are particularly vulnerable to this
tactic because they have ongoing special enrollment periods.
SHIPs report that sales representatives are blurring the
important difference between original Medicare and private fee-
for-service plans by using misleading catchphrases such as,
``see any doctor you want,'' ``no network.'' These sales
representatives are failing to explain how PFFS require
providers to agree to plans' payment terms for each office
visit or hospital stay.
Moreover, many doctors are now deciding not to participate
in these PFFS plans, so beneficiaries are all of a sudden
having to find new providers.
Three, confusing plan structure leads to problems accessing
appropriate medications at the pharmacy counter. Because dozens
of plans are available in most parts of the Country, each with
different formularies and coverage rules, health-care
professionals face a tangled web of prior authorization and
formulary exception procedures that lack uniformity.
Rather than take the time to untangle the web and work
through the process, busy pharmacists and physicians simply
substitute a drug, with few or no procedural restrictions. The
result is that beneficiaries not only lose access to the drugs
they really need, they also are losing access to their appeal
rights.
Fourth, the CMS regional and central offices require
specific information about client problems on an individual
basis and are inconsistent in addressing State and local SHIP
needs. From the first day of the Part D drug program's
implementation, CMS has insisted on trying to resolve systemic
problems on an individual basis.
This is hugely inefficient and ineffective. Additionally,
HAP has received numerous reports about some regional offices
of CMS being unable or unwilling to provide technical
assistance to State and local SHIP staff, who need help that
only CMS can provide to resolve the problems.
Fifth, CMS produces misleading media campaigns and
correspondence. This past fall, CMS issued an ad that advised
beneficiaries to take no action if they were satisfied with
their plans. The ad failed to inform enrollees that plans can
make significant changes from year to year.
Furthermore, CMS informational materials are often vague,
are not available in languages other than English and do not
address the needs of the visually impaired, the socially
isolated and homebound and those with low literacy rates.
Finally, customer service representatives, or CSRs, at 1-
800-MEDICARE and the Part D plans refer beneficiaries directly
to SHIPs in situations that they should be handling themselves.
Funding for the SHIP network was $31 million in 2006, and we
understand that funding is going to be level in 2007.
In contrast, the Medicare contractor Pearson Government
Solutions received $440 million in 2006 for a 2.5-year
contract. However, the SHIPs have reported that 1-800-MEDICARE
CSRs and the plans refer beneficiaries directly to SHIPs for
assistance, even with general and programmatic and enrollment
issues.
HAP supports legislation which will address and remedy the
above-identified ongoing problems experienced by many
beneficiaries, including those with low-income subsidy. We
specifically endorse all of the recommendations that Mr. Bedlin
talked about, on behalf of the National Council on Aging.
We would also like to emphasize once again the value of the
SHIP network to Medicare beneficiaries and, in addition,
therefore, to supporting the remedies to existing LIS
legislation, we urge this Committee to advocate for increased
funding for the SHIP network of at least $1 per beneficiary in
2007 and for all future years.
Again, thank you very much for asking me to testify.
[The prepared statement of Ms. Leitzer follows:]
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The Chairman. Thank you very much.
Do I take it that both of you would recommend that we do
away with the asset test?
Ms. Leitzer. Absolutely, Mr. Kohl.
The Chairman. Mr. Bedlin.
Mr. Bedlin. Yes, absolutely.
The Chairman. That is good to hear from both of you.
In your experience, would more seniors apply for the low-
income subsidy if the application process were streamlined, and
can it be without doing any damage to that application process?
Mr. Bedlin. Very much so, and we do have some specific
ideas. Take, for example, the question on the cash surrender
value of a person's life insurance program, something that I
personally would have a real hard time finding somewhere in my
house. It is complex, and typically seniors will use that for
their burial expenses, to help their kids when they pass. So we
don't think that that should be counted against them.
Senator Smith earlier asked about the question regarding
in-kind support and maintenance, which penalizes someone if
their family is helping them to pay for their grocery bills or
their heating bills or for their trash collection bills. We
don't think that makes any sense. It changes from month to
month. We think that question should be eliminated.
We also have concerns about the application form in that it
threatens someone with jail time if they fill it out wrong,
which is not the case with a lot of similar application forms.
Those mention perjury, but they don't mention jail time. We
think that should be eliminated.
Fundamentally, though, we need to move from 20th century
applications to 21st century, and that means really providing
application forms online that can be submitted online. We file
our taxes online. There is no reason why one should not be able
to fill out a form for a whole host of benefits that they are
eligible for, because there is a lot of correlation.
I am not expecting that most of their seniors are going to
do it themselves. They will probably ask their kids, or they
will ask a counselor. Fill it out online, submit it online, it
reduces the cost, it makes it a lot easier, that is the
direction that we really need to go.
The Chairman. Ms. Leitzer.
Ms. Leitzer. Senator Kohl, I agree with everything that
Howard has said.
I would add that I have, in the past, tried to help clients
for other Government programs figure out the value of their
life insurance. Many of these policies were 20, 30, 40 years
old; the companies were no longer in existence. It took
advocacy on the part of me and my staff to try and figure out
who now owned the company that was issuing this policy.
So it is a time consuming and difficult process, and that
includes also the process for figuring out in-kind
contribution. It is very, very hard to do that.
I would also like to address the issue that you raised
earlier of the IRS data sharing. It is interesting to note that
the Medicare Modernization Act already authorizes that for the
Medicare Part B premium, so there is precedent for allowing
data sharing by the IRS with SSA.
The Chairman. That is good.
One more question: In addition to the more than 3 million
low-income seniors who may be eligible for the subsidy but
haven't applied, more than 600,000 seniors, as you know, lost
their automatic eligibility and need to reapply this year. Are
our poorest seniors falling through the cracks? What can we do
to reach this most vulnerable population?
Mr. Bedlin. That is a very good question, because, as we
understand it, 400,000 of the 630,000 that still have not
applied and are remaining out there. These are people who had
the LIS last year, but now, when they go to the pharmacy, for
example, they may be having to pay a deductible for the first
time. So they are going to be in for a real surprise when they
go to the pharmacy.
Now, many of the plans have provided for, we understand, a
60- or 90-day transition period, so they may not get hit with
this higher cost until March or April and they will be, again,
in for a big surprise. There are things that we need to do,
because this is going to happen every year. Next year at this
time, we are going to be facing the same problem.
A number of things can be done. I think we need to screen
them, and before we tell them that they are no longer eligible,
to make sure since they may well be eligible. I think we do
need to, within the concerns of confidentiality and privacy,
try to find these people and screen them for whatever LIS
category they may be in.
Second, I think we need to require some kind of a
transition period. We shouldn't be cutting them off on January
1. There should be some requirement that we use the months of
January, March, and April to find these people after the open
enrollment period is over.
Finally, maybe there should be a presumption of some kind,
that these people will continue to be eligible unless it can be
rebutted that they are not. Why continue to put the burden on
them? I think it is an area that we really need to take a close
look at.
The Chairman. That is good.
Ms. Leitzer.
Ms. Leitzer. Senator Kohl, I would just add to that that
other benefit programs have a recertification process, so
before somebody, a beneficiary, is dropped from a program, they
are sent a letter to come in and be recertified, and I would
suggest that that system should be followed for this
population, as well.
The Chairman. Thank you very much.
Senator Carper.
Senator Carper. Thanks, Mr. Chairman.
My thanks to both of you for joining us today, for your
testimony and for responding to our questions.
You may have spoken to the question that was raised while I
was outside of the room. I think you have already spoken to it
in part while I was in the room.
We are going to have a debate, they have already had it in
the House of Representatives, about changes in the Medicare
Part D program with respect to what role should the Secretary
of Health and Human Services play with respect to negotiating
drug prices or not.
