Medicare Part D: Challenges in Enrolling New Dual-Eligible Beneficiaries

Highlights

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.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Centers for Medicare & Medicaid Services	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.	Closed – Implemented 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.
Centers for Medicare & Medicaid Services	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.	Closed – Implemented 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.
Centers for Medicare & Medicaid Services	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.	Closed – Implemented 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.
Centers for Medicare & Medicaid Services	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.	Closed – Implemented CMS stated it has worked with key partners to plan, prioritize, and execute end-to-end testing since May 2007.
Centers for Medicare & Medicaid Services	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.	Closed – Implemented 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.
Centers for Medicare & Medicaid Services	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.	Closed – Not Implemented 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.

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BeneficiariesClaims processingEligibility determinationsHealth care programsInternal controlsMedicaidMedicareMonitoringPharmaceutical industryPrescription drugsProspective paymentsReimbursements