Medicare Part D Low-Income Subsidy: SSA Continues to Approve
Applicants, but Millions of Individuals Have Not Yet Applied
(22-MAY-08, GAO-08-812T).
To help the elderly and disabled with prescription drug costs,
the Congress passed the Medicare Prescription Drug, Improvement
and Modernization Act of 2003 (MMA), which created a voluntary
outpatient prescription drug benefit (Medicare Part D). A key
element of the prescription drug benefit is the low-income
subsidy, or "extra help," available to Medicare beneficiaries
with limited income and resources to assist them in paying their
premiums and other out-of-pocket costs. To assess the Social
Security Administration's (SSA) implementation of the subsidy,
GAO is providing information on (1) the number of applicants
approved for or denied the low-income subsidy and (2) challenges
of identifying individuals eligible for the subsidy and targeting
outreach efforts. This statement is based on a prior GAO report
on the subsidy and associated spending issued in May 2007,
selected aspects of which we updated in May 2008.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-08-812T
ACCNO: A82173
TITLE: Medicare Part D Low-Income Subsidy: SSA Continues to
Approve Applicants, but Millions of Individuals Have Not Yet
Applied
DATE: 05/22/2008
SUBJECT: Appeals
Appeals process
Beneficiaries
Data collection
Data integrity
Disadvantaged persons
Elderly persons
Eligibility determinations
Health care programs
Income statistics
Income taxes
Information disclosure
Medicare
Prescription drugs
Strategic planning
Subsidies
Program goals or objectives
Medicare Part D
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GAO-08-812T
This is the accessible text file for GAO report number GAO-08-812T
entitled 'Medicare Part D Low-Income Subsidy: SSA Continues to Approve
Applicants, but Millions of Individuals Have Not Yet Applied' which was
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Testimony:
Before the Special Committee on Aging, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:30 a.m. EDT:
Thursday, May 22, 2008:
Medicare Part D Low-Income Subsidy:
SSA Continues to Approve Applicants, but Millions of Individuals Have
Not Yet Applied:
Statement of Barbara D. Bovbjerg, Director Education, Workforce, and
Income Security Issues:
GAO-08-812T:
GAO Highlights:
Highlights of GAO-08-812T, a report to the Special Committee on Aging,
U.S. Senate.
Why GAO Did This Study:
To help the elderly and disabled with prescription drug costs, the
Congress passed the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (MMA), which created a voluntary outpatient
prescription drug benefit (Medicare Part D). A key element of the
prescription drug benefit is the low-income subsidy, or �extra help,�
available to Medicare beneficiaries with limited income and resources
to assist them in paying their premiums and other out-of-pocket costs.
To assess the Social Security Administration�s (SSA) implementation of
the subsidy, GAO is providing information on (1) the number of
applicants approved for or denied the low-income subsidy and (2)
challenges of identifying individuals eligible for the subsidy and
targeting outreach efforts.
This statement is based on a prior GAO report on the subsidy and
associated spending issued in May 2007, selected aspects of which we
updated in May 2008.
What GAO Found:
Of the approximately 7.2 million applicants for the low-income subsidy,
SSA approved approximately 2.8 million as of March 2008, and SSA has
improved some key measures for its subsidy application processes. SSA
approved about 570,000 applicants, denied about 403,000 applicants, and
determined that no decision was required for about 281,000 applicants
in fiscal year 2007. The table below shows that excess income was the
primary reason applicants were denied benefits, while many other
applicants were denied benefits because their resources exceeded
program limits. Further, SSA has collected data and established some
goals to monitor its progress in implementing and administering the
subsidy benefit.
No reliable data are available to help SSA identify the eligible
population for its outreach efforts, and millions who may be eligible
have not yet applied. SSA maintains that it would not be able to
establish specific goals and measures for its outreach activities, as
we recommended in our May 2007 report because, of the lack of reliable
data on the total eligible population. Responding to another of our
recommendations, SSA is working with the Internal Revenue Service to
determine if tax data can help target individuals eligible for the
subsidy. The Centers for Medicare & Medicaid Services and the
Congressional Budget Office have estimated, respectively, that about
2.6 million to over 4 million individuals who may qualify for the
subsidy are not receiving it. Various barriers, such as reluctance to
disclose personal financial information or lack of knowledge of the
subsidy, may prevent potentially eligible Medicare beneficiaries from
applying for the subsidy. To solicit applications from individuals
potentially eligible for the subsidy, SSA conducted an extensive
outreach campaign from May 2005 to August 2006, but has decreased its
outreach activities since then. Staffing constraints in SSA field
offices may also limit SSA�s ability to assist individuals with the
subsidy and conduct local outreach to inform the public about the
subsidy.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-812T]. For more
information, contact Barbara Bovbjerg at 202-512-7215 or
[email protected].