The House has taken a position, and they have sent their
legislation over to us for our consideration. I want to set
aside the question of whether or not the Congress would mandate
that the Secretary play a role like the House has suggested, or
there would be an option for the Secretary to play that kind of
role.
Whether we end up agreeing or not on doing something on
that score, what else should we do? I think there are a number
of areas where you agree. You have mentioned a couple of them,
and one of them was with respect to assets.
Just run through for me again, just to re-emphasize the
areas, as we take up legislation this, sort of a to-do list of
things that you agree on steps that we should take.
Mr. Bedlin. Sure, thank you.
I think we really need to prioritize where we want to spend
limited resources. We all recognize that we are under PAYGO
rules, and when we go to staffers, the first question we get
is, how much does it cost, and how are we going to pay for it?
So we need to prioritize.
That is very important as we look at improving Part D, and
we would argue that we need to start by looking at those who
are most vulnerable, lowest income and in greatest need of
help.
I would ask that you think about a typical American
grandmother; widow in her 80's, living alone, relying on her
Social Security check for income, multiple chronic conditions,
taking a dozen or so medications. There are millions of women
who fit this category. My grandmother was one of them.
Let's look at how current law would affect her eligibility
for the low-income subsidy. If she saved during her life, to
put away a little nest egg, generally around $30,000 to
$40,000, current law counts it against her, to deny her the
extra help she needs.
Similarly, if she did the right thing, and during her
working years invested in a 401(k) plan, current law counts it
against her, to deny her the extra help she needs. If she has a
life insurance policy, which, again, might help pay her burial
expenses when she passes, current law counts it against her, to
deny her the extra help she needs.
If her kids help her with her expenses, be they grocery
expenses or her heating expenses or trash collection, current
law counts it against her, to deny her the extra help she
needs.
Let's say she is getting the extra help and overcomes some
of these obstacles, but her income is just above the poverty
line. Let's say it is $11,000 a year, which is less than $1,000
a month. That is over the poverty line. Under current law, her
drug copayments will increase each year by more than two times
her Social Security COLA, making her medications less and less
affordable over time.
Finally, again, if she is receiving this extra help, it is
going to count against her in terms of how much help she is
getting from other programs, so that current law would cut her
food stamp benefits and cut her low-income housing subsidy.
These are areas that we think need to be priorities. We
think they are relatively non-controversial, relatively
inexpensive, and we urge the Congress to take action on them
this year.
Senator Carper. I am going to come back and explain to us
what you mean by relatively inexpensive----
Mr. Bedlin. That is a good question.
Senator Carper. But, Ms. Leitzer?
Ms. Leitzer. My organization has endorsed and we share the
same recommendations with the National Council on Aging.
Senator Carper. Every one of them?
Ms. Leitzer. I am with the Health Assistance Partnership.
Senator Carper. I said every one of their recommendations?
Ms. Leitzer. Every one of their--in fact, our organizations
worked on the recommendations jointly.
In addition, my organization supports the SHIP network, the
State health insurance assistance programs, that have been
providing one-on-one counseling to the Medicare population.
They are an extremely valuable network, they are woefully
under-funded, and we would also urge that Congress allocate $1
per beneficiary for this network in 2007 and in future years,
as well.
Mr. Bedlin. We agree with that. SHIPs definitely need more
money, and we also think a wise investment is in the new
National Center on Senior Benefits Outreach and Enrollment that
was recently authorized under the Older Americans Act. We are
trying to get a $4 million appropriation, because that new
center would be utilizing all the lessons learned and cost-
effective strategies that we think can make a real difference.
Senator Carper. In the pay-as-you-go world, where we are
going to try live once again under the rules that existed about
4 or 5 years ago, what is relatively inexpensive? Any thoughts
on how we pay for what is relatively inexpensive?
Mr. Bedlin. Well, it is really a question of priorities.
Senator Carper. It always is.
Mr. Bedlin. There are a lot of things that we are spending
a heck of a lot of money on, and this is a population who made
America as great as it is, fought in World War II and worked
all their lives to help their children. Now many of them are on
fixed incomes and have a lot of chronic conditions and need
help. So, certainly, they need to be a priority for us, in my
view.
We will see how CBO scores a lot of these proposals. We
think, for example, back-of-the-envelope estimate on
eliminating the asset test, would cost about $1.5 billion per
year. That is probably by far the most expensive recommendation
that we have from the list. We think the others are far less
expensive.
There are a lot of ideas that are being floated about with
regard to how to pay for them. People are looking at the
stabilization fund dollars that remains and so-called
overpayments for Medicare Advantage Plans, so I think those
could be potentially part of a package.
Senator Carper. Thanks very much.
The Chairman. Thank you very much, Senator Carper.
Senator Casey.
Senator Casey. Mr. Chairman, thank you very much for
convening this hearing.
I want to thank you for focusing our attention on issues of
concern not just to families across the Nation, but in
particular those families that are struggling with all of the
challenges that I have seen on the campaign trail over the
course of 20 months when I was campaigning, all of the problems
with Medicare Part D.
As much as people appreciate that benefit, there have been
tremendous problems in terms of confusion, in terms of access,
but also in terms of whether or not we are going to focus on I
think the urgent priority to have a negotiation for lower
prices. But I think that this hearing today highlights some of
the other problems that maybe don't get as much attention as a
negotiation question.
One of the questions I had, I wanted to go first to Ms.
Leitzer, about one of your recommendations. The third
recommendation you made, and I am looking at your testimony on
page five, which was this: enact a monthly copay cap, allowing
some reprieve for those who take multiple medications per
month.
I wanted to have you elaborate on that. I know you have
gone through it once, but some of these issues bear repeating
and further emphasis.
I know, for people in Pennsylvania, we have--depending on
how it is counted, but I think we are still second in terms of
the number of senior citizens, in terms of population--we have
just over 1.9 million people over the age of 65. We have got a
huge Medicare and Medicaid population, of course, that includes
those over 65 and a lot of people under 65 who benefit from
those programs.
But you cite in particular the hardship, and I wanted to
have you elaborate on the question of that hardship.
Ms. Leitzer. Senator Casey, the hardship is that many
clients that are certified SHIPs--and, again, we are a National
organization that are assisting SHIPs, but also in my own
practice at the Senior Citizens Law Office in New Mexico, I had
clients whose incomes were SSI or just above SSI level and they
were taking 20 medications. That is not unusual.
The fact that they have to pay these copays for each
medication they take, that adds up monthly. When you are
talking about a really poor population that have other
expenses--housing, heating, food--those expenses really make a
difference to them, that added.
So to cap what somebody's monthly copays could be would be
very, very helpful to this poorest population.
Senator Casey. Of the people that you are working with
every day and that you see, you said it is not necessarily
unusual to see individuals that have to take 20 or more
medications per day.
What percent, if you can estimate? I realize it is probably
an estimate, but give it a good educated guess. We won't hold
you to it in specificity, but what percent of that population
that you work with in your experience is in that category of 20
or more medications per day?
Ms. Leitzer. I would say that it is more typical to be
eight to 10 to 12 medications, but it is not unusual to have
people on 20 medications.
In fact, relating this to the 1-800-MEDICARE, when people
would call 1-800-MEDICARE and they did have 20 medications, 1-
800-MEDICARE would say, ``We can only handle people who are on
nine medications or 10 medications or less.'' So the SHIPs were
handling a disproportionate number of Medicare beneficiaries
who had large numbers of medications.
So, to answer your question, I would say that maybe 5
percent of the population are on 20 or more, but I would say
maybe as high as 50, 60 percent who are on eight to 10
medications.
Senator Casey. Eight to 10 medications, a significant
number.
Mr. Bedlin. Senator Casey, just a quick follow-up?
Senator Casey. Yes, sure.
