Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

T M -

EMPORARY  EDICARE
A D D
PPROVED  RUG  ISCOUNT 

C :  B  

ARD ENEFICIARIES
A U
WARENESS AND  SE OF 

I R
NFORMATION  ESOURCES

Daniel R. Levinson

Inspector General 

October 2005

OEI-05-04-00200
 Office of Inspector General 
http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services (HHS) 
programs, as well as the health and welfare of beneficiaries served by those programs. This 
statutory mission is carried out through a nationwide network of audits, investigations, and 
inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits examine 
the performance of HHS programs and/or its grantees and contractors in carrying out their 
respective responsibilities and are intended to provide independent assessments of HHS programs 
and operations in order to reduce waste, abuse, and mismanagement and to promote economy 
and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts management and program evaluations 
(called inspections) that focus on issues of concern to HHS, Congress, and the public.  The 
findings and recommendations contained in the inspections generate rapid, accurate, and up-to-
date information on the efficiency, vulnerability, and effectiveness of departmental programs.  
OEI also oversees State Medicaid Fraud Control Units which investigate and prosecute fraud and 
patient abuse in the Medicaid program. 
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of 
allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment 
by providers.  The investigative efforts of OI lead to criminal convictions, administrative 
sanctions, or civil monetary penalties.  
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, 
rendering advice and opinions on HHS programs and operations and providing all legal support 
in OIGs internal operations.  OCIG imposes program exclusions and civil monetary penalties on 
health care providers and litigates those actions within HHS.  OCIG also represents OIG in the 
global settlement of cases arising under the Civil False Claims Act, develops and monitors 
corporate integrity agreements, develops compliance program guidances, renders advisory 
opinions on OIG sanctions to the health care community, and issues fraud alerts and other 
industry guidance.    E X E C U T I V E   S U M M A R Y  

OBJECTIVE 
To determine the extent of beneficiaries awareness and use of 
information resources for the Medicare-approved Drug Discount Card 
(drug card) program for the purpose of maximizing the effectiveness of 
outreach and education efforts for the new Medicare drug benefit.  
BACKGROUND 
The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) created the temporary drug card program to provide 
immediate access to discounted drugs.  Under the drug card program, 
some low-income beneficiaries also qualify for a $600 annual credit 
toward drug purchases.  The MMA also added a new outpatient 
prescription drug benefit to Medicare under Part D that becomes 
effective in January 2006.   
The Centers for Medicare & Medicaid Services (CMS) is required to 
broadly disseminate information to beneficiaries about the drug card 
program.  CMS offers information through a toll free number (1-800-
MEDICARE) and a Web site, both of which allow beneficiaries to 
compare drug prices and program features across available drug cards. 
CMS also developed television and radio ads and mailed information 
about the drug card program to all eligible beneficiaries.  In addition, 
CMS has awarded grants to State Health Insurance Assistance 
Programs (SHIP) to provide beneficiary education and counseling.  
Private companies that sponsor drug cards (card sponsors) are also 
required to make available specific information to promote informed 
choice.  
To measure beneficiary awareness and use of information, we conducted 
a national survey of a stratified random sample of beneficiaries. We 
stratified based on drug card enrollment status as of August 1, 2004, 
and our sample included 550 enrolled beneficiaries (population of about 
1.8 million) and 620 nonenrolled beneficiaries (population of about    
33.4 million). 
This inspection is intended to assist CMS in maximizing the 
effectiveness of beneficiary information and outreach efforts for the new 
drug benefit.  As such, we are reporting on beneficiaries awareness and 
use of drug card resources so that CMS can take these behaviors into 
account for current and future efforts. 
OEI-05-04-00200  TEMPORARY MEDICARE-APPROVED DRUG CARD:  BENEFICIARIES AWARENESS AND USE OF INFORMATION RESOURCES  i  EEEE XXXX EEEE CCCC UUUU TTTT IIII VVVV EEEE      SSSS UUUU MMMM MMMM AAAA RRRR YYYY