[End of section]
May 22, 2007:
Mr. Chairman and Members of the Committee:
I appreciate the opportunity to participate in today's hearing to
discuss the Social Security Administration's (SSA) progress in
enrolling individuals in the Medicare Part D Low-Income Subsidy. High
prescription drug costs can have a detrimental effect on low-income
seniors and the disabled, who are more likely than others to suffer
from chronic medical problems requiring prescription drugs. Such high
costs may cause some elderly patients to forgo or restrict their use of
prescription drugs. To help the elderly and disabled with these costs,
the Congress passed the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA).[Footnote 1] MMA enabled Medicare
beneficiaries to enroll voluntarily in drug plans sponsored by private
health insurance companies. The benefit includes a low-income subsidy,
or "extra help," to assist Medicare beneficiaries with limited income
and resources (also called assets) in paying their premiums and other
out-of-pockets costs.
The Department of Health and Human Services and its Centers for
Medicare & Medicaid Services (CMS) are largely responsible for
implementing the new drug plan, called Medicare Part D, and SSA
administers the low-income subsidy. SSA is responsible for conducting
outreach efforts to identify and notify individuals of the subsidy's
availability, taking applications, making subsidy eligibility
determinations, resolving appeals, and ensuring continued subsidy
eligibility. SSA also withholds Part D premiums from Social Security
benefits for beneficiaries who select this option. My testimony will
address (1) the number of applicants approved for or denied the low-
income subsidy and (2) the challenges of identifying individuals
eligible for the subsidy and targeting outreach efforts.
My comments are based largely on a prior GAO report issued in May 2007
addressing SSA's implementation of the low-income subsidy and
associated spending.[Footnote 2] We updated selected aspects of the
work during May 2008. We conducted our work in accordance with
generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
Summary:
Of the 7.2 million applicants for the low-income subsidy, SSA approved
2.8 million of them, and SSA has improved some key measures for its
subsidy application processes. SSA approved about 570,000 applicants,
denied about 403,000 applicants, and determined that no decision was
required for about 281,000 applicants in fiscal year 2007. In a 2007
SSA study of low-income subsidy denials, SSA found that excess income
was the primary reason for 62 percent of applicant denials and about 24
percent of these denied applicants were within $1,500 of the income
limit. Excess resources were the primary reason for 16 percent of
applicant denials and nearly 30 percent of these denied applicants were
within $5,000 of the resource limit. Approximately 9 percent had both
excess income and resources. Further, SSA has collected key data and
established some goals to monitor its progress in implementing and
administering the subsidy benefit.
No reliable data are available to help SSA target its outreach efforts,
and millions who may be eligible for the subsidy have not yet applied.
SSA maintains that it is not able to establish specific goals and
measures for its outreach activities, as we recommended in our May 2007
report, because of the lack of reliable data on the total eligible
population. However, responding to another of our recommendations, SSA
is working with the Internal Revenue Service to determine whether tax
data can help to target individuals eligible for the subsidy. According
to CMS and Congressional Budget Office estimates, respectively, about
2.6 million to over 4 million individuals who may qualify for the
subsidy are not receiving it. Various barriers, such as a reluctance to
disclose personal financial information, and inadequate availability of
one-on-one assistance for completing the application, may prevent
potentially eligible Medicare beneficiaries from applying for the
subsidy. To solicit applications from individuals potentially eligible
for the subsidy, SSA conducted an extensive outreach campaign, from May
2005 to August 2006, but has decreased its outreach activities since
then due to limited funding. Staffing constraints in SSA field offices
may also limit SSA's ability to assist individuals with the subsidy and
conduct local outreach to inform the public about the subsidy.
Background:
All Medicare beneficiaries entitled to benefits under Medicare Part A
or enrolled in Part B are eligible to enroll in Medicare Part
D.[Footnote 3] Medicare beneficiaries who qualify for full coverage
under their state's Medicaid program,[Footnote 4] as well as Medicare
beneficiaries who qualify for more limited Medicaid coverage,
Supplemental Security Income (SSI), or state Medicare Savings Programs
are automatically enrolled in a Part D prescription drug plan by
CMS,[Footnote 5] automatically qualify for the full subsidy of their
premium and deductible, and do not need to file an application. They
are referred to as "deemed."
Other Medicare beneficiaries who do not automatically qualify for the
subsidy (i.e., who are not deemed) must apply and meet the income and
resource requirements. These beneficiaries generally qualify if they
have incomes below 150 percent of the federal poverty level and have
limited resources. Generally, in 2008, individuals qualify if they have
an income up to $15,600 for an individual and $21,000 for a couple and
if they have resources up to $11,990 for an individual or $23,970 for a
couple.[Footnote 6] The amount of the subsidy for premiums,
deductibles, copayments, and catastrophic coverage varies depending on
income and resources.