Mr. Bedlin. Three things that can be done.
One is Senator Smith will shortly be reintroducing a bill
that treats dual eligibles getting home- and community-based
care similarly to those in nursing homes. We support that bill.
Second, I mentioned earlier how those copayments are
indexed. For folks below 100 percent of poverty on LIS, they
are indexed by the Consumer Price Index. For those between 100
and 150 percent of poverty, they are indexed by Part D costs,
which are twice as high, generally, at least, than the Social
Security COLA. There is no reason to treat them differently.
They should all be indexed by CPI.
Finally, again for dual eligibles, Medicare and Medicaid
eligible, if a State should decide to help pay for that $3 or
$5, or $1 or $3 copay, they will not get a Medicaid match. That
is 100 percent State dollars. We believe that the Federal
Government should match that State contribution to help pay for
dual-eligible copays.
Senator Casey. I know I have limited time, but let me get
to one more.
I wanted to focus, Mr. Bedlin, on your testimony, and one
of the points that you made, if I can find it here on the right
page, was on the question of outreach. On page 10 of your
testimony, you talk about--and this, of course, is a list of
recommended legislative changes.
This, I guess, is the third on the list: Appropriate funds
to support organizations that use a person-centered approach to
outreach, which has been shown to be one of the most efficient
and effective ways to find and enroll LIS eligibles.
I point to this for a couple of reasons. One is, I know in
the State of Pennsylvania, for example, with regard to programs
that help very vulnerable populations--I am thinking in
particular the Children's Health Insurance Program, which I
think has to be one of the priorities of this new Congress in
terms of reauthorization--one of the biggest problems is,
unless you have a sustained and massive television advertising
campaign, no one knows about the program, at least with regard,
in my experience, with the Children's Health Insurance Program.
So you flood the airwaves with television and the
enrollments go way up. You take the T.V. or the other
advertising off the air, eligibility goes down.
Of course, there are some people in Washington and State
capitals who say, ``Well, if no one is calling to be enrolled,
we must be doing a great job.'' It is a myth and it is really
misleading, in some cases intentionally misleading, because
they don't want to cover those people. They don't want to have
to pay for it, or maybe give up a tax cut to pay for it.
But this question of outreach and the question of how you
connect with people to give them the opportunity to access
programs which will help them is of central concern to me,
because too often it is overlooked. You can have a great
program, great benefits, people can be helped by it, but unless
those who don't know about these programs have the opportunity,
we are making a big mistake.
But I just wanted to have you reiterate or elaborate or
amplify what you said about outreach.
Mr. Bedlin. Thank you. You are absolutely right. Seniors
don't know about the benefits that they are eligible for. It is
shocking to me that after 40 years, only 30 percent of seniors
eligible for food stamps are receiving it.
Under one of the so-called Medicare Savings Programs, which
is pretty confusing, but there is one called the SLMB program
that pays premiums for beneficiaries with incomes between 100
and 120 percent of poverty. According to our statistics, only
13 percent of the people that are eligible for that are
actually receiving it. There is a great deal that could be
done.
You mentioned patient-centered outreach. Part of the
problem is that historically what we have done is SSA will do
outreach for SSI. CMS will do outreach for the Medicare Savings
Program. USDA will do outreach for food stamps. A lot of these
people are the same individuals. There is a great deal of
correlation.
For example, we have found that 70 percent of the people
who are eligible for the Part D low-income subsidy are also
eligible for the Medicare Savings Program. The problem is we
have been searching for needles in a haystack.
Independently, we need to pull together all the different
piles of needles that have already been found. Fifty-five
percent of the cost is taken up by just finding these people.
Once they have been found, we need to actually use a lot of the
technology that is available online to get them enrolled in a
whole host of benefits that they are eligible for.
Pennsylvania is actually leading the way. They are doing
some very innovative things at the State level with the PACE
program. Actually, in our testimony, page 24 is all about the
great things that Pennsylvania is doing, and we would love to
be able to replicate what Pennsylvania is doing in the rest of
the Country.
Senator Casey. Well, I wish I could take full credit for
that, but I can't. But I didn't want to use my time to brag
about the State. They do a great job.
I think the problem that we face and the challenge that we
face in this Congress is making sure--one of the challenges, I
should say--is that someday people will say the same about the
Federal Government on a whole host of issues that they perform
at that level.
So I don't want to dwell on the negative and the
challenges, but I think it is very important to emphasize what
you have also brought to this hearing.
I know my time is limited, but maybe we will come back.
Senator Whitehouse, I wanted to make sure that he had time,
because I like to listen to his questions.
The Chairman. Thank you, Senator Casey.
Senator Lincoln.
Senator Lincoln. Thank you so much, Mr. Chairman. I really
appreciate your dedication to this Committee and to issues that
come before us. It is one of my most favorite of all. I
appreciate you, because I really feel like you, to bring up
these issues and to provide us an opportunity--and we
appreciate the panel that is here.
I have several questions for the first panel, as well, and
I apologize that I wasn't here for that. But I would like to
submit them to the Committee for answers in writing, if I
might.
The Chairman. Do it.
Senator Lincoln. Great, thank you so much.
Mr. Bedlin, I just wanted to say, I have come from the Ag
Committee, where we were having a meeting on food stamps and
nutrition programs. It is quite interesting that our panelists
there expressed the same concern about making sure that those
who were signing up for food stamps could also sign up for the
Part D.
It seems kind of crazy that, with marketing as it is today
and the technology that exists, that the technology exists to
recognize my household as one that likes pets, eats ice cream,
all these other kind of things that people know about us in
order to market us, that we can't figure out that when people
are in a certain income level that they qualify for multiple
programs that they should be getting that would improve their
quality of life.
So I very much appreciate your point on that.
I hope, Mr. Chairman, that we will work with Chairman
Harkin and others as we move forward with both the farm bill
and some of our other issues--Senator Baucus, Chairman Baucus--
in the Medicare arena, that we really encourage on behalf of
seniors and the aging population in this Country, that we make
it a more seamless process and one that is easier.
It is unfortunate that those seniors that are eligible for
food assistance programs don't access it and could do so when
they access many other programs. So I encourage us to really
look at the opportunity and push the Federal programs and the
Federal agencies into the 21st century and get them to where
they can actually--the other is veterans.
We tried that out of my office a couple of years ago,
encouraging the Veterans Association to couple with the Social
Security Administration, to kind of show that same group of
individuals what opportunities and what programs were available
to them from both of those agencies. It does make a difference,
when people do that, because it simplifies their lives.
Certainly, as we know in our seniors, that that is an issue.
I just want to make a couple of points from the questions I
didn't ask the first panel, and that is just mentioning these
issues that are related to the Part D that are big problems in
our State of Arkansas. Beneficiaries, especially the low
income, they need to receive accurate and available assistance.
They need better customer service.
They are calling an 800 number. They wait sometimes a
couple of hours, oftentimes finally get a Medicare staff person
who can't even resolve the problem. It sometimes give them
inaccurate information, or it transfers the caller to someone
else so they can wait another hour or couple of hours. Better
customer service is going to be critical.
Curbing the aggressive marketing that exists out there is
also something in think that is going to be important. I know
the CMS folks probably could address that. Then more support
for counseling, and I would like to go to that so that I can
direct to Ms. Leitzer--is that correct?
Ms. Leitzer. That is correct.
Senator Lincoln. I just want to publicly thank the Health
Assistance Partnerships that exist for us in Arkansas. They
were absolutely tremendous. There are thousands of Medicare
beneficiaries in our State, and certainly around the Country,
that turn to their area agencies on aging, their State health
insurance assistance programs--you mentioned SHIPs earlier--the
Native American aging programs, for their enrollment assistance
and counseling.