AWARENESSAND USE OF RESOURCES 
Almost three-quarters of beneficiaries are aware of at least one 
source they could contact for information about the drug card 
program. Seventy-two percent of all beneficiaries are aware of at least 
one of the following five sources that they could contact for drug card 
program information: 1-800-MEDICARE, Medicare Web site, drug card 
sponsors, pharmacies, and SHIPs. Awareness seems highest for 1-800-
MEDICARE and lowest for SHIPs. Enrolled beneficiaries are more 
likely to be aware of information sources than nonenrolled beneficiaries. 
Beneficiaries most commonly used passive sources such as news 
media and mail for drug card information. Only one-fifth of 
beneficiaries contacted a source requiring self-initiated action. 
Overall, 65 percent of beneficiaries used the news media and 53 percent 
used information in their mail to make enrollment decisions. We 
categorized news media and mail as passively acquired sources 
because obtaining information from these sources does not require the 
self-initiated action by the beneficiary needed to contact any of the 
actively acquired sources. Actively acquired sources are 1-800-
MEDICARE, the Medicare Web site, card sponsors, pharmacies, and 
SHIPs. Twenty-one percent of all beneficiaries have contacted one or 
more of these sources for information on the drug card program. 
Enrolled beneficiaries had a much higher rate of use (77 percent) of any 
actively acquired sources than nonenrolled beneficiaries (17 percent). 
Among nonenrolled beneficiaries, those with drug coverage are less 
likely to contact any actively acquired sources for information than 
those without drug coverage. Those who used news media or mail are 
more likely to also use an actively acquired source. 
Just over one-third of enrolled beneficiaries needed help with the 
enrollment process. Thirty-seven percent of enrolled beneficiaries 
needed help with the process of signing up after they decided to enroll. 
These beneficiaries most frequently needed help completing the 
enrollment form or applying for the $600 credit. Among the 
beneficiaries who needed help signing up, the most common sources 
that provided enrollment help were pharmacies and 1-800-MEDICARE. 
IMPLICATIONS FOR THE NEW DRUG BENEFIT 
To maximize the effectiveness of beneficiary education, we suggest that 
CMS consider the following implications for the new drug benefit. 
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For the new drug benefit, CMS should consider expanding the 
efforts it used to inform beneficiaries about the availability of 
information resources for the drug card program. Overall, CMSs 
efforts to make beneficiaries aware of information resources, including 
1-800-MEDICARE, seem effective in reaching most beneficiaries. 
However, the information did not reach all beneficiaries.  Expanding 
these efforts and extending them to additional sources could help to 
increase awareness of specific information resources.   
CMS should recognize and consider capitalizing on beneficiaries 
propensity to use passively acquired information. More beneficiaries 
obtained information through news media and mail than any other 
sources, so CMS could take advantage of these mechanisms to reach the 
greatest number of beneficiaries.  CMS could use these sources to 
promote increased use of other sources of information on the new drug 
benefit, including 1-800-MEDICARE, drug plan sponsors, SHIPs, and 
community-based organizations.   
CMS should consider collaborating with the sources that 
beneficiaries contact most frequently, including pharmacies and 
sponsors.  CMS should consider working to assist pharmacies, the 
most commonly contacted information source, in responding to 
beneficiary inquires.  CMS could provide fact sheets and materials to 
pharmacists to give to beneficiaries and referrals to direct beneficiaries 
to other sources of assistance, such as 1-800-MEDICARE or SHIPs. In 
its oversight capacity, CMS should work with drug plan sponsors to 
ensure that they provide beneficiaries with useful information about the 
new drug benefit. This is particularly important because drug card 
sponsors were the second most commonly contacted source for the drug 
card program. 
Anticipating the need for enrollment assistance, CMS could  
promote available sources of assistance and continue to invest in 
the capacity of those sources to meet beneficiary needs. Over one-
third of enrolled beneficiaries needed help enrolling in a drug card, and 
drug plan enrollment will likely be more complicated.  CMS should 
anticipate and continue to prepare to meet beneficiary need for 
enrollment assistance.  We support CMSs plan to develop an online 
enrollment system and encourage continued efforts to facilitate drug 
plan enrollment. 
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AGENCY COMMENTS 
CMS stated that it views the drug card as an important opportunity for 
lessons learned for outreach and education strategies for the drug 
benefit and agreed with each of the implications for the drug benefit 
that we suggested.  CMS noted that it has substantially more time to 
plan for the drug benefit, as compared to the drug card program, and 
thus has been able to develop stronger collaborations and partnerships 
to achieve these goals.  CMS detailed several planned and ongoing 
outreach and education activities related to our suggestions. The 
agency described a targeted education effort that incorporates media 
advertising, simple fact sheets, detailed publications, direct mail, and 
community-based grassroots outreach with numerous partners 
(including pharmacies).  CMS also highlighted the personalized 
information available through the Drug Plan Compare web tool and  
1-800-MEDICARE.  CMS thanked OIG for providing constructive and 
timely information.  The complete text of CMSs comments is included 
in Appendix F. 
OFFICE OF INSPECTOR GENERAL RESPONSE 
OIG appreciates CMSs response to this report and the detailed 
descriptions of its ongoing and planned beneficiary outreach and 
education efforts for the drug benefit.  This inspection is intended to 
assist CMS in maximizing the effectiveness of beneficiary information 
and outreach efforts for the drug benefit.  We are pleased that CMS 
found this information to be constructive and agrees with our 
suggestions. We recognize that CMS is devoting substantial effort 
toward beneficiary outreach and education. 
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EXECUTIVE SUMMARY ........................................  i

INTRODUCTION ................................................ 1 

AWARENESS AND USE OF INFORMATION ................. 7 

Almost three-quarters of beneficiaries aware of at least one 

information source  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7

Most beneficiaries use news media and mail; one-fifth use other 

sources... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9

About one-third of beneficiaries need help signing up. . . . . . . . . .  13

IMPLICATIONS:  NEW DRUG BENEFIT .................... 15 

AGENCY COMMENTS ......................................... 18

ENDNOTES ..................................................... 19 

APPENDIXES .................................................. 22 

A:  DetailedMethodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22

B:  Confidence Intervalsfor Key Statistics  . . . . . . . . . . . . . . . . . .  26

C:  LogisticRegressionModels. . . . . . . . . . . . . . . . . . . . . . . . . . . .  30