Individuals generally apply for the benefit directly through SSA,
although they may also apply through their state Medicaid office. The
agency that receives an application, whether SSA or a state Medicaid
agency, is responsible for making initial subsidy determinations and
deciding appeals and redeterminations. Those who apply through SSA may
submit their subsidy application using SSA's paper application or an
Internet application form. Applicants may also have their information
entered electronically by visiting an SSA field office or by calling
SSA's toll-free phone line. According to state Medicaid officials we
spoke with, they encouraged beneficiaries to apply for the subsidy
through SSA whenever possible. As of March 2007, only the Colorado and
Kansas state Medicaid agencies had made Part D subsidy determinations.
Under the MMA, the Congress provided SSA with a special $500 million
appropriation from the Federal Hospital Insurance Trust Fund and the
Federal Supplementary Medical Insurance Trust Fund to assist SSA in
implementing its Part D responsibilities for fiscal years 2004 and
2005, but later extended the appropriation to fiscal year 2006. Since
January 2006, SSA officials told us that the agency has had to draw on
its overall administrative appropriation to support its Part D
activities. SSA informed us that the agency now has a mechanism to
track costs for low-income subsidy applications, and estimates that it
cost the agency $175 million to administer the subsidy in fiscal year
2007, and that it expects similar costs in fiscal year 2008.
SSA Continues to Approve Applications and Improve Processing Efforts
and Has Improved Some Measures for Processing Benefits:
SSA continues to approve low-income subsidy applications; of the
applicants who were denied benefits, most exceeded income limits and
others exceeded resource limits. To monitor its progress in
implementing and administering the subsidy benefit, SSA has collected
key data and established some goals.
Excess Income Was the Predominant Reason That Applicants Were Denied
the Subsidy in Fiscal Year 2007:
Of the approximately 7.2 million applicants filing for the subsidy as
of March 2008, SSA approved 2.8 million.[Footnote 7] SSA received 1.3
million new applications in fiscal year 2007, approving approximately
570,000 (43 percent), denying approximately 403,000 (31 percent), and
made no decision for approximately 281,000 (22 percent) because
applicants had submitted duplicate applications among other
reasons.[Footnote 8]
According to a recent SSA study of individuals who applied for the
subsidy in 2007 and where SSA made a decision by January 2008, SSA
denied approximately 416,000 applicants. The most common reasons for
denials were excessive income and resources.[Footnote 9] As Table 1
shows, excess income was the primary reason for denials, and excess
resources were the reason in approximately 17 percent of the denials.
Table 1: Reason for Denials for Individuals Who Applied in 2007, in
Percentages:
Application: Individual;
Income: 62.2%;
Resources: 20.2;
Both income and resources: 8.7;
Other reason[A]: 8.9;
Total: 100%;
Number of persons: 295,559.
Application: Couple;
Income: 61.5%;
Resources: 8.0;
Both income and resources: 10.9;
Other reason[A]: 19.7;
Total: 100%;
Number of persons: 120,934.
Application: All denied applicants;
Income: 62.0%;
Resources: 16.6;
Both income and resources: 9.4;
Other reason[A]: 12.1;
Total: 100%;
Number of persons: 416,493.
Source: Social Security Administration's analysis of Medicare Database,
February 1, 2008.
Totals may be greater than 100 percent due to rounding.
[A] This included applicants that were denied because they were not
Medicare beneficiaries, were not a U.S. resident, or because they
failed to provide SSA with documentation to complete its subsidy
determination.
[End of table]
For denials based on excess income, about 10 percent of applicants were
within $500 of the income limit. About 98 percent of applicants with
excess income received Social Security benefits, and 35 percent
received pensions from sources other than veterans' or Social Security
benefits. Table 2 shows the extent to which applicants were denied
subsidy eligibility because their income was too high. For those
denied, the median excess income was $4,572.
Table 2: Amount by Which Income Exceeded the Subsidy Limits when Income
Was a Reason for Denial, in Percentages of Persons Denied:
Excess annual income of denied applicants in 2007: $20,000 or more;
Single applicant: 7.5%;
Couple: 7.2%;
All: 7.3%.
Excess annual income of denied applicants in 2007: $15,000 to <$20,000;
Single applicant: 4.8;
Couple: 4.5;
All: 4.7.
Excess annual income of denied applicants in 2007: $10,000 to <$15,000;
Single applicant: 10.8;
Couple: 9.3;
All: 10.4.
Excess annual income of denied applicants in 2007: $7,500 to <$10,000;
Single applicant: 10.1;
Couple: 9.2;
All: 9.8.
Excess annual income of denied applicants in 2007: $5,000 to <$7,500;
Single applicant: 15.7;
Couple: 14.7;
All: 15.4.
Excess annual income of denied applicants in 2007: $3,000 to <$5,000;
Single applicant: 11.3;
Couple: 16.7;
All: 12.9.
