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The Social Security Administration (SSA) has been withholding Medicare premiums from beneficiaries' Social Security payments since the Supplementary Medical Insurance (Part B) program was first enacted in 1965. Beginning in 2006, premium withholding became a payment option for the Medicare Advantage program (Part C) and the new program for Prescription Drug Coverage (Part D). These changes were authorized by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). Two federal agencies play critical roles in the premium withholding process: the Centers for Medicare & Medicaid Services (CMS) and SSA. The Department of the Treasury (Treasury) also plays an important role by disbursing the adjusted Social Security payments to beneficiaries. Premium withholding can make paying premiums easier for both beneficiaries and the insurance plans. However, following implementation of the premium withholding provisions under MMA in 2006, there were numerous reports of beneficiaries not having the correct Parts C and D premiums withheld. Also, about 231,000 beneficiaries had their premiums refunded erroneously because they were mistakenly identified as having paid excess premiums. As a result, you requested that we review efforts to ensure that the correct Medicare premiums are being withheld from beneficiaries' Social Security payments. Specifically, we sought answers to the following key questions: 1. How do the processes for withholding premiums from Social Security payments compare for the various parts of Medicare? 2. What problems, if any, have been identified with the premium withholding process? 3. What steps have SSA and CMS taken to address these problems?

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Recommendations for Executive Action

Agency Affected Recommendation Status
Centers for Medicare and Medicaid Services To help premium withholding become a more viable payment option for Medicare Parts C and D, and to reduce the number of requests requiring retroactive adjustments, CMS should consider alternatives to the approach put forth in the proposed regulations for preventing double-billing of beneficiaries while premium withholding requests are being processed. More specifically, for initial premium withholding requests (either for new enrollees or for existing enrollees who want to switch to premium withholding), CMS should consider allowing plans to bill beneficiaries directly until they are notified that the request for premium withholding has been accepted and will begin to be reflected in the beneficiary's next Social Security payment.
Closed - Implemented
CMS agreed with this recommendation. In its final regulations issued on January 12, 2009, CMS adopted modified language to clarify that the agency only intends to prohibit billing a beneficiary a second time for premiums when the beneficiary has already paid through premium withhold, not when the beneficiary has simply requested premium withholding. In the regulations, CMS also stated that it would continue to work in collaboration with SSA and its contracting partners to refine the premium withholding process in order to ensure a more timely and equitable outcome for all. Subsequently, CMS officials informed us that one enhancement that had been implemented in May 2009 based on our report is to split Part B transactions from the Premium Withhold transactions when CMS sends the file to SSA, which allows for changes to Part B reductions without impacting premium withholdings.
Social Security Administration SSA--in consultation with CMS and Treasury, as appropriate--should explore other ways to expedite the processing of premium withholding requests, such as separating batch transaction files for paper checks and Electronic Funds Transfer (EFT) payments, which may allow extending the processing window for changes to EFT payments, or processing more cases during Treasury's extended window for accepting changes to Social Security payments.
Closed - Implemented
We reported that SSA's limited window for accepting transactions from CMS lead to delays in when Medicare Parts C and D premiums are withheld from Social Security payments. In response to our recommendation, SSA officials held discussions with CMS and Treasury on ways to effectuate premium withholding adjustments as late as possible in Treasury's payment cycles. As a result of the discussions, SSA officials said the agency expanded its window to provide an additional 3 workdays each month to receive from CMS premium withholding requests to adjust the next month's Social Security payments. SSA said the change will affect payments beneficiaries receive beginning November 3, 2008.

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