I want to publicly thank those in Arkansas. The AAAS
deserves such a big thanks for working and helping our seniors
sign up. They were lifesavers in our State. We would not have
had the success we did without them and the Social Security
office, who went at a time which was incredible, because we got
65,000 evacuees from Katrina that came to Arkansas. The Social
Security Administration regional office and their dedicated
office in Arkansas, we could not have asked for more dedicated
workers, worked through holiday weekends. They worked through
weekends, both assisting the evacuees and then, in the next go-
around, helping with our signup for Medicare Part D.
CareLink is a good example, and I attended several of their
counseling sessions. CareLink in central Arkansas, which is an
AAA-based in Little Rock, it provided one-on-one Medicare Part
D assistance to 5,574 older adults, spending an average of 63
minutes per counseling session.
One-on-one counseling, it provides such an important means
for these seniors to get the available information they need
and understand it. It is one of the best ways to find people
that are eligible for LIS, as we mentioned earlier, and help
them fill out that difficult application form.
That was the other thing we talked about with the food
stamp and nutrition programs was simplifying applications and
making it easier. But without those dedicated resources for
outreach and assistance through the AAAs, such as CareLink, we
just would have been unable to sustain the Medicare Part D
efforts on an ongoing basis.
I guess you probably talked about it here, and one of the
questions I had for CMS was do they intend to help in terms of
resources and funding for the partnerships that exist out there
that have done them a tremendous service in making the Medicare
Part D program accessible? I know you have mentioned how
important those resources are, and, however, I think we can be
helpful in directing that.
I want you to know that I am sold. I am a believer and am
enormously grateful for the efforts that were put into that.
Maybe you all could even shed some light to the extent of
the number of greater low-income citizens we could serve if we
had more resources. I don't know if you have got numbers, or
maybe you have already talked about that when I ran over to the
Energy Committee. I don't know.
Ms. Leitzer. Well, I would just like to say in response,
and thank you so much for your expression of appreciation. The
SHIPs and other partners have worked extraordinarily, and they
worked through Christmas last year.
Senator Lincoln. They did.
Ms. Leitzer. Some worked through Christmas this year. They
just went above and beyond.
I don't know if you were here for the part of my testimony
in which I talked about how the 1-800-MEDICARE contractor,
Pearson Government Solutions, received $440 million for 2.5
years to provide services at 1-800-MEDICARE. They routinely
refer callers for even the simplest questions to the SHIP
programs----
Senator Lincoln. Absolutely.
Ms. Leitzer. SHIPs only got $31 million last year, and we
understand it is going to be something like that, just not sure
exactly how much. When you look at that discrepancy or
disparity, it is huge.
The SHIPs do one-on-one personal counseling that is
invaluable when you look at the demographics of the Medicare
population. I don't know if you were here for that, but 27
percent are cognitively impaired. These are people who have a
very difficult time dealing with information over the telephone
or even with waiting or understanding messages.
This is my experience from working with this population. If
you give them voicemail, they start talking because they think
they are talking to a human being and they don't understand
that this is a voicemail system.
So one-third have not graduated from high school. That is a
huge number. Thirty one percent have difficulties with
activities of daily living. We are talking about a population
that needs lots of help, and relatively few have Internet
accessibility.
CMS is all about everything is on the Internet. Well,
frankly, this population doesn't access the Internet.
Senator Lincoln. We complained heavily about that, because,
for the seniors in Arkansas, as you said, in terms of the low-
income nature, the educational levels, they would call 1-800-
MEDICARE and then they would just get referred to go to the Web
site. They did not have that kind of access, nor did they have
the ability to discern from that what they needed to do.
Because we were so involved with our partnerships and with
the different groups, the SHIPs, particularly, we were able to
really work with them and get them out there. They actually
trained some of our local folks. We had people from the Rotary
group or for the Sunday school classes that would kind of take
a lesson from the SHIPs and from the Area Agency on Aging, and
then they would go back to their Sunday school or their Rotary
group and make a presentation from what they had learned.
So they were great not just in doing what they did, but
sharing their knowledge, because their ultimate purpose was
really to get the information to seniors as best they could. So
I am definitely sold, and I do want to publicly thank so much
of all of those people that really made this happen.
I would just like to add to Mr. Bedlin, your comments
earlier, I tried to get the QMBs and the SLMBs automatically
enrolled like we did the dual eligibles, but I lost that fight.
Mr. Bedlin. Well, you won a few, though. I mean, the reason
the LIS is as generous as it is is in large part due to your
leadership. We appreciate it.
I did want to mention that we estimate that there are 3.5
to 4.5 million beneficiaries that are eligible for the low-
income subsidy and are still not receiving it, and we need to
make that a priority and invest in finding and enrolling those
folks. We need foundations. We need the private sector, who
have stepped up a lot.
The My Medicare Matters campaign has provided some
resources to try to find them, and the Congress needs to step
up by, as we mentioned, funding the SHIP programs at a higher
level, maybe targeting some of those resources that SHIPs get
to the low-income subsidy. We have found that it costs
approximately $100 per enrollee, so it is not inexpensive, but
there are a lot of ways that you could make that more cost
effective.
We have done some pretty sophisticated benchmarking
analysis, looking back at benefits programs over the last
several years, and there is wide variation based on what kind
of methods you used. It can be $50, it can be $250. What we
really need to do is take those lessons learned and take the
best practices and find them in the most cost-effective
strategies. As I mentioned in our testimony, we have a
benefits--checkup Web site that we think can reduce costs.
Many of those online applications are going to SSA and
reducing their per-enrollee costs. We have helped to form this
National center under the Older Americans Act that would also
utilize a lot of these lessons to find these people in the most
cost-effective way possible. So we are hoping the Congress will
join in investing to try to help those people who need it the
most.
Senator Lincoln. Mr. Chairman, one of the other topics that
came up in our hearing in ag too was the asset tests and how
complicated they were and difficult they were for seniors,
particularly. That was something that we might think about in
terms of the low income that are being denied the LIS because
their assets are over the limit, sometimes just over that limit
of $11,710 for individuals, which is phenomenal.
But, anyway, those might be some areas we look at, and I
just appreciate your patience with me, because I really love
being on this Committee and I talk too much sometimes.
The Chairman. Very good.
Senator Lincoln. Thank you.
The Chairman. You are really informative. Just for your
information, when you weren't here, both our witnesses said
they would favor disposing of the asset test. Thank you so
much.
Senator Whitehouse.
Senator Whitehouse. Thank you. I will be very brief,
because I am running extremely late for my next meeting at this
point, but I did want to let you know, first of all, from my
point of view, it should not be this way and it does not have
to be this way. So anything that I can do to be helpful, call
on me.
Second, in the context of all of the confusion, all of the
delay, all of the multiple forms, all the people who never get
onto programs that they are eligible for, what is the value
that you have seen as you have worked in this system?
What is the value of adding multiple providers into this
equation, rather than having their be a CMS-run benefit for
folks who are in this LIS category? What does it add to have
that extra element of multiplicity, at a minimum, and
confusion, perhaps.
Ms. Leitzer. I would think the obvious. It adds a profusion
of confusion. It is unnecessary. It is overwhelming
individuals. It is overwhelming the system and it should not be
this way.
Senator Whitehouse. We deal obviously in cost-benefit
balances a lot in Government, and while those are clearly the
costs, can you even think of a benefit to having that
profusion?
Ms. Leitzer. Speaking individually, because I am not
authorized to speak on behalf of Families USA, which is my
parent agency, individually, I do not see a benefit.
Senator Whitehouse. Just for the record----
Mr. Bedlin. The process certainly could be simplified. I
think there are far more plans that are participating than most
people had ever anticipated. For us, one of the questions is
does it pass the kitchen table test, when someone wants to
really figure out which plan they want to select, which is very
confusing, quite often? Probably the only way to do it in an
informed way is using the Internet, and a lot of seniors don't
have that kind of access.