Excess annual income of denied applicants in 2007: $1,500 to <$3,000;
Single applicant: 14.4;
Couple: 16.8;
All: 15.1.
Excess annual income of denied applicants in 2007: $1,000 to <$1,500;
Single applicant: 6.6;
Couple: 6.5;
All: 6.6.
Excess annual income of denied applicants in 2007: $500 to <$1,000;
Single applicant: 8.2;
Couple: 7.2;
All: 7.9.
Excess annual income of denied applicants in 2007: < $500;
Single applicant: 10.8;
Couple: 7.9;
All: 9.9.
Excess annual income of denied applicants in 2007: Total;
Single applicant: 100%;
Couple: 100%;
All: 100%.
Excess annual income of denied applicants in 2007: Median excess
income;
Single applicant: $4,751;
Couple: $4,335;
All: $4,572.
Excess annual income of denied applicants in 2007: Mean excess income;
Single applicant: $9,136;
Couple: $8,753;
All: $9,023.
Excess annual income of denied applicants in 2007: Number of persons;
Single applicant: 209,539;
Couple: 87,594;
All: 297,133.
Source: Social Security Administration's analysis of Medicare Database,
February 1, 2008.
Totals may be greater than 100 percent due to rounding.
Note: The mean is calculated excluding about 130 outliers over
$1,000,000.
[End of table]
For denials based solely on excess resources, nearly 6 percent of
applicants were within $500 of the resource limit. Table 3 shows the
extent to which applicants were denied subsidy eligibility because
their resources were too great. For those denied, the median excess
resources were $13,690. Bank accounts and investments, which included
stocks, bonds, and individual retirement account balances were
responsible for about 57 percent of the excess resource denials.
Table 3: Amount by Which Resources Exceeded Subsidy Limits when
Itemized Resources Were the Only Reason for Denial, in Percentages of
Persons Denied:
Excess Resources of Denied Applicants in 2007: $20,000 or more;
Single Applicant: 39.2%;
Couple: 48.9%;
All: 40.2%.
Excess Resources of Denied Applicants in 2007: $15,000 to <$20,000;
Single Applicant: 7.1;
Couple: 6.9;
All: 7.1.
Excess Resources of Denied Applicants in 2007: $10,000 to <$15,000;
Single Applicant: 10.5;
Couple: 7.8;
All: 10.2.
Excess Resources of Denied Applicants in 2007: $7,500 to <$10,000;
Single Applicant: 6.6;
Couple: 6.1;
All: 6.5.
Excess Resources of Denied Applicants in 2007: $5,000 to <$7,500;
Single Applicant: 6.5;
Couple: 7.0;
All: 6.5.
Excess Resources of Denied Applicants in 2007: $3,000 to <$5,000;
Single Applicant: 8.3;
Couple: 6.6;
All: 8.1.
Excess Resources of Denied Applicants in 2007: $1,500 to <$3,000;
Single Applicant: 7.1;
Couple: 8.5;
All: 7.3.
Excess Resources of Denied Applicants in 2007: $1,000 to <$1,500;
Single Applicant: 4.0;
Couple: 2.0;
All: 3.7.
Excess Resources of Denied Applicants in 2007: $500 to <$1,000;
Single Applicant: 4.8;
Couple: 3.1;
All: 4.6.
Excess Resources of Denied Applicants in 2007: < $500;
Single Applicant: 6.0;
Couple: 3.3;
All: 5.7.
Excess Resources of Denied Applicants in 2007: Total;
Single Applicant: 100%;
Couple: 100%;
All: 100%.
Excess Resources of Denied Applicants in 2007: Median excess resources;
Single Applicant: $13,290;
Couple: $18,934;
All: $13,690.
Excess Resources of Denied Applicants in 2007: Mean excess resources;
Single Applicant: $40,904;
Couple: $57,754;
All: $42,962.
Excess Resources of Denied Applicants in 2007: Number of persons;
Single Applicant: 37,731;
Couple: 5,267;
All: 42,998.
Source: Social Security Administration's analysis of Medicare Database,
February 1, 2008.
Totals may be greater than 100 percent due to rounding.
Note: This table excludes people who were denied because they checked
the box on the application stating that their resources exceeded the
established limits. The mean is calculated excluding about 200 outliers
over $1,000,000.
[End of table]
SSA Has Made Some Improvements for Measuring Subsidy Processes, but
Lacks Measures in Certain Areas:
We reported, in May 2007,[Footnote 10] that SSA had established
application processes for determining low-income subsidy eligibility,
reviewing appeals, and conducting redeterminations; however, it had not
established some key management tools to monitor progress of all of its
efforts. To enable agencies to identify areas in need of improvement,
GAO internal control standards state that agencies should establish and
monitor performance measures and indicators.[Footnote 11] Accordingly,
agencies should compare actual performance data against expected goals
and analyze the differences.