D:  Enrollment Decisions and Explanations  . . . . . . . . . . . . . . . . .  33

E:  Beneficiary Knowledge of DrugCard Program  . . . . . . . . . . . .  35

F:  AgencyComments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37

ACKNOWLEDGMENTS ......................................... 42
   I N T R O D U C T I O N  

OBJECTIVE 
To determine the extent of beneficiaries awareness and use of 
information resources for the Medicare-approved Drug Discount Card 
(drug card) program to maximize the effectiveness of outreach and 
education efforts for the new Medicare drug benefit. 
BACKGROUND 
Medicare Coverage of Prescription Drugs 
In 2004, Medicare provided health insurance for approximately  
41.8 million Americans; this includes more than 35 million seniors and 
6.5 million nonelderly people with disabilities.1  Medicare Part B covers 
a limited range of drugs, primarily those administered in a physicians 
office.  In 2003, Medicare spent approximately $4 billion on prescription 
drugs covered under Part B.2 
The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA), Public Law 108-173, added an outpatient prescription 
drug benefit to Medicare under Part D.  Effective January 2006, all 
Medicare beneficiaries will be able to enroll in private plans, which will 
cover a percentage of their drug costs.  Assistance with premiums and 
cost sharing will also be provided to an estimated 11 million low-income 
beneficiaries.3  Estimates of the Part D drug benefit cost range from 
$47 billion to $58.9 billion for fiscal year (FY) 2006.4 
Medicare-Approved Drug Discount Card Program 
While the full Medicare prescription drug benefit will not be 
implemented until January 2006, the MMA also created the drug card 
program to provide immediate access to discounted prescription drugs.  
All Medicare beneficiaries who are enrolled in Medicare Part A and/or 
Part B and do not have outpatient prescription drug coverage under 
Medicaid are eligible. Beneficiaries were able to enroll at any time from 
May 3, 2004, through December 31, 2005.  Discounts became available 
in June 2004 and end January 2006 with the advent of the full 
prescription drug benefit.  The Centers for Medicare & Medicaid 
Services (CMS) reported in December 2004 that 5.8 million beneficiaries 
had enrolled in the drug card program.5 
In early 2004, CMS approved private companies (sponsors) including 
health insurance companies, drugstore groups, and managed care firms, 
to provide a total of 73 Medicare-approved drug discount cards.  
OEI-05-04-00200  TEMPORARY MEDICARE-APPROVED DRUG CARD:  BENEFICIARIES AWARENESS AND USE OF INFORMATION RESOURCES  1  II NN TT RR OO DD
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Sponsors offer approximately 40 different national drug cards and

33 regional drug cards. 