One of the ideas that some have discussed is looking at the
model of Medigap, when back in 1990 there were a whole variety
of different Medigap plans that were very confusing. Congress,
in its wisdom, decided to standardize some of those plans so
that now there are 10 Medigap plans.
I know this is an issue that Finance Committee Chairman
Baucus has talked about it. He was very involved in that 1990
Medigap standardization process.
My guess is that if you look at all the prescription drug
plans out there, it would not be difficult for the National
Association of Insurance Commissioners, for example, to try to
figure out what the most common ones are and even get the
industry to agree that there are some standard plans that if we
were to say, you can offer this range, that it really would
simplify things a lot for folks. We would be supportive of
looking into that.
Senator Whitehouse. It would help deal with the call
shifting issue that we get right now, where competitive plans
have every interest to cost shift out to SHIPs, to senior
centers and to everybody else to explain the confusion that
they have wrought, rather than tarry the costs themselves and
make sure that they are really doing an adequate job of
explaining and outreaching. I think it is a giant cost shift
you are seeing, when people get driven to the SHIPs to answer
their questions, or to senior centers, or to State agencies.
Mr. Bedlin. It is certainly taxing their resources. They
have got a lot of other work they do as well, and this past
year has not been easy in terms of trying to provide the help
people need and still doing a lot of the other work, such as
helping people learn about preventive benefits under Medicare,
which are also underutilized.
Senator Whitehouse. Thank you both very much.
Thank you, Mr. Chairman.
The Chairman. Thank you very much, Senator Whitehouse.
We thank you so much for being here today.
This is a very important issue. We need to do everything we
can to see to it that our poorest seniors have access to the
Medicare Part D benefit program, and we need to do everything
we can to make the whole program more efficient and more
effective.
This hearing has shed a lot of light on the problems, as
well as having come up with a lot of good, common sense,
practical suggestions to improve the program. So your presence
here has been very valuable, very helpful, and we thank you for
taking the time.
This hearing is closed.
[Whereupon, at 12:25 p.m., the Committee was adjourned.]
A P P E N D I X
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Questions from Senator Lincoln for Beatrice Disman
Question. There have been far too many problems in getting
the right premium amount deducted from people's Social Security
checks and sent to the right Part D plan. In Arkansas, we are
still getting calls about withholding issues--many of these
problems go back to January 2006.
Why is this such a big problem, how many total cases have
there been, how many remain to be resolved, and how do you
intend to prevent these problems from recurring.
Answer. These premium withholding problems have been of
great concern to SSA as well, and we are committed to working
closely with CMS to resolve all outstanding withholding issues.
Premium withholding originates with the beneficiary
enrolling with the Prescription Drug Plan (PDP). The PDP inputs
the information to CMS who in turn transmits it to SSA for
premium withholding where appropriate.
This means that in every case where a Medicare beneficiary
has elected to have plan premiums withheld from a monthly
Social Security benefit, SSA must rely on the successful
transmission of correct withholding information across two
separate entities. If there is a problem anywhere along this
chain, the withholding request is either 1) never received by
SSA, or 2) contains inaccurate information.
By ``containing inacurrate information,'' we mean that the
transaction does not tell SSA enough to verify the amount of
required withholding, the effective dates of withholding, or in
some cases, even the correct record to adjust. Historically, a
significant number of CMS' transactions have ``rejected''
because of errors in the transmitted data. SSA cannot correct
the errors independently.
However, the quality of transmissions we are receiving from
CMS in 2007 has improved. Fewer CMS transactions contain data
errors, and the occurrence of some of the more common errors
has been reduced. SSA analysts have worked with CMS on an
ongoing basis to reconcile data files, ensuring that the
transactions flowing from CMS will make accurate premium and
enrollment adjustments, per the beneficiary's request. In
effect, SSA performs a ``trial run'' of much of the CMS data,
to verify that the final, accepted transaction will reflect the
intent of the beneficiary (as relayed through the PDP and CMS).
SSA defers to CMS regarding the total number of premium
withholding cases there have been and the number of unresolved
cases.
We continue to work with CMS to analyze and simplify the
data exchange between our two agencies, recently holding a 2-
day process improvement workshop to help address unresolved
issues. A primary goal of this effort is to reduce the
occurrence of data edits without compromising the quality
standards that are a hallmark of SSA's business practice. We
also continue to assist CMS in the resolution of outstanding
premium issues.
Question. The biggest complaint in Arkansas is that
applying for the low-income subsidy is too challenging for
seniors. I have been informed that the Social Security Managers
in Arkansas have contacted many of the LIS folks from last year
who didn't return their redetermination forms. When contacted
to inquire why they had not returned the forms, some said that
they didn't want to go through the process again, it just
wasn't worth it.
The LIS application form is several pages (about 8) and,
despite your best efforts to simplify it, is very complicated.
Wouldn't eliminating the asset test make the enrollment
process much simpler?
Short of that, aren't there some questions that could be
removed, like those about the cash value of life insurance and
help from family and friends with groceries and other household
expenses?
Answer. SSA does not have the authority to make such
changes administratively, as the requirements to consider
assets and in-kind contributions are statutory in nature.
However, removal of either the asset test or the specific
application questions you mention would clearly make the
process simpler, but would also increase the costs of the
program.
The Medicare Modernization Act (MMA) directed SSA to follow
Supplemental Security Income (SSI) methodology for counting
resources. The SSI resource standards are in Section 1613 of
the Social Security Act. MMA established the resource level
significantly higher than the SSI level, which is $2,000 for an
individual and $3,000 for a couple. There is a sliding resource
level for MMA, which combined with certain income levels
determines if a full or partial subsidy is received. In 2007,
for MMA purposes, an individual's resource level could be
$10,210 and a couple $20,410. As an extension of these MMA-
liberalized resource limits, SSA does not consider non-liquid
resources for purposes of the LIS program. However, the
exclusion of liquid resources (such as cash-surrender value of
life insurance and other resources that could be quickly
converted into cash) would not be consistent with the SSI
methodology intended by MMA.
Likewise, MMA directed SSA to follow SSI methodology
regarding income consideration (Section 1612 of the Social
Security Act). Under these rules, considered income includes
earned income, unearned income, and in-kind support and
maintenance (ISM). Assistance from family and friends with
groceries and household expenses meets the definition of ISM
for SSI purposes, thus its consideration for the LIS is
consistent with the intent of MMA.
------
Questions from Senator Thomas Carper for Beatrice Disman
Question. It is my understanding that over 600,000 low-
income beneficiaries lost their ``deemed'' status, making them
no longer dual eligible. Now, this group who were automatically
enrolled in the benefit at first will have to proactively sign
up. What are CMS and SSA doing to ensure this group does not
fall through the cracks?
Answer. We share your concern. To address this situation,
SSA and CMS arranged for the SSA low-income subsidy application
to be included with the notice that CMS mailed to all affected
beneficiaries in September 2006. This means that every
beneficiary who lost his or her deemed status received a letter
explaining the need to proactively apply for the subsidy and
also received the form needed to apply for ``extra help.''
SSA continues to receive applications based on this
mailing. To date, about 230,000 of these beneficiaries have
reapplied. This is in addition to a number of individuals who
have regained automatic (deemed) eligibility through
reentitlement to certain State programs.
In an additional effort to reach out to these
beneficiaries, SSA is doing a study to make personal phone
calls to 10,000 individuals who have lost deemed status and, to
date, have not reapplied. By conducting this study we hope to
encourage these individuals to apply, but just as important, we
hope to learn about the reasons why some individuals have not
returned the application. As we proceed with this study, our
next steps will be guided by what we learn from these phone
calls.