While SSA had tracked the progress of subsidy determinations since it
began processing applications in July 2005, it did not have goals for
measuring the processing time for these applications until March 2007.
SSA's goal is to process 75 percent of the subsidy applications in 60
days and reported that it processed 93 percent of determinations within
60 days during the first 6 months of fiscal year 2008. SSA had also
been tracking the amount of time for resolving appeals of subsidy
denials, but also did not have a performance goal to assess the
timeliness of appeals decisions. In response to our recommendation, SSA
established a goal of processing 75 percent of appeals within 60 days-
-similar to its goal for processing subsidy applications. SSA reported
that 74.5 percent of appeals were processed in 60 days during the first
6 months of fiscal year 2008.
SSA tracks various results from the redeterminations process, such as
the number of decisions made, and the number and level of continued
subsidies. According to the MMA and SSA regulations, all recipients of
the subsidy are required to have their eligibility redetermined within
one year after SSA first determines their eligibility.[Footnote 12]
Future redeterminations are required to be conducted at intervals
determined by the Commissioner. SSA's regulations provide that these
periodic redeterminations be based on the likelihood that an
individual's situation may change in a way that affects subsidy
eligibility. Additionally, SSA's regulations provide that unscheduled
redeterminations may take place at any time for individuals who report
a change in their circumstances, such as marriage or divorce. In May
2007, we recommended that SSA collect data on the processing time for
individual redetermination decisions, and establish performance
standards for such processing time. SSA disagreed with our
recommendation, stating that the agency monitors the time for
completing the overall redetermination cycle, providing adequate
management controls. While SSA still does not collect processing time
data for individual redetermination decisions, an SSA official recently
told us that it is now the agency's goal to complete redetermination
decisions before the end of each year, except for people who do not
respond to SSA's inquiries.
No Reliable Data Are Available to Identify Eligible Population for
Outreach Efforts, and Millions May Have Not Yet Applied:
No reliable data are available to help SSA identify the eligible
population for its outreach efforts, and millions who may be eligible
have not yet applied, in part due to privacy concerns and application
complexity. SSA is working with the Internal Revenue Service (IRS) to
determine whether tax data can help target individuals eligible for the
subsidy. According to available estimates, millions of individuals who
may qualify for the subsidy have not yet applied. Various barriers,
such as a reluctance to share personal financial information, may
discourage some individuals from applying. Furthermore, SSA initially
conducted a focused outreach campaign, but now incorporates such
efforts into its overall Social Security outreach including work with
third parties to publicize the subsidy and targeted outreach events on
Mother's Day and Father's Day.
SSA Does Not Have Data to Narrowly Target Eligible Population:
SSA does not have access to data that might help it to narrowly target
the eligible population. In the absence of reliable data for
identifying the eligible population, in 2006 SSA broadly targeted 18.6
million individuals who might be eligible for the subsidy, which was an
overestimate. SSA identified the target population by using income data
from various government sources to screen out Medicare beneficiaries
whose income made them ineligible for the Part D subsidy.[Footnote 13]
SSA realized that using these data sources would result in an
overestimate of the number of individuals who might qualify for the
subsidy, because the data provided limited information on individuals'
resources or nonwage income. SSA officials said they took this approach
to ensure that all Medicare beneficiaries who were potentially eligible
for the subsidy were made aware of the benefit and had an opportunity
to apply for it.
SSA officials said that they would have preferred to specifically
target Medicare beneficiaries who were more likely to be eligible for
the subsidy by using tax data from IRS on individuals' wage, interest,
and pension income. Current law permits SSA to obtain income and asset
data from IRS to assist in verifying information provided on subsidy
applications.[Footnote 14] The law, however, prohibits IRS from sharing
such data with SSA in the absence of a submitted application. According
to SSA officials, such data would allow SSA to identify individuals to
target outreach more directly and to estimate how many individuals may
qualify for the subsidy. However, IRS officials told us that its data
have many limitations that could affect their usefulness. For example,
IRS officials said that they have limited data on assets for
individuals whose income is less than $20,000 because these individuals
do not typically have interest income, private pensions, or dividend
income from stocks that could help SSA in estimating an individual's
potential asset level. Given these limitation, IRS officials stated
that their tax data was more likely to identify individuals who would
not quality for the subsidy, rather than those who would. In November
2006, the HHS Office of Inspector General reported that legislation is
needed to provide SSA and CMS access to income tax data to help the
agencies more effectively identify beneficiaries potentially eligible
for the subsidy.[Footnote 15]
In our May 2007 report, we recommended that SSA develop a comprehensive
plan, with specific performance goals and measures, to detail the
agency's outreach strategy for enrolling additional individuals who
qualify for the subsidy. While SSA agreed with the recommendation in
theory, it maintains that it would be unable to implement specific
goals and measures due to the lack of reliable data on the eligible
population. SSA recently informed us that is still the agency's
position. We also recommended that SSA and IRS work together to assess
the extent to which IRS tax data would help SSA to identify individuals
who might qualify for the subsidy, possibly aiding SSA in better
targeting outreach efforts. In implementing our recommendation, SSA
provided IRS with a random sample of 200,000 individuals (of
approximately 19 million potentially eligible) who might qualify for
the subsidy. IRS then provided SSA Form 1098 and 1099 data for these
individuals, with identifying information removed. SSA could then use
its methodology for IRS to estimate potential subsidy eligibility. The
Form 1098 and 1099 information will help SSA determine if individuals
have pensions and resources that exceed the subsidy threshold. IRS is
expecting to complete its preliminary analysis and share the
information with SSA by the end of June 2008.
Millions of Eligible Individuals May Not Be Taking Advantage of the
Subsidy:
Millions of individuals potentially eligible for the low-income subsidy
are still not receiving it. Although no reliable data exist on the
total eligible population, CMS estimated that about 2.6 million
individuals may be eligible but not receiving the subsidy. Based on a
2004 Congressional Budget Office (CBO) estimate, 4.4 million
individuals may be eligible and not receiving the subsidy.[Footnote 16]
Several barriers may prevent potentially eligible Medicare
beneficiaries from applying for the subsidy. In our May 2007 report, we
stated that some individuals were reluctant to apply because they did
not want to share their personal financial information for fear that an
inadvertent error on the application could subject them to prosecution
under the application's perjury clause. However, in December 2007 SSA
revised the clause removing the threat of imprisonment for false
statements. A 2007 Mathematica study conducted for AARP, also found
that reluctance to share personal financial information, the stigma
associated with applying for public benefits, and inadequate
availability of one-on-one assistance for completing the subsidy
application, and resource limits affected individuals' decision not to
apply for the subsidy.[Footnote 17] A CMS study also found that
individuals do not apply if they are currently not taking prescription
medications because they do not believe that they need the benefit and
are discouraged by the assumed high Part D drug costs.[Footnote 18]
SSA Initially Conducted Focused Outreach Efforts, But Now Incorporates
Such Efforts into Overall Social Security Outreach:
From the outset of the low-income subsidy program, SSA conducted a
broad outreach campaign to inform as many potentially eligible people
as possible about the subsidy and how to apply for it. SSA conducted
its initial outreach campaign from May 2005 to August 2006. To solicit
subsidy applications, SSA sent targeted mailings, which included an
application for the subsidy and instructions on how to apply, to 18.6
million individuals identified as potentially eligible. SSA also
conducted over 76,000 outreach events in collaboration with federal,
state, and local partners, such as CMS, state Medicaid agencies, state
health insurance programs, and advocacy groups for Medicare
beneficiaries, among other efforts. The number of outreach events has
declined, from a high of 12,150 in July 2005 to 230 at the completion
of the campaign in August 2006.
Today, SSA continues to solicit applications, but through the agency's
ongoing general outreach activities, working with third parties and
special targeted events around Mother's Day and Father's Day, though
not through a dedicated campaign. Current activities include:
* mailing notices annually that include information about the low-
income subsidy to low-income Medicare beneficiaries.
* mailing approximately 100,000 applications each month to
beneficiaries attaining initial Medicare eligibility after screening
them to determine that their income may be below 150 percent of the
federal poverty level.
* including information on the subsidy in its Cost-of-Living Adjustment
letter sent each December to over 50 million Medicare beneficiaries.
* developing new outreach material for capturing the attention of
Medicare beneficiaries regarding the subsidy.
* conducting a "Show Someone You Love How Much You Care" campaign to
inform relatives and caregivers about the low-income subsidy. This
campaign has focused on Mother's Day and Father's Day in 2007 and 2008.
* using automated phone call technology to call potentially eligible
individuals to inform them about the subsidy. SSA field office staff
will call individuals who do not respond. This initiative will begin in
June 2008.
* using a new special pamphlet, designed with a mailer insert that is
placed at pharmacies, hospitals, and medical practices, to enable
Medicare beneficiaries to request a low-income subsidy application
without calling or visiting SSA.
Recent staffing reductions in field offices may have left SSA with
limited resources to assist individuals with the subsidy and conduct
local outreach efforts.[Footnote 19] With staffing reductions, much of
SSA's work is focused on its core workload, which includes processing
applications for Social Security benefits and for Social Security
numbers. Between 2005 and 2007, field office staffing declined by 7.1
percent. We recently testified that this staffing reduction may have
increased customer waiting time in field offices. Further, during the
course of our recent study, several staff reported that they often did
not have adequate time to spend with customers to explain information.