Medicare beneficiaries are only allowed to enroll in one drug card per 
year. Once beneficiaries are enrolled, they are not allowed to switch to 
a different drug card until the next open-enrollment period. 
Beneficiaries are expected to consider several program features when 
deciding which drug card is best for them. These features relate to each 
cards specific discounts, formulary, enrollment fee, and network of 
pharmacies that will accept the card. Drug card discounts vary between 
cards and may vary within each drug card program. Drug card 
sponsors can offer discounts on all drugs allowed by CMS or may cover 
only a select list of drugs (i.e., a formulary). A drug card formulary may 
vary throughout the life of the program. Drug card sponsors may 
charge an annual enrollment fee of up to $30 or may offer a card 
without an enrollment fee. Finally, discounts are redeemable only at 
network pharmacies, which also vary by drug card. 
$600 Transitional Assistance Credit 
In addition to the discounts available through the drug cards, a 
$600 transitional assistance credit ($600 credit) is available for 
beneficiaries with incomes at or below 135 percent of the Federal 
Poverty Level and without other drug coverage.6 Eligible beneficiaries 
may use the annual $600 credit toward prescription drug purchases in 
both 2004 and 2005. CMS also will pay any enrollment fees for these 
beneficiaries. According to CMS, 1.5 million drug card enrollees were 
receiving the $600 credit as of December 2004.7 
Beneficiary Education 
CMS. The MMA requires CMS to broadly disseminate information to 
individuals eligible for the drug card program. Required information 
includes enrollment procedures, a comparison of cards annual 
enrollment fees, and information on the variability of discounts and 
drug prices under an approved drug card. In accordance with this 
mandate, CMS has emphasized the importance of Medicare 
beneficiaries access to all the information available to make decisions 
about choosing the card that best fits their needs.8 
CMS has initiated several efforts to reach out to beneficiaries and to 
ensure their access to information on the drug card program. CMS 
mailed program information to all eligible beneficiaries and has spent 
$60 million for an advertising campaign. In addition, CMS established 
a Web site (www.Medicare.gov) and a toll free number 
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(1-800-MEDICARE) where beneficiaries may compare enrollment fees, 
discounted drug prices, and formularies offered by the drug card 
programs available in their geographic areas.  These sources also 
provide information on eligibility and how to apply for the $600 credit.  
Representatives at 1-800-MEDICARE also refer callers to additional 
resources, including State Health Insurance Assistance Programs 
(SHIP), as needed.  In April 2004, CMS awarded $21.1 million in grants 
to States in support of local SHIPs to help Medicare beneficiaries 
understand and take advantage of new benefits and programs in 
Medicare.9  SHIPs provide one-on-one counseling to beneficiaries. 
CMS and other stakeholders targeted additional education efforts 
toward low-income beneficiaries likely to be eligible for the 
$600 transitional credit.  For example, CMS collaborated with the Social 
Security Administration (SSA). SSA mailed letters to all Social Security 
recipients who were likely to be eligible for the $600 credit informing 
them of this benefit.  CMS also developed TV and radio advertisements 
(ads) that focus on the $600 credit and target low-income beneficiaries.  
Approved Card Sponsors.  The MMA requires each card sponsor to make 
available information on enrollment fees, negotiated price information 
for covered drugs, and other information deemed necessary by the 
Secretary of the Department of Health and Human Services to promote 
informed choice. 10  Each card sponsor must have a mechanism, 
including a toll free number, for providing specific information to 
individuals enrolled in the program.  The Secretary is required to 
provide appropriate oversight to ensure compliance of card program 
sponsors with the requirements.11 
CMS describes the required sponsor information in its Information and 
Outreach Materials Guidelines for sponsors materials.  CMS 
regulations incorporate these Information and Outreach Materials 
Guidelines by reference.12  Examples of required information include: 
(cid:190)  information on how to become enrolled in a program, 
(cid:190)  eligibility qualifications for the $600 credit, 
(cid:190)  toll-free telephone numbers, 
(cid:190)  enrollment fees, 
(cid:190)  a list of contracted pharmacies and prescription drugs offered for a 
negotiated price, and 
(cid:190)  a notice that drugs and prices may change and a description of how 
enrollees can obtain information regarding those changes.13 
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Drug card sponsors also are required to obtain CMS approval of all 
information and outreach materials before distributing them to 
beneficiaries. According to CMS, the goal of this review of beneficiary 
materials is to ensure that information and outreach materials promote 
informed choice.14  Card sponsors began sending CMS-approved 
information and materials to beneficiaries in May 2004.   
Enrollment 
To participate in the drug card program, Medicare beneficiaries 
(excluding those automatically enrolled through a Medicare Advantage 
program or their States Pharmancy Assistance Program) must directly 
enroll with the drug card sponsor of their choice.  CMS issued a 
standard enrollment form accepted by all approved drug card sponsors. 
CMS intends the standard form to make it easier for community-based 
organizations, health professionals, and consumer groups to assist 
beneficiaries with the enrollment process.15  To enroll, beneficiaries 
must complete either CMSs or their selected drug card sponsors 
enrollment form and send it to their selected card sponsor. 
Implications for the New Medicare Drug Benefit Under Part D  
This inspection is intended to assist CMS in maximizing the 
effectiveness of beneficiary information and outreach efforts for the new 
drug benefit.  As such, we are reporting on beneficiaries awareness and 
use of drug card resources so that CMS can take these behaviors into 
account for ongoing and future efforts.  CMS plans to spend 
$300 million in 2005 to educate Medicare beneficiaries about the new 