Question. I believe the automatic enrollment process for
dual eligibles performs an important function by guaranteeing
that low income beneficiaries get immediate coverage. However,
I am concerned that because dual eligibles are randomly
assigned to plans that do not necessarily fit their needs, we
may be creating more work for ourselves in the long run. How
can we more accurately enroll this group to reflect their
needs, and cut down on the wasted cost and time exhausted
trying to reassign these beneficiaries later?
Answer. We defer to CMS, as SSA is not involved in the auto
enrollment process.
Question. We need to ensure that CMS has the proper
structures in place to oversee participating health plans. CMS
must ensure that plans are doing what they are supposed to be
doing and that any lack of compliance is immediately identified
and corrected. How has CMS improved their ability to monitor
the compliance of these various plans?
Answer. We defer to CMS regarding their plans to monitor
health plan compliance.
Question. While is is important to provide plans the
flexibility to change their benefits package every year to
adapt to changing drug demands, it seems problematic that plans
that qualified for Low Income beneficiaries one year may no
longer cover them in the next. 1.2 million dual eligibles had
to be reassigned to other plans during the latest enrollment
period because of terminated plans and fluctuating benefits
costs. What can we do to curb this turnover year in and year
out?
Answer. We defer to CMS, as SSA has no role in either the
structuring of individual prescription drug plans or in the
auto-enrollment process.
------
Questions from Senator Kohl for Larry Kocot
Question. Mr. Kocot, as you know, Congress remains
committed to implementing a Medicare Part D program that serves
the needs of all of America's seniors, including low-income and
minority beneficiaries. It was because of this commitment, in
fact, that Congress included a provision in the Medicare
Modernization Act that charges CMS with the responsibility of
overseeing the Part D plans to ``ensure that drug plans provide
access to medically necessary treatments for all and do not
discriminate against any particular types of beneficiary.'' As
you may know, the FDA recently approved a drug for the
treatment of heart failure in self identified blacks, called
BiDil. It has come to our committee's attention that, to date,
only about half of Part D plans are covering this medication. I
am told that this is because plans believe or have been told
that it is not necessary to cover this drug if they are
covering what is being referred to as ``its generic component
parts,'' Isordil and Apresoline, neither of which are approved
for the treatment of heart failure.
If you would, Mr. Kocot, could you please inform this
committee about, what if anything, CMS has done to be sure that
the decisions regarding coverage of this drug are being made
based on the best available science and not as part of an
effort by plans to discourage African American patients with
heart failure from participating?
Answer. Formularies and formulary management practices vary
across plans, subject to CMS-published guidelines reflecting
two overarching policy objectives. First, Part D plan sponsors
must provide access to medically necessary Part D treatments
and must not substantially discourage enrollment by particular
types of beneficiaries. Second, plan sponsors are expected to
use approaches to drug benefit management that are proven and
in widespread use in prescription drug plans today.
As a condition of participation in Part D, sponsors must
submit their plan formularies for CMS review and approval. CMS
considers covered drugs as well as utilization management
techniques. If CMS reviewers find that a plan's formulary could
substantially discourage enrollment by certain types of
beneficiaries or otherwise violate Part D program requirements,
that formulary will not be accepted and if unchanged, the plan
is not eligible for a Part D contract.
CMS is fully committed to ending healthcare disparities in
the United States. Consistent with the most recent feedback we
have received from the American College of Cardiology (ACC) and
American Heart Association (AHA) regarding management of HF in
African-Americans, CMS has ensured that all Part D formularies
contain either BiDil or isosorbide dinitrate and hydralazine
(the individual generic components which are the active
ingredients found in BiDil). We will continue to evaluate the
information on BiDil and other drug products and update our
formulary processes as appropriate when new information becomes
available.
------
Questions from Senator Blanche Lincoln for Larry Kocot
Question. There have been far too many problems in getting
the right premium amount deducted from people's Social Security
checks and sent to the right Part D plan. In Arkansas, we are
still getting calls about withholding issues--many of these
problems go back to January 2006.
Why is this such a big problem, how many total cases have
there been, how many remains to be resolved, and how do you
intend to prevent these problems from recurring?
Answer. Premium withholding continues to work for the vast
majority of the 4.7 million beneficiaries who requested
withholding in 2006. While many beneficiaries have experienced
some issues with their withholding, CMS is committed to
addressing and resolving these issues as soon as possible. The
majority of issues were caused by CMS and Social Security
Administration (SSA) systems having mismatching data on certain
beneficiaries.
CMS, working with the Social Security Administration and
key stakeholders (plans, pharmacies, etc.), has made tremendous
strides to resolve premium withhold issues encountered in the
first year of the program and to lay the groundwork for
continued improvements in 2007 and beyond. Those steps have
clearly paid off, with a 97% acceptance rate for transactions
between CMS and SSA in 2007.
Question. I am being told by my constituents that no matter
what the Medicare problem is that they are required to call the
800 number. The wait time can be a couple of hours and often
the Medicare staff person can't resolve the problem, gives
inaccurate information, or transfers the caller to someone else
for another wait. This is especially distressing considering
many low-income persons are facing enrollment changes and may
need assistance.
What steps are being taken to provide quick and accurate
information to callers who have problems with their checks or
other issues?
Answer. The Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) required CMS to establish a
centralized, single toll-free number for beneficiary inquiries.
Using 1-800-MEDICARE as the focal point for all beneficiary
telephone inquiries relating to Part D provides beneficiaries
with an opportunity to obtain answers to all types of Medicare
questions, receive claims information, and order Medicare
publications in a consistent manner.
We do not have any documented reports of callers waiting
several hours to reach a 1-800-MEDICARE Customer Service
Representative (CSR). However, we would be happy to trace any
specific call complaints if provided with the date of the call,
the telephone number where the call was made from, and the name
of the caller. Further, our 1-800-MEDICARE Contractor, Vangent
(formerly Pearson Government Solutions), performs real-time
monitoring and makes staffing adjustments based on wait times
and call arrival patterns.
Also, note that we implement a ``call back'' process when
the average speed of answer (or wait time) for any 30 minute
period reaches 15 minutes. This ensures that beneficiaries do
not have exceptionally long wait times. We direct a certain
percentage of calls to a dedicated automated voice message
system where callers can leave their names and phone numbers
and a CSR will call the individual back at a less busy time.
In the event there is a complex issue that cannot be
handled at our call center, we have a process in place to refer
these issues to a specialized group of CSRs who will research
the issue and provide a resolution for the beneficiary. These
types of inquiries represent less than 1 percent of the total
call volume. We do refer callers with non-related 1-800-
MEDICARE issues to the appropriate agency for assistance (such
as callers who have contacted 1-800-MEDICARE but their issue
must be handled by the Social Security Administration or the
Railroad Retirement Board.)
1-800-MEDICARE CSRs receive weekly Refresher Training to
update them on new procedures and initiatives. The materials
covered for the week are conducted either in a classroom
setting, or by individualized desktop training. Once the
materials are presented, the CSRs are given a knowledge test
which contains questions from the current and prior week's
training materials. This approach ensures that CSRs retain
information that was covered earlier in the month.
Finally, a minimum of four calls per customer service
representative, per month, are monitored for quality using a
national Quality Call Monitoring (QCM) scorecard. More calls
are monitored for new customer service representatives and for
those CSRs with performance concerns. During the review of the
QCM scorecards, CSRs listen to their recorded calls with their
supervisors and corrective actions are taken where applicable.
Question. Does CMS plan to provide resources, funded under
Medicare Part D administration, to the Areas Agencies on Aging
and Native American aging programs to support their community-
level outreach, assistance and counseling efforts?
