Medicare Part D Low-Income Subsidy:

Additional Efforts Would Help Social Security Improve Outreach and Measure Program Effects

GAO-07-555: Published: May 31, 2007. Publicly Released: Jun 20, 2007.

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Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which created a Part D outpatient prescription drug benefit that enables Medicare beneficiaries to enroll in competing private drug coverage plans. The benefit also offers a subsidy administered by the Social Security Administration (SSA) to assist certain low-income Medicare beneficiaries with out-of-pocket costs. GAO was asked to review (1) SSA's progress in identifying and soliciting applications from individuals potentially eligible for the subsidy; (2) SSA's processes for making eligibility determinations, resolving appeals, and redetermining beneficiaries' eligibility; and (3) how the subsidy has affected SSA's workload and operations. To conduct this study, GAO reviewed the law, assessed subsidy data, and interviewed SSA and other officials.

SSA approved about 2.2 million Medicare beneficiaries for the low-income subsidy as of March 2007, despite barriers it faced in identifying the eligible population and soliciting applications; however, measuring the success of SSA's outreach efforts is difficult because there are no reliable data on the size of the eligible population. In 2005, SSA mailed 18.6 million subsidy applications to Medicare beneficiaries who were potentially eligible for the subsidy. SSA knew that this mailing was an overestimate, but took this approach to ensure that all who were eligible would be contacted. SSA had hoped to more specifically identify the eligible population using IRS tax data, but current law restricts the use of taxpayer data unless an individual has already applied for the subsidy. Further, SSA conducted a campaign of about 76,000 events held nationwide to educate people about the subsidy and how to apply for it. Since the initial campaign ended, however, SSA has not developed specific performance goals and measures to assess the progress of its continuing outreach efforts. SSA's efforts to solicit applications were hindered by beneficiaries' confusion about the difference between the subsidy and the Medicare Part D prescription drug plan, and the reluctance of some individuals to share personal financial information, among other factors. While the early subsidy participation rate compares favorably to those of some other low-income programs, the lack of reliable data on the size of the eligible population means that the extent to which SSA has signed up the eligible population for the benefit is unknown. While SSA has established processes for making subsidy eligibility determinations, resolving appeals, and conducting redeterminations, it has not established some key management tools to monitor the progress of all of its efforts, as specified in GAO's internal control standards. For example, while SSA tracks various results from its appeals process, it does not currently have a performance goal to assess the timeliness of appeals decisions, but agency officials told us that SSA plans to establish a goal of processing 75 percent of appeals in 60 days. Also, while SSA tracks the status of its redetermination decisions, officials do not believe that it is necessary to measure the time for processing individual redetermination decisions because they said that the time to complete the overall redeterminations cycle provides adequate information. SSA's implementation of the low-income subsidy did affect the agency's workload and operations, but according to SSA officials, the additional workloadhas been manageable overall as a result of increased funding that the agency received to carry out MMA activities. SSA hired 2,200 field office staff, and 500 headquarters staff to handle its new subsidy workload, as well as to carry out other activities for the program. In 2006, SSA staff spent the equivalent of 2,190 work years on low-income subsidy implementation activities, with about 50 percent of the time spent on subsidy applications. While there were periods of high subsidy application activity, SSA officials told us that subsidy program activities did not have an adverse impact on other SSA workloads. The officials attributed the minimal impact of Part D to several factors, including the highly automated subsidy application process and the $500 million congressional appropriation that SSA spent on MMA start-up costs. SSA estimates that its costs for low-income subsidy activities are $175 million annually.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In it initial comments on our draft report in May 2007, SSA stated that it had begun discussions with IRS to evaluate how such a study might be designed. The IRS stated that it agrees that a test should be conducted and is willing to work with SSA in that effort, with the understanding that present law prohibits the IRS from sharing tax information as part of the test. In December 2008 issued, IRS issued the report from the study.

    Recommendation: The Commissioners of SSA and the Internal Revenue Service (IRS) should work together to assess the extent to which IRS tax data may help SSA to better target individuals who might qualify for the subsidy, possibly aiding SSA in better targeting its outreach efforts. This effort could also aid in developing more precise estimates of the eligible population and help to better inform the Congress on legislative proposals to allow IRS to share tax data with SSA to assist the agency with its outreach efforts.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: SSA initially reported that the data it collects on processing time for the overall re-determination cycle provides adequate management controls for operational data. Also, while SSA stated that it had established a performance standard for assessing the timeliness of appeals, in a follow-up discussion with agency officials after receiving their comments, they told us that the goal did not exist, but that the agency planned to establish a goal of processing 75 percent of appeals in 60 days. However, in August 2009, SSA stated that it had established the performance goal for appeals, and that it had implemented a monthly processing goal report that captures data for the fiscal year. We believe that SSA's actions significantly address this recommendation.

    Recommendation: To improve SSA's outreach efforts and its ability to measure the effectiveness of the Medicare Part D low-income subsidy application processes, the Commissioner of Social Security should direct staff to begin collecting data on the processing time for individual redetermination decisions, and establish performance standards for processing time for the appeals and redetermination decisions.

    Agency Affected: Social Security Administration

  3. Status: Closed - Not Implemented

    Comments: In its response to our report, SSA stated that it believed that its National Strategic Communications Plan serves as a comprehensive plan for its outreach efforts agency-wide, but that it would not be able to implement specific goals and measures due to the lack of reliable data on the eligible population. While we agreed that SSA's National Strategic Communications Plan serves as a comprehensive plan for describing the agency's outreach efforts, we stated that we did not believe that data on the potentially eligible subsidy population, while useful, were needed for SSA to establish specific performance goals and measures to assess the effectiveness of its outreach efforts. Although SSA has taken a number of actions to make more people aware of the subsidy, such as mailing a notice to approximately 6 million low-income Medicare beneficiaries informing them about the subsidy, it has not established the performance goals and measures we recommended.

    Recommendation: To improve SSA's outreach efforts and its ability to measure the effectiveness of the Medicare Part D low-income subsidy application processes, the Commissioner of Social Security should establish specific performance goals and measures for SSA's outreach activities to provide the agency with a means to assess their effectiveness in soliciting applications from additional individuals who qualify for the subsidy, but have not yet applied.

    Agency Affected: Social Security Administration

  4. Status: Closed - Implemented

    Comments: In its initial comments on our draft report in May 2007, SSA stated that it had begun discussions with IRS to evaluate how such a study might be designed. In December 2008, IRS issued the report from this study.

    Recommendation: The Commissioners of SSA and the Internal Revenue Service (IRS) should work together to assess the extent to which IRS tax data may help SSA to better target individuals who might qualify for the subsidy, possibly aiding SSA in better targeting its outreach efforts. This effort could also aid in developing more precise estimates of the eligible population and help to better inform the Congress on legislative proposals to allow IRS to share tax data with SSA to assist the agency with its outreach efforts.

    Agency Affected: Social Security Administration

 

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