drug benefit, including initiatives with SSA, States, and national and 
community-based organizations.16 While the drug card program will 
end with the start of this benefit in 2006, understanding beneficiaries 
awareness and use of information resources for the drug card program 
is instructive for the new drug benefit. It is reasonable to expect that 
beneficiaries will become aware of and obtain information about the 
drug benefit through channels similar to those they used for the drug 
card program. 
Concurrent Office of Inspector General Inspections 
The Office of Inspector General (OIG) conducted two additional studies 
related to the drug card program. One study, Assessment of Sponsors 
Materials Under the Medicare-Approved Drug Discount Card Program 
(OEI-05-04-00190), assessed the extent to which drug card sponsors 
materials promote informed choice for beneficiaries. The second study, 
Analysis of Drug Card Sponsors Drug Prices (OEI-05-05-00020), 
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monitored the prescription drug prices posted on the Medicare Web site 
and determined the extent to which sponsors are changing these prices. 
METHODOLOGY 
We conducted a national survey of a stratified random sample of 
Medicare beneficiaries eligible for the drug card program.  The following 
provides a general overview of our methodology. See Appendix A for 
more details on our methodology. 
Sampling 
Our population is Medicare beneficiaries who are eligible to participate 
in the drug card program, excluding beneficiaries who were 
automatically enrolled by their Medicare Advantage plan.  All Medicare 
beneficiaries except for those who receive drug benefits under Medicaid 
are eligible to enroll in the drug card program. 
From this population, we selected a stratified random sample of 
beneficiaries from four mutually exclusive strata based on two criteria: 
enrollment status as of August 1, 2004, and eligibility for the  
$600 credit. For beneficiaries enrolled in the drug card program, we 
stratified based on whether the beneficiary was also enrolled in the 
$600 credit. For nonenrolled beneficiaries, we used low-income ZIP 
codes as a proxy to ensure that our sample would include some 
nonenrolled beneficiaries eligible for the $600 credit.  Table 1 describes 
our four strata. 
TABLE 1: Population and Sample Size, by Strata 
Population  Sample 
Strata Description  Size  Size 
1. Enrolled beneficiaries receiving $600 credit  817,969  300 
2. Enrolled beneficiaries not receiving $600 credit  928,928  250 
3. Nonenrolled beneficiaries residing in low-income ZIP code  38,524  400 
4. Nonenrolled beneficiaries not residing in low-income ZIP code  33,346,431  220 
Totals  35,131,852  1,170 
Survey and Response Rates 
We developed two survey instruments, one for enrolled beneficiaries and 
one for nonenrolled beneficiaries.  Most of our key survey questions on 
awareness and use of resources were identical across the two surveys.  
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This allows us to combine information across all respondents and 
project to the total population.   
We conducted these surveys primarily by mail.  In addition, we hired a 
contractor to call beneficiaries who did not respond to the mail survey. 
Surveys were completed between September and December 2004. 
Our overall response rate was 65 percent.  Enrolled beneficiaries 
responded at a higher rate than nonenrolled beneficiaries.  By strata, 
our response rates ranged from 50 percent (nonenrolled beneficiaries 
residing in a low-income ZIP code) to 77 percent (enrolled beneficiaries 
not receiving the $600 credit). We conducted a nonresponse analysis 
that found no evidence of nonresponse bias.  Details of this analysis are 
included in the detailed methodology in Appendix A. 
Analysis 
We used several methods to analyze the survey data and focused on the 
key questions related to our objective, i.e., questions about awareness 
and use of information resources, and the enrollment process.  Appendix 
A provides details of our analysis and Appendix B provides confidence 
intervals for key statistics at the 95 percent confidence level.  We 
weighted the data based on probability of selection to project to the 
population. It is important to note that beneficiaries in strata four have 
a substantially greater weight than the other three strata because this 
strata (not enrolled, not low-income ZIP code) represents 95 percent of 
our total sampling population.   
In addition to our key questions on awareness, use, and enrollment, we 
analyzed information pertaining to nonenrolled beneficiaries 
enrollment decisions and beneficiaries knowledge of the drug card 
program. This information may be found in Appendixes D and E. 
This inspection was conducted in accordance with the Quality 
Standards for Inspections issued by the Presidents Council on 
Integrity and Efficiency. 
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Almost three-quarters of beneficiaries are aware  Seventy-two percent of all 
of at least one source they could contact for  beneficiaries are aware of at least 
one of five information resources 
information about the drug card program 
that they could contact to obtain 
information about the drug card program.  These five sources include:  
1-800-MEDICARE, the Medicare Web site, drug card sponsors, 
pharmacies, and SHIPs.17  Ninety-one percent of enrolled beneficiaries 
and 71 percent of nonenrolled beneficiaries are aware that they can get 
information about the drug card program from at least one of these 
sources.  Of these five sources, enrolled beneficiaries are aware of 2.4 
sources on average and nonenrolled beneficiaries are aware of an 
average of 1.9 sources. 
Among both enrolled and nonenrolled beneficiaries, most beneficiaries are 
aware of 1-800-MEDICARE and the fewest are aware of SHIPs 
We ordered the sources by awareness, and we found a similarity in this 
ordering for enrolled and nonenrolled beneficiaries.  For both groups, 
most beneficiaries are aware of 1-800-MEDICARE and the fewest are 
aware of SHIPs.18  As shown in Table 2, 75 percent of enrolled and     
56 percent of nonenrolled beneficiaries are aware that they could 
contact 1-800-MEDICARE for information about the drug card program.  
Twenty-two percent of enrolled and 21 percent of nonenrolled 
beneficiaries are aware of SHIPs as a source of information about the 
drug card program. 
TABLE 2: Beneficiary Awareness of Available Information Sources 
Enrolled Beneficiaries  Nonenrolled Beneficiaries 
Information Resource  Aware  Aware 
1-800-Medicare* 75%  56% 
Card sponsors*  65%  38% 
Pharmacy*  60%  41% 
Medicare.gov*  58%  47% 
SHIP  22%  21% 
* Statistically significant difference between enrolled and nonenrolled beneficiaries using the chi square test, 
p<0.05. 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005.  
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Profile of those aware of 1-800-MEDICARE.  We explored the 
characteristics of beneficiaries who are aware of 1-800-MEDICARE to 
identify any useful lessons for educating beneficiaries about available 
resources. We found that receiving mail, seeing television ads, and 
hearing radio ads about the drug card program are significantly related 
to awareness of 1-800-MEDICARE.  Beneficiaries who received no mail 
about the drug card program are much less likely to be aware of 
1-800-MEDICARE.  Also, among enrolled beneficiaries, those who have 
seen television ads or heard radio ads about the drug card program are 
more likely to be aware of 1-800-MEDICARE than those who have not 
seen or heard such ads.  Demographic characteristics (including income, 
age, education, and gender) are not related to awareness of 1-800-
MEDICARE.  Appendix C provides details of this logistic regression 
analysis. 
CMS promoted this information source through the written materials it 
mailed to beneficiaries and through television and radio ads.  It is 
plausible that beneficiaries learned that they could call this source for 
drug card information through CMSs mail and ads, suggesting that 
these education efforts are effective for those whom they reach. 
However, not all beneficiaries heard ads or received any mail.   
Profile of those aware of SHIPs.  We also analyzed characteristics of 
beneficiaries who are aware of SHIPs to identify any useful patterns.  In 
April 2004, CMS awarded $21.1 million in grants for SHIPs to help 
Medicare beneficiaries understand and take advantage of new benefits, 
including the drug card.19 
We found three characteristics related to awareness of SHIPs. Two of 
these are hearing radio ads and receiving mail about the drug card 
program. Beneficiaries who have heard radio ads about the drug card 
program are more likely to be aware of SHIPs than those who have not. 
For example, 42 percent of the beneficiaries who have heard radio ads 
about the drug card are aware of SHIPs, compared to 12 percent of 
those who have not heard radio ads.  Also, beneficiaries who received no 
mail about the drug card were less likely to be aware of SHIPs than 
those who received mail.  It is possible that radio ads or mail informed 
beneficiaries about SHIPs, or they could have indirectly led to SHIP 
awareness by encouraging the beneficiary to seek out more information. 
The third characteristic is eligibility for the $600 credit, which was 
significant only among enrolled beneficiaries.  Twenty-six percent of 
enrolled beneficiaries eligible for the $600 credit are aware of SHIPs as 
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a source of information about the drug card, compared to 17 percent of 
those ineligible for the $600 credit. This difference is small but 
statistically significant.  Other demographic characteristics (including 
age, education, and gender) are not significantly related to awareness of 
SHIPs. Appendix C provides details of this logistic regression analysis. 
Most beneficiaries obtained information 
  Beneficiaries most commonly used 
about the drug card program by reading 
passive sources such as news media and mail 
newspaper articles, seeing television 
for drug card information.  Only one-fifth of 
news stories, or reading their mail.  
beneficiaries contacted a source requiring  Overall, 65 percent of beneficiaries used 
self-initiated action  the news media (i.e., newspaper articles 
or televised news stories) and 53 percent 
used information in their mail to make enrollment decisions.  We 
categorized news media and mail as passively acquired sources 
because obtaining information from these sources does not require the 
self-initiated action by the beneficiary needed to contact any of the other 
actively acquired sources. 
Overall, 21 percent of beneficiaries have contacted one or more of the 
following actively acquired sources for information on the drug card 
program: 1-800-MEDICARE, the Medicare Web site, card sponsors, 
pharmacies, or SHIPs.20  A greater proportion of enrolled beneficiaries 
(77 percent) used any actively acquired sources compared to nonenrolled 
beneficiaries (17 percent).  However, because there are many more 
nonenrolled than enrolled beneficiaries in the population, the overall 
rate of use more closely reflects the use among nonenrolled 
beneficiaries. 
Nonenrolled beneficiaries tended to use passively acquired sources 
exclusively, compared to enrolled beneficiaries who also used actively 
aquired sources 
The majority of all beneficiaries used at least one passively acquired 
source (i.e., news media or mail) for information about the drug card 
program.  Eighty-four percent of enrolled beneficiaries and 76 percent of 
nonenrolled beneficiaries used at least one passively acquired source. 
News media and mail were the two most commonly used information 
sources among both enrolled and nonenrolled beneficiaries. 
However, enrolled and nonenrolled beneficiaries differed dramatically 
in their use of actively acquired sources.  Enrolled beneficiaries are 
significantly more likely to contact those sources. While 77 percent of 
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enrolled beneficiaries used any actively acquired sources, only   
17 percent of nonenrolled beneficiaries contacted any of those sources 
for information about the drug card program. 
Enrolled and nonenrolled beneficiaries also differed significantly in 
their rate of use of each source, but the order of sources (from highest to 
lowest use) appears to be similar across these two groups.  Table 3 
provides the rates of use for enrolled and nonenrolled beneficiaries for 
each source in our survey. 21 
TABLE 3: Beneficiary Use of Information Resources  
Information Resource  Enrolled Beneficiary Use  Nonenrolled Beneficiary Use 
News Media (P)  69%  64% 
Mail (P) *  68%  52% 
Pharmacy (A) *  42%  10% 
Card Sponsors (A) *   38%  4% 
1-800-MEDICARE (A) *  27%  3% 
Medicare Web site (A) *  9%  2% 
SHIP (A)  4%  2% 
(A) denotes actively acquired source, (P) denotes passively acquired source. 

*Statistically significant difference between enrolled and nonenrolled beneficiaries using CMH test, p<0.05. 

Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005.

For nonenrolled beneficiaries, awareness of actively acquired sources often 
did not result in use of those sources 
Awareness of an information source is necessary but not sufficient to

result in a beneficiary using that source.  For each actively acquired 

source, we determined what proportion of nonenrolled beneficiaries 

aware of the source used it.  When we exclude the beneficiaries who are

not aware of the information source, the rates of use among aware 

beneficiaries increase slightly.  When we ordered the sources by use,

pharmacies showed the highest proportion of users among nonenrolled

beneficiaries aware of pharmacies as an information resource. Of all 

nonenrolled beneficiaries who knew they could get information from 

their pharmacies, 21 percent contacted their pharmacies about the drug

card program.  In contrast, 5 percent of nonenrolled beneficiaries aware 

OEI-05-04-00200  TEMPORARY MEDICARE-APPROVED DRUG CARD:  BENEFICIARIES AWARENESS AND USE OF INFORMATION RESOURCES 10  A W A R E N E S S   A N D   U S E   O F   I N F O R M A T I O N  
of 1-800-MEDICARE called for information about the drug card.  Table 
4 provides these rates for each source. 
TABLE 4: Nonenrolled Beneficiary Use by Those Aware of Source 
For How Many Beneficiaries Did 
Information Resource  Awareness  Awareness Result in Use? 
Pharmacy 41%  21% 
Card Sponsors  38%  12% 
SHIP  21%  7% 
1-800-MEDICARE 56%  5% 
Medicare Web site  47%  5% 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
For nonenrolled beneficiaries, lack of drug coverage and use of passive 
sources predict use of actively acquired sources.  As awareness does not 
necessarily lead to use, we explored other characteristics that might 
explain resource use among nonenrolled beneficiaries.  Among 
nonenrolled beneficiaries aware of any sources, we found two factors 
that are related to their use of actively acquired sources.  Appendix C 
provides details of this logistic regression analysis. 
Having other drug coverage is related to beneficiaries use (or lack of 
use) of actively acquired sources. Half of nonenrolled beneficiaries 
indicated that they have prescription drug coverage through another 
source such as retiree benefits.22  Among nonenrolled beneficiaries 
aware of any sources, those with existing drug coverage are less likely to 
contact any sources than those without drug coverage.  Only 6 percent 
of nonenrolled beneficiaries with drug coverage contacted any actively 
acquired sources, compared to 41 percent of those without drug 
coverage. Drug coverage is not related to whether these beneficiaries 
used any passively acquired sources (news media or mail).  One 
plausible explanation is that beneficiaries with drug coverage have less 
incentive to make an effort to contact an information source and instead 
rely on the information provided to them through the passively acquired 
sources. Appendix D provides information on existing drug coverage as 
an explanation for why some nonenrolled beneficiaries have decided not 
to enroll in a drug card. 
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In addition, nonenrolled beneficiaries who have used any passively 
acquired sources are more likely to use any actively acquired sources 
than those who did not use news media or mail.  Of those who used 
news media or mail, 30 percent also used at least one actively acquired 
source, compared to less than 1 percent of those who did not use news 
media or mail.  It could be that use of mail or news media spurred 
beneficiaries to seek more information; alternatively, these beneficiaries 
may have greater interest in the program and therefore take advantage 
of multiple information sources.   
No other factors are significantly related to nonenrolled beneficiaries 
use of actively acquired sources.  Factors tested include demographic 
characteristics (age, education, income, gender, and marital status), 
seeing television or hearing radio ads about the drug card, and whether 
a proxy respondent completed the survey for the beneficiary.23 
For enrolled beneficiaries, card sponsors and pharmacies seemed to help 
the greatest proportion of beneficiaries who used them 
When we asked beneficiaries about the information resources they used, 
we also asked them to specify whether their use of each source helped or 
did not help them to make their enrollment decision.  For each source, 
we determined the rate of users who were helped.  We focused this 
analysis on enrolled beneficiaries to identify sources that helped 
beneficiaries decide to enroll, as encouraging enrollment will be a 
primary goal of outreach and education efforts for the new drug benefit. 
Contacting card sponsors and pharmacies seemed to help the greatest 
proportion of beneficiaries who used them, helping 86 percent and 
83 percent of users, respectively.  Though the greatest number of 
beneficiaries used news media, this source helped the lowest proportion 
(56 percent) of the beneficiaries who used it.  Table 5 shows enrolled 
beneficiaries use and the proportion of users helped for each source. 
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TABLE 5: Proportion of Users Helped by Source, Enrolled Beneficiaries 
Information Resource  Use  Proportion of Users Helped 
News Media  61%  56% 
Mail  61%  65% 
Pharmacy 41%  83% 
Card Sponsors  34%  86% 
1-800-MEDICARE 25%  68% 
Medicare Web site  8%  (64%)* 
SHIP  4%  (77%)* 
* Because few beneficiaries used the Medicare Web site or SHIPs, confidence intervals for these estimates are wide. 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
The closed-ended survey questions used to calculate the proportion of 
users helped measured whether each source helped or not, but they did 
not rank the sources by their helpfulness. To identify the most helpful 
sources, we used an open-ended question that asked beneficiaries, 
What was the most helpful source to get information about the 
Medicare approved drug discount card?  Of the enrolled beneficiaries 
who responded, the most commonly named sources were pharmacy  
(21 percent); media, including media ads (12 percent); and resources 
provided by Medicare (10 percent). 
Just over one-third of enrolled beneficiaries  Thirty-seven percent of enrolled 
needed help with the enrollment process  beneficiaries needed help with the 
process of signing up after they 
decided to enroll.  We asked beneficiaries to specify for which steps in 
the process they needed assistance.  Of these beneficiaries who needed 
help, 51 percent needed help filling out the enrollment form.  Forty-four 
percent of those requiring assistance needed help applying for the $600 
credit, and 36 percent needed help obtaining an enrollment form.24 
Among the beneficiaries who needed help signing up, the most common 
sources that provided enrollment help were the pharmacy and     
1-800-MEDICARE 
Of the enrolled beneficiaries who needed help signing up for a card,   
81 percent identified at least one source that provided them enrollment 
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help.  Pharmacies and 1-800-MEDICARE were the most common 
sources of enrollment help.  Among the beneficiaries who needed 
assistance, 41 percent received help signing up from a pharmacy. 
Twenty-one percent obtained enrollment help from 1-800-MEDICARE.  
Ten percent of these beneficiaries called card sponsors for assistance 
with enrollment. Few enrolled beneficiaries obtained help with signing 
up from either the Medicare Web site or SHIPs. 
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When Medicares voluntary Part D drug benefit becomes available, 
beneficiaries will face more complicated enrollment decisions than they 
have under the drug card program. The potential costs and benefits to 
the beneficiaries are greater under the new drug benefit, and the 
program is more complex.  Beneficiaries will need information, and 
perhaps individualized assistance, to decide whether to enroll in this 
drug benefit and to identify which plan best meets their needs.  They 
may also need assistance completing the enrollment process.   
This inspection is intended to assist CMS in maximizing the 
effectiveness of their beneficiary education and outreach efforts for the 
new drug benefit.  As such, we are reporting on beneficiaries awareness 
and use of drug card resources so that CMS can take these behaviors 
into account in implementing ongoing and future efforts.  One might 
expect that beneficiaries will become aware of and obtain information 
about the drug benefit through channels similar to those they used for 
the drug card program. We suggest that CMS consider the following 
implications for the new drug benefit. 
IMPLICATIONS:  BENEFICIARY AWARENESS OF RESOURCES 
For the new drug benefit, CMS should consider expanding the efforts it used 
to inform beneficiaries about the availability of information resources for the 
drug card program 
Overall, CMSs efforts to inform beneficiaries about the availability of 
information resources seem to be effective in reaching most 
beneficiaries. Almost three-quarters of beneficiaries are aware of at 
least one source they could contact to obtain information about the drug 
card program.  However, this message about availability of information 
resources did not reach all beneficiaries.  Expanding these efforts and 
extending them to additional sources could help to increase awareness 
of some lesser-known sources of information.  For example, we found 
that beneficiaries who received mail about the drug card, saw television 
ads, or heard radio ads were more likely to be aware of 
1-800-MEDICARE.  We suggest that CMS continue to broaden its use of 
these and other methods to inform beneficiaries about the various 
information resources available for the new drug benefit. 
OEI-05-04-00200  TEMPORARY MEDICARE-APPROVED DRUG CARD:  BENEFICIARIES AWARENESS AND USE OF INFORMATION RESOURCES 15  I M P L I C A T I O N S :   N E W   D R U G   B E N E F I T  
IMPLICATIONS:  BENEFICIARY USE OF RESOURCES 
CMS should recognize and consider capitalizing on beneficiaries 
propensity to use passively acquired information 
Given that 91 percent of enrolled and 71 percent of nonenrolled 
beneficiaries used at least one passively acquired source of information 
(news media and mail), CMS could take advantage of these mechanisms 
to reach the greatest number of beneficiaries.  Additionally, CMS could 
use these sources of information to promote increased use of actively 
acquired sources of information for the new drug benefit, including    
1-800-MEDICARE, the Medicare Web site, drug plan sponsors, SHIPs, 
and community-based organizations.  Among nonenrolled beneficiaries, 
those who used passively acquired sources were more likely to contact 
any actively acquired sources. 
While CMS has less influence over the news media than other sources, 
news media is the most common source of information that beneficiaries 
used.  CMS should consider making a concerted effort to properly 
educate the media about the new drug benefit.  Efforts to reach out to 
news media outlets could help CMS to educate beneficiaries about the 
new drug benefit. These efforts could include holding press conferences; 
offering interviews with top Medicare officials; and disseminating press 
releases, fact sheets, and media information packets. 
Mail is also an important mechanism, commonly used by both enrolled 
and nonenrolled beneficiaries.  We suggest that CMS continue to invest 
in developing and disseminating useful outreach and education 
materials by mail. CMS should consider using the mail to reach as 
many beneficiaries as possible but not rely solely on this method to 
reach all beneficiaries. Almost half of all beneficiaries indicated that 
they did not receive any mail about the drug card despite CMSs efforts 
to mail information to all beneficiaries.  
CMS should consider collaborating with the actively acquired sources that 
beneficiaries contact most frequently, including pharmacies and sponsors 
CMS should consider working collaboratively with pharmacies because 
pharmacies were the most commonly contacted source of information 
about the drug card.  In addition, among enrolled beneficiaries, 
pharmacies helped 83 percent of beneficiaries who contacted them.  One 
might expect that beneficiaries will turn to pharmacies for similar 
assistance with the new drug benefit.  Recognizing this, CMS could 
work with pharmacies to assist them in responding to beneficiary 
inquires.  This assistance could include disseminating fact sheets or 
OEI-05-04-00200  TEMPORARY MEDICARE-APPROVED DRUG CARD:  BENEFICIARIES AWARENESS AND USE OF INFORMATION RESOURCES 16  I M P L I C A T I O N S :   N E W   D R U G   B E N E F I T  
other materials to pharmacists to provide to beneficiaries and informing 
pharmacists about how to direct beneficiaries to other information 
sources, such as 1-800-MEDICARE, a local SHIP, or a community-based 
organization. 
Card sponsors were the second most commonly contacted source for 
drug card information. Also, among enrolled beneficiaries, card 
sponsors seemed to help the highest rate (86 percent) of beneficiaries 
who used them.  In their oversight capacity, CMS should work with 
drug plan sponsors to ensure that they also provide beneficiaries with 
helpful information about the new drug benefit.  OIG conducted another 
inspection, focused specifically on card sponsors beneficiary education 
materials, which provides more detailed suggestions to CMS on 
beneficiary education by drug plan sponsors.  Suggestions include 
requiring sponsors to provide specific information critical to beneficiary 
understanding of the program, providing model materials for sponsors, 
and facilitating in-person education of beneficiaries.25 
IMPLICATIONS:  ENROLLMENT PROCESS 
Anticipating the need for enrollment assistance, CMS could promote 
available sources of assistance and continue to invest in the capacity of 
those sources to meet beneficiary needs 
While the enrollment process has not been implemented yet, we 
anticipate that a significant number of beneficiaries may need help 
enrolling in a drug plan.  More than one-third of enrolled beneficiaries 
needed help with the enrollment process for the drug card program, 
which is a simpler process than the drug benefit enrollment process will 
be. Of these beneficiaries, about half needed help filling out the 
enrollment form.   
Promoting available sources of enrollment assistance could help such 
beneficiaries to identify available information sources.  Given the 
potentially large number of beneficiaries needing assistance, these 
sources may benefit from continued investment by CMS in the capacity 
of those sources to meet beneficiaries needs.  For the drug card 
program, pharmacies and 1-800-MEDICARE were the most common 
sources where beneficiaries obtained help with enrollment. CMS plans 
to develop an online enrollment system to facilitate drug plan 
enrollment by SHIPs, community-based organizations, and other 
partners.  We support this initiative and encourage CMS to continue to 
develop strategies for simplifying the enrollment process. 
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AGENCY COMMENTS 
CMS stated that it views the drug card as an important opportunity for 
lessons learned for outreach and education strategies for the drug 
benefit and agreed with each of the implications for the drug benefit 
that we suggested.  CMS noted that it has substantially more time to 
plan for the drug benefit, as compared to the drug card program, and 
thus has been able to develop stronger collaborations and partnerships 
to achieve these goals.  CMS detailed several planned and ongoing 
outreach and education activities related to our suggestions. The 
agency described a targeted education effort that incorporates media 
advertising, simple fact sheets, detailed publications, direct mail, and 
community-based grassroots outreach with numerous partners 
(including pharmacies).  CMS also highlighted the personalized 
information available through the Drug Plan Compare web tool and  
1-800-MEDICARE.  CMS thanked OIG for providing constructive and 
timely information.  The complete text of CMSs comments is included 
in Appendix F. 
OFFICE OF INSPECTOR GENERAL RESPONSE 
OIG appreciates CMSs response to this report and the detailed 
descriptions of its ongoing and planned beneficiary outreach and 
education efforts for the drug benefit.  These descriptions highlight 
substantial efforts by CMS toward beneficiary outreach and education. 
This inspection is intended to assist CMS in maximizing the 
effectiveness of beneficiary information and outreach efforts for