Answer. In FY 2007, CMS will provide more than $30 million
to the State Health Insurance Assistance Programs (SHIPs) in
every state. However, CMS does not have a breakout by state or
nationally on the amount of Federal SHIP funding that flows to
the Area Agencies on Aging (AAAs) through their contracts and
relationships with SHIPs. CMS directs SHIPs to build networks
of locally accessible counseling locations, and many States use
Federal SHIP funding to contract or otherwise fund AAAs to
achieve that goal.
In addition to any SHIP funding provided to the AAAs, CMS
has an interagency agreement with the U.S. Administration on
Aging (AoA) to target resources to AAAs in geographic areas
with high concentrations of beneficiaries who might be eligible
for the low-income subsidy. In FY 2007, the total amount
allocated under this agreement is $1.4 million.
CMS has developed a collaborative partnership with the AoA
to leverage the federal, state, tribal, and local partnerships
called the National Aging Services Network. Through this
collaborative effort, CMS is providing resources to the AoA and
its National Aging Services Network to offer outreach and
education, assistance, and counseling to people with Medicare
at the local level. This partnership is designed to help
beneficiaries make informed decisions about their healthcare
and have greater access to affordable medications.
The National Aging Services Network reaches more than 7
million older persons, Medicare beneficiaries, and their
caregivers, includes 56 State Units on Aging (SUA), 655 Area
Agencies on Aging (AAAs), 243 Tribal organizations, more than
29,000 local community-service organizations, 500,000
volunteers, and a wide variety of national organizations.
Question. In Arkansas, insurance companies are aggressively
selling HMOs to seniors who only thought they were getting Part
D plans. The seniors later found out their providers weren't
part of the plan they signed up for. There was a segment in the
news in my state a couple of days ago (on Channel 7--On My
Side) about this happening to an elderly woman and she was
having trouble getting out of her plan.
What, if anything, is being done to remedy this?
Answer. Medicare Advantage (MA) organizations that directly
employ or contract with a person to market a MA plan must
ensure that a plan representative or agent complies with
applicable MA and Part D laws, federal health care laws, and
CMS policies (including CMS' Marketing Guidelines). CMS will
hold organizations utilizing agents that violate Medicare
program marketing requirements responsible for the conduct of
these agents.
CMS has taken a proactive approach to ensure that the
marketing activities and outreach of these plans is accurate
and complies with all program requirements. For example, CMS
has begun utilizing a program audit assistance contractor to
conduct ``secret shopping'' of sales events across the country.
This information enables CMS to learn first hand what is
happening in the sales marketplace, determine the accuracy of
MA sales presentations, and identify organizations for
compliance intervention that are not meeting CMS marketing and
enrollment requirements.
CMS also is strengthening its relationships with state
regulators. Specifically, CMS worked with the National
Association of Insurance Commissioners and States to develop a
model Compliance and Enforcement Memorandum of Understanding
(MOU). This MOU enables CMS and State Departments of Insurance
to freely share compliance and enforcement information, to
better oversee the operations and market conduct of companies
we jointly regulate and enable the sharing of specific
information about marketing agent conduct.
Question. There were approximately 13 million beneficiaries
eligible for the low-income subsidy in 2006, but 9.9 million
enrolled.
How do you plan to reach the rest in 2007? Would it help if
the IRS told you in advance which beneficiaries meet the income
limits so you can target outreach directly to them? Are there
other steps Congress could take to help?
Answer. Since the enactment of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003, CMS has made
extensive efforts to implement the law and provide
beneficiaries with access to prescription drugs. Because of the
extraordinary importance of this new benefit, CMS outreach to
Medicare beneficiaries has been unprecedented. We are pleased
that over 90 percent of all people eligible for the Medicare
prescription drug benefit are receiving prescription drug
coverage through the Medicare prescription drug benefit or from
another creditable source.
We agree it is critical to ensure low-income beneficiaries
are able to access, and take advantage of, the extra help
available to them under the new Medicare prescription drug
benefit. CMS, in partnership with the Social Security
Administration (SSA), was extremely successful in enrolling
low-income subsidy (LIS)-eligible individuals into Part D plans
in the first year of the program. Of the approximately 13
million beneficiaries CMS estimates were eligible for the LIS
in 2006, nearly 10 million now have coverage for prescription
drugs. Through ongoing outreach that continues today, CMS has
added over 300,000 new LIS-beneficiaries who enrolled in Part D
prior to January 1, 2007. With the recently extended Medicare
demonstration that allows LIS-approved beneficiaries to enroll
through the end of 2007 without any late enrollment penalty,
these numbers should continue to grow.
CMS is continuing outreach activities to the remaining
individuals who might be eligible for the subsidy. Outreach
efforts to this critical population have been data-driven, with
our focus on identifying LIS-eligible populations at the State,
county, community, and individual level. These individuals have
been targeted with a multi-pronged education and outreach
campaign that leverages existing information, intermediaries
and resources. Initiatives include direct mailings and phone
calls to beneficiaries, along with local outreach from
community groups, intergovernmental partners, health care
providers, and pharmacists. Given that many beneficiaries may
be difficult to reach through traditional means, CMS has
special initiatives targeting urban minority beneficiaries and
beneficiaries in rural areas who may be isolated from general
community outreach efforts.
The Office of the Inspector General (OIG) of the Department
of Health and Human Services recently issued a report entitled,
``Identifying Beneficiaries Eligible for the Medicare Part D
Low-Income Subsidy, OEI-03-06-00120.'' In this report the OIG
recommended, ``. . .legislation is needed to allow CMS and SSA
to more effectively identify beneficiaries who are potentially
eligible for the subsidy.'' OIG goes on to say ``access to IRS
data would help CMS and SSA identify the beneficiaries most
likely to be eligible for the subsidy.'' However, many of those
eligible for the low-income subsidy do not file federal income
tax returns because of their limited incomes. As a result, the
utility of using IRS data to target low-income beneficiaries
would be minimal in comparison to the privacy concerns that
would be inherent in making this data available. Given the
extreme sensitivity and privacy concerns that revolve around
any sharing of personal tax information, along with our
existing outreach strategy, we do not believe we need
additional legislative authority to appropriately target low-
income beneficiaries.
Question. Many people with very low incomes are being
denied LIS because their assets are just over the limits
($11,710 for individuals and $23,410 for couples). That's
hardly enough of a nest egg to get someone through retirement.
Wouldn't eliminating the asset test get help to millions of
additional beneficiaries who need it? Short of eliminating the
asset test, shouldn't we at least increase the limits?
Answer. Congress established as asset test as a component
of the low-income subsidy of the Medicare prescription drug
benefit. Inherently, eliminating the asset test would increase
the number of individuals who could qualify for the low-income
subsidy. At this time, the Administration does not support
eliminating the asset test.
------
Questions from Senator Carper for Larry Kocot
Question. It is my understanding that over 600,000 low-
income beneficiaries lost their ``deemed'' status, making them
no longer dual eligible. Now, this group who were automatically
enrolled in the benefit at first will have to proactively sign
up.
What are CMS and SSA doing to ensure this group does not
fall through the cracks?
Answer. CMS took great strides to ensure that beneficiaries
receiving the low-income subsidy (LIS) who were no longer
automatically eligible for extra help in 2007 had uninterrupted
drug coverage and as seamless a transition as possible.
Due to a loss of eligibility for Medicaid, including the
Medicare Savings Program, or Supplemental Security Income (SSI)
benefits, some Medicare beneficiaries no longer automatically
qualified for LIS in 2007. In September 2006, CMS reached out
to these beneficiaries by notifying them through the mail about
this change, and providing information and guidance to help
them get drug coverage that meets their needs. The letter
advised that if a beneficiary has limited income and resources
and thinks s/he may still qualify for extra help, s/he will
need to apply and qualify through SSA, via the application that
is included with the notice, or their State Medical Assistance
(Medicaid) office.
CMS also worked with the Social Security Administration
(SSA), State Medical Assistance (Medicaid) Offices, the State
Health Insurance and Assistance Programs (SHIPs), physicians
and pharmacists, prescription drug plans, and hundreds of
partner organizations across the country to reach beneficiaries
with these messages and guidance. Our customer service
representatives at 1-800-MEDICARE are prepared to answer
questions and to guide beneficiaries through the process of
losing their LIS status, and relevant information is posted on
our consumer website, www.medicare.gov.
As a result, as of January 2007, roughly 35 percent of
people who had lost their deemed status had regained LIS
eligibility--including those who regained their deemed status
and those who reapplied and qualified for LIS with SSA. We
expect these numbers to continue to grow throughout 2007.
Question. I believe the automatic enrollment process for
dual eligibles performs an important function by guaranteeing
that low income beneficiaries get immediate coverage. However,
I am concerned that because dual eligibles are randomly
assigned to plans that do not necessarily fit their needs, we
may be creating more work for ourselves in the long run.
How can we more accurately enroll this group to reflect
their needs, and cut down on the wasted cost and time exhausted
trying to reassign these beneficiaries later?
Answer. Section 1860D-1(b)(1)(C) requires that any full
benefit dual eligible that fails to enroll in a PDP or an MA-PD
be auto-enrolled on a random basis among all PDPs in a given
PDP region that have premiums at or below the low-income
benchmark.
Question. We need to ensure that CMS has the proper
structures in place to oversee participating health plans. CMS
must ensure that plans are doing what they are supposed to be
doing and that any lack of compliance is immediately identified
and corrected.
How has CMS improved their ability to monitor the
compliance of these various plans?
Answer. CMS has strengthened its oversight of Part D plans
by improving its method for identifying companies for
compliance audits, making more efficient use of the resources
devoted to ensuring compliance, and developing a closer
relationship with state regulators.
CMS has developed a contractor risk assessment methodology
that identifies organizations and program areas that represent
the greatest compliance risks to Medicare beneficiaries and the
government. This approach enables the Agency to focus its
compliance/enforcement resources on those program areas
representing the greatest concern to CMS. Further, CMS uses a
contractor to augment the Federal employees conducting Part D
compliance audits. Among the steps the contractor is taking is
to conduct ``secret shopping'' of sales events across the
country; this information is enabling CMS to learn first-hand
what is happening in the sales marketplace and to identify
organizations for compliance intervention that are not meeting
CMS marketing and enrollment requirements.
CMS also has strengthened its relationships with state
regulators that oversee market conduct of plans. Specifically,
CMS worked cooperatively with the NAIC and State Departments of
Insurance to develop a model Compliance and Enforcement
memorandum of Understanding (MOU). This MOU enables CMS and
State Departments of Insurance to freely share compliance and
enforcement information, to better oversee the operations and
market conduct of companies we jointly regulate and enable the
sharing of specific information about marketing agent conduct.
To gain entry into the program, Part D plans must submit an
application for CMS approval. CMS performs a comprehensive
review of a plan's application to determine if the plan meets
program requirements. Annually, plans also must submit
formulary and benefit information for CMS review prior to being
accepted for the following contract year. For each plan
sponsor, CMS establishes a single point of contact (Account
Manager) for all communications with the plan. The Account
Managers work with plans to resolve any plan problems,
including compliance issues.
Finally, CMS continually collects and analyzes performance
data collected from Part D plans, internal systems, and
beneficiaries. CMS has established baseline measures for the
performance data. Plans not meeting the baseline measures are
contacted and compliance actions initiated.
Question. While it is important to provide plans the
flexibility to change their benefits package every year to
adapt to changing drug demands, it seems problematic that plans
that qualified for Low Income beneficiaries one year may no
longer cover them in the next. 1.2 million dual eligibles had
to be reassigned to other plans during the latest enrollment
period because of terminated plans and fluctuating benefits
cost.
What can we do to curb this turnover year in and year out?
Answer. CMS is committed to ensuring that beneficiaries
receiving the low-income subsidy have uninterrupted drug
coverage and a seamless transition as they move through plan
years. Almost all 2006 Part D sponsors either continued their
current plans in 2007 or streamlined and consolidated their
2006 plans. Additionally, in 2007 beneficiaries with limited
incomes who qualify for the extra help have a range of options
available for comprehensive coverage. Nationally, over 95
percent of low income beneficiaries did not need to change
plans to continue to receive this coverage for a zero premium.
In 2007, CMS had to randomly reassign about 250,000
beneficiaries outside their current organization and took steps
to ensure that these beneficiaries were aware of the action and
could review their options.
------
Questions from Senator Blanche Lincoln for Ellen Leitzer
Question. Do AAAs/SHIPs have the financial resources needed
to continue the task?
Answer. The Health Assistance Partnership works closely
with this country's SHIP network and can only speak
knowledgeably about SHIP funding. The short answer to Senator
Lincoln's question is no--SHIPs do not have adequate funding to
meet the needs of the Medicare population that they serve.
The most significant source of unbiased consumer education
for the Medicare program has been the national network of State
Health Insurance and Assistance Programs (SHIPs). In 1990,
Congress established the SHIP network so that counseling
assistance, referrals, and accurate information could be made
available to Medicare beneficiaries nationwide. The SHIP
network is the only entity that offers in-depth, one-on-one
assistance to beneficiaries with an objective viewpoint, and an
ability to handle complex cases that may require lengthy
follow-up. The 1,400 local, community-based SHIP programs have
an estimated 12,000 staff members and volunteers; their
officers are often housed in area agencies on aging, senior
centers, hospitals, and other organizations that serve the
elderly. Due to limits in resources, most SHIP counselors are
volunteers.
Question. The SHIP network is under-funded. Funding should
be increased from $30 million to $43 million--a total of one
dollar per beneficiary--for the following reasons:
Answer. Growing Complexity of Medicare: In addition to
helping seniors navigate the confusing Medicare Part D program,
SHIPs are needed to help beneficiaries understand a growing
array of coverage options that create confusion, including:
original fee-for-service Medicare; supplemental insurance;
employer-based retiree coverage; regional PPOs; private fee-
for-service (PFFS); and Special Needs Plans. The CMS plan
comparison tools often lack key information needed to weigh
benefits and risks, identify and evaluate variables, and
counterbalance incomplete or misleading marketing claims.
Improving Low Income Seniors' Participation in Special
Subsidy Programs: SHIPs are uniquely positioned to help low
income beneficiaries. Fewer than 1 in 3 of those eligible for
Medicare Savings Programs (MSPs) actually receive them.
Applying for these programs can be daunting and an estimated
two-thirds of enrollees need help completing the forms. SHIPs
can help raise awareness of Medicaid and Medicare Savings
Programs; help beneficiaries gather documentation; help
beneficiaries understand program asset limits and estate
recovery rules; help beneficiaries find providers who accept
Medicare and Medicaid; and draw attention to Special Needs
Plans for dual-eligibles.
Evaluating Changing Benefits: Private plans can change
benefit structures and cost-sharing annually and beneficiaries
will need to evaluate their coverage every year. SHIPs will be
needed to help beneficiaries make sense of annual plan changes
and help to evaluate whether it makes sense to switch plans.
Understanding Long-Term Care Options: Medicare does not
cover many long-term care and personal care services. SHIPs are
needed to help educate Medicare beneficiaries about Medicare's
home health benefits, Medicaid's role in funding long-term care
services, and provide one-on-one assistance for people denied
longterm care benefits. In 2004, out-of-pocket spending for
long-term care totaled $36.9 billion nationally. Only 10% of
Americans 65 and older had long-term care insurance in 2002 and
for those who can afford long-term care insurance, the choices
are bewildering.
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