Medicare Part D:

Challenges in Enrolling New Dual-Eligible Beneficiaries

GAO-07-272: Published: May 4, 2007. Publicly Released: May 8, 2007.

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Since January 1, 2006, all dual-eligible beneficiaries--individuals with both Medicare and Medicaid coverage--must receive their drug benefit through Medicare's new Part D prescription drug plans (PDP) rather than from state Medicaid programs. GAO analyzed (1) current challenges in identifying and enrolling new dual-eligible beneficiaries in PDPs, (2) the Centers for Medicare & Medicaid Services' (CMS) efforts to address challenges, and (3) federal and state approaches to assigning dual-eligible beneficiaries to PDPs. GAO reviewed federal law, CMS regulations and guidance and interviewed CMS and PDP officials, among others. GAO also made site visits to six states to learn about the enrollment of dual-eligible beneficiaries from the state perspective.

CMS's enrollment procedures and implementation of its Part D coverage policy generate challenges for some dual-eligible beneficiaries, pharmacies, and the Medicare program. A majority of new dual-eligible beneficiaries--generally those on Medicare who have not yet signed up for a PDP and who become eligible for Medicaid--may be unable to smoothly access their drug benefit for at least 5 weeks given the time it takes to enroll them in PDPs and communicate information to beneficiaries and pharmacies. Pharmacies also may be affected adversely when key information about a beneficiary's dual eligibility is not yet processed and available. When dispensing drugs during this interval, pharmacies may have difficulty submitting claims to PDPs and accurately charging copayments. In addition, Medicare pays PDPs to provide these beneficiaries with several months of retroactive coverage but, until March 2007, CMS did not inform beneficiaries of their right to be reimbursed for drug costs incurred during these periods. CMS does not monitor its payments to PDPs for retroactive coverage or the amounts PDPs have reimbursed dual-eligible beneficiaries. Medicare paid PDPs millions of dollars in 2006 for coverage during periods for which dual-eligible beneficiaries may not have sought reimbursement for their drug costs. CMS has taken steps to address challenges associated with enrolling dual-eligible beneficiaries in PDPs. CMS has implemented a policy to prevent a gap in prescription drug coverage for those new dual-eligible beneficiaries whose Part D eligibility is predictable--Medicaid beneficiaries who subsequently qualify for Medicare. We estimate this group represents about one-third of new dual-eligible beneficiaries. In August 2006, CMS began operating a prospective enrollment process that should allow the agency and its Part D partners time to complete the enrollment processes and notify these beneficiaries before their effective enrollment date. Also, CMS is making changes to improve the efficiency of key information systems involved in the enrollment process. While the agency is performing some information systems testing, it is not planning to perform testing of the interactions of key information systems collectively, which is crucial to mitigating the inherent risks of system changes. Under federal law, CMS is required to assign dual-eligible beneficiaries to PDPs based on PDP premiums and geographic area. State Medicaid agency officials and others assert that this assignment method often places dual-eligible beneficiaries in PDPs that do not meet their drug needs. With CMS approval, Maine officials considered beneficiary-specific data to reassign nearly half of their dual-eligible beneficiaries to PDPs that better met their drug needs in late 2005. After the reassignment, the number of these dual-eligible beneficiaries whose PDP covered nearly all of their prescription drugs increased significantly. States choosing to make such reassignments in the future would need ready access to key information from PDPs. CMS contends that reassignments are not needed because beneficiaries may switch to drugs of equivalent therapeutic value or change plans at any time.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: CMS implemented this recommendation in April 2007. The agency made changes to its auto-assignment processes so that all dual-eligible beneficiaries are assigned to a prescription drug plan (PDP) serving the state that submits the individual's information on their dual-eligible file. This change should ensure that these dual-eligible beneficiaries are not forced to change PDPs after assignment.

    Recommendation: To help ensure new dual-eligible beneficiaries are enrolled in PDPs that serve the geographic area where they live, the Administrator of CMS should assign dual-eligible beneficiaries with representative payees to a PDP serving the state that submits the individual's information on their dual-eligible file.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  2. Status: Closed - Implemented

    Comments: CMS stated it has worked with key partners to plan, prioritize, and execute end-to-end testing since May 2007.

    Recommendation: To mitigate the risks associated with implementing Part D information systems changes, especially in light of initial systems issues caused by the lack of adequate testing, the Administrator of CMS should work with key partners to plan, prioritize, and execute end-to-end testing.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  3. Status: Closed - Implemented

    Comments: The study was completed, and results shared with Reps. Doggett and Stark in January 2009. CMS estimated that Medicare Part D plans received approximately $123.2 in Part D revenue for retroactive enrollment periods for dual-eligible individuals and paid about $79.1 million in retroactive drug claims. As a result, CMS estimates that, in 2006, Part D plans received $44.1 million more in revenue than their costs for retroactively enrolled dual-eligible individuals. CMS also stated that it recouped about $20.7 million of the $44.1 million difference through risk-sharing. To address concerns identified by GAO and others on the efficacy of random, retroactive auto enrollment, CMS obtained demonstration authority to procure a single PDP sponsor to cover all retroactive auto enrollment periods. The contractor would be paid on a capitation basis, but would have greatly narrowed risk corridors. This would ensure that CMS payments to the plan are much more closely aligned with plan payments for covered claims for retroactive periods. CMS expects to implement the demonstration in January, 2010, and operate it for five years.

    Recommendation: To determine the impact of its retroactive coverage policy, the Administrator of CMS should monitor PDP reimbursements to dual-eligible beneficiaries, and those that paid on their behalf, for costs incurred during retroactive periods through an examination of the prescription utilization data reported by PDP sponsors.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  4. Status: Closed - Implemented

    Comments: CMS reports that it began to track the number of dual-eligible beneficiaries it enrolls each month on a retroactive basis in November 2006. The agency did not indicate whether it currently tracks data on the number of months of retroactive coverage provided to these beneficiaries.

    Recommendation: To determine the magnitude of Medicare payments made to PDPs under its retroactive coverage policy, the Administrator of CMS should track how many of the new dual-eligible beneficiaries it enrolls each month receive retroactive drug benefits and how many months of retroactive coverage the agency is providing them.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  5. Status: Closed - Implemented

    Comments: In comments on the report, CMS indicated it modified the agency's notice to dual-eligible beneficiaries who are auto-enrolled in a Part D plan. The changes to the notice include the addition of language telling the beneficiary to submit receipts for prescription drug costs incurred during retroactive eligibility periods to their Part D plan for reimbursement. CMS also made similar changes to the model notice used by PDP sponsors to confirm auto-enrollments with beneficiaries.

    Recommendation: To help ensure that dual-eligible beneficiaries are receiving Part D benefits, the Administrator of CMS should require PDP sponsors to notify new dual-eligible beneficiaries of their right to reimbursement for costs incurred during retroactive coverage periods.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  6. Status: Closed - Not Implemented

    Comments: CMS disagreed with this recommendation and did not believe that it was necessary for states to assign dual-eligible beneficiaries to prescription drug plans (PDPs) based on drug needs.

    Recommendation: To support states with the relevant authority that want to use alternative enrollment methods to reassign dual-eligible beneficiaries to PDPs, the Administrator of CMS should facilitate the sharing of data between PDPs and states.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

 

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