Although SSA hired 2,200 new field office staff to assist with the
implementation of Medicare Part D, these staff are now focused on the
full range of field office workloads and are therefore not available to
specifically serve the needs of individuals seeking assistance with the
low-income subsidy.
Individuals responding to Mathematica's 2007 study stated that the
availability of local SSA staff to help low-income subsidy applicants
is important because SSA staff may provide more personalized assistance
than staff in SSA's Teleservice Centers, which operate the agency's
toll-free telephone service. However, many of the study respondents
reported long lines at crowded SSA field offices or difficulty getting
through on local field office telephone lines. Mathematica reported
that several respondents reported that SSA field offices were
overwhelmed by people seeking services other than the low-income
subsidy. In our May 2008 testimony on SSA field offices, we also
reported that staffing reductions have adversely affected field
offices' ability to serve customers. In particular, we reported that
between 2002 and 2006, the average waiting time for field office
service increased by 40 percent from 15 minutes to 21 minutes, and in
fiscal year 2007, more than 3 million customers waited for over an hour
to be served, according to SSA data. We also reported that SSA's 2007
Field Office Caller Survey found that 51 percent of customer calls to
48 randomly selected field offices went unanswered.
Conclusions:
Reaching the millions of people who are forgoing the government's help
in paying for their prescription drug benefit remains a significant
challenge. While SSA continues to approve applications for the subsidy,
the agency's efforts to attract new subsidy applicants have slowed
significantly since 2006. CMS and CBO estimate, respectively, that
about 2.6 million to over 4 million individuals who may be eligible for
the subsidy are still not receiving the benefit. It is not clear how to
reach the remaining eligible people, and the barriers to identifying
them and convincing them to sign up remain. While advocacy groups
encourage a more personalized outreach approach, it may be unrealistic
to expect SSA to conduct such efforts, given its resource limitations.
The IRS and SSA study may help determine if tax data could help
identify individuals who may qualify for the subsidy and target
outreach efforts. A better understanding of who is eligible could help
SSA make more efficient use of limited staff resources by targeting
outreach more narrowly to the eligible population.
Mr. Chairman, this completes my prepared statement. I would be happy to
respond to any questions you or other members of the committee may have
at this time.
GAO Contacts and Staff Acknowledgments:
For further information regarding this testimony, please contact
Barbara D. Bovbjerg, Director, Education, Workforce, and Income
Security Issues, on (202) 512-7215. Blake Ainsworth, Susannah Compton,
Mary Crenshaw, Matthew Lee, Lise Levie, Sheila McCoy, and Paul Wright
also contributed to this statement.
[End of section]
Related GAO Products:
Social Security Administration Field Offices: Reduced Workforce Faces
Challenges as Baby Boomers Retire. GAO-08-737T. Washington, D.C.: May
8, 2008.
Social Security Administration: Policies and Procedures Were in Place
over MMA Spending, but Some Instances of Noncompliance Occurred. GAO-
07-986. Washington, D.C.: August 31, 2007.
Medicare Part D Low-Income Subsidy: Additional Efforts Would Help
Social Security Improve Outreach and Measure Program Effects. GAO-07-
555. Washington, D.C.: May 31, 2007.
Medicare Part D Low-Income Subsidy: Progress Made in Approving
Applications, but Ability to Identify Remaining Individuals Is Limited.
GAO-07-986. Washington, D.C.: May 8, 2007.
Medicare Part D: Challenges in Enrolling New Dual-Eligible
Beneficiaries. GAO-07-272. Washington, D.C.: May 4, 2007.
Prescription Drugs: An Overview of Approaches to Negotiate Drug Prices
Used by Other Countries and U.S. Private Payers and Federal Programs.
GAO-07-358T. Washington, D.C.: January 11, 2007.
Medicare Part D: Prescription Drug Plan Sponsor Call Center Responses
Were Prompt, but Not Consistently Accurate and Complete. GAO-06-710.
Washington, D.C.: June 30, 2006.
Medicare: Communications to Beneficiaries on the Prescription Drug
Benefit Could Be Improved. GAO-06-654. Washington, D.C.: May 3, 2006.
Social Security Administration: Medicare Part D Subsidies. GAO-06-344R.
Washington, D.C.: January 13, 2006.
Medicare: Contingency Plans to Address Potential Problems with the
Transition of Dual-Eligible Beneficiaries from Medicaid to Medicare
Drug Coverage. GAO-06-278R. Washington, D.C.: December 16, 2005.
Medicare: CMS's Beneficiary Education and Outreach Efforts for the
Medicare Prescription Drug Prescription Drug Discount Card and
Transitional Assistance Program. GAO-06-139R. Washington, D.C.:
November 18, 2005.
Medicare: CMS's Implementation and Oversight of the Medicare
Prescription Drug Discount Card and Transitional Assistance Program.
GAO-06-78R. Washington, D.C.: October 28, 2005.
Retiree Health Benefits: Options for Employment-Based Prescription Drug
Benefits under the Medicare Modernization Act. GAO-05-205. Washington,
D.C.: February 14, 2005.
Medicare Savings Programs: Results of Social Security Administration's
2002 Outreach to Low-Income Beneficiaries. GAO-04-363. Washington,
D.C.: March 26, 2004.
[End of section]
Footnotes:
[1] Pub. L. No. 108-173.
[2] GAO, Medicare Part D Low-Income Subsidy: Additional Efforts Would
Help Social Security Improve Outreach and Measure Program Effects, GAO-
07-555 (Washington, D.C.: May 31, 2007).
[3] Individuals who are eligible for Medicare automatically receive
Hospital Insurance, known as Part A, which helps pay for hospital
stays, related post-hospital care, home health services, and hospice
care, and typically does not require a monthly premium. Medicare also
offers optional insurance under Supplementary Medical Insurance (Part
B) to cover doctor's services and outpatient care, and requires a
premium.
[4] Medicaid is a federal and state program that helps pay medical
costs for certain low-income people, such as those who are 65 and
older, the blind, the disabled, and members of families with dependent
children or qualified pregnant women or children. Prior to the
effective date of Part D, Medicaid provided coverage for outpatient
prescription drug costs for persons eligible for that program.
[5] Medicare Savings Programs are offered by state Medicaid agencies to
assist people with limited income and resources with their Medicare
premiums and, in some cases, may also pay Medicare Part A and Part B
deductibles and coinsurance.
[6] For 2006, the asset limits were based on three times the resource
limit of the SSI program for subsidy beneficiaries. For subsequent
years, the limits are to be updated based on the Consumer Price Index.
Countable resources include such things as savings, investments, and
real estate (other than an individual's primary residence). Countable
resources do not include such things as a car, a burial plot or limited
funds set aside for burial expenses, or certain other personal
possessions.
[7] The number of applications, applicants, approvals and denials
differs from the number of individuals involved. This is because the
same individual may submit multiple applications as a result of changes
to their automatic eligibility status or as a result of losing their
eligibility for the subsidy based on SSA's redetermination. On the
other hand, one application can involve multiple applicants within the
same household.
[8] In some instances, SSA canceled applications, including when such
applications were withdrawn by the applicant.
[9] The study was based on the Social Security Administration's
Medicare Database, and included the full universe of people who applied
for the low-income subsidy during calendar year 2007 and whose
applications had been denied by the end of January 2008.
[10] GAO, GAO-07-555.
[11] GAO, Internal Control Standards: Internal Control Management and
Evaluation Tool, GAO-01-1008G (Washington, D.C.: August 2001).
[12] This does not include individuals who continue to be deemed or
automatically eligible for the subsidy. Individuals who report changes
to SSA regarding their benefit status are also excluded from the
initial redetermination process since they are redetermined as a result
of the change.
[13] SSA obtained income data from its earnings records, as well as
data from the Office of Personnel Management, the Department of
Veterans Affairs, the Railroad Retirement Board, and the Office of
Child Support Enforcement of the Department of Health and Human
Services.
[14] Under 26 U.S.C. � 6103(l)(7)(D), IRS may only provide tax return
information to SSA for purposes of, and to the extent necessary in,
determining the eligibility for or the correct amount of benefits
provided through the subsidy program. In signing the application form,
individuals acknowledge that SSA will compare the information reported
by them on the form to information supplied by federal, state, and
local government agencies, including IRS.
[15] Department of Health and Human Services, Office of Inspector
General, Identifying Beneficiaries Eligible for the Medicare Part D Low-
Income Subsidy, OEI-03-06-00120 (Washington, D.C.: Nov. 17, 2006).
[16] Congressional Budget Office, A Detailed Description of CBO's Cost
Estimate for the Medicare Prescription Drug Benefit, table 8
(Washington, D.C.: July 2004). The data were projected for calendar
year 2006. CBO estimated that an overall total of 14.2 million
beneficiaries would be eligible for the subsidy in 2006.We derived the
CBO estimate by subtracting 8.4 million beneficiaries that CMS
estimated in January 2008 were deemed for the subsidy, or had
comparable coverage from other federal programs, from the sources'
original estimates of all eligible beneficiaries.
[17] Mathematica Policy Research, Inc., Doors to Extra Help: Boosting
Enrollment in the Medicare Part D Low-Income Subsidy, #2007-15 (AARP,
Washington, D.C.: September 2007).
[18] CMS, Office of External Affairs, Strategic Research & Campaign
Management Group, Division of Research, Formative Research on the Low
Income Not Enrolled Population (no date).
[19] GAO, Social Security Administration Field Offices: Reduced
Workforce Faces Challenges as Baby Boomers Retire, GAO-08-737T
(Washington, D.C.: May 8, 2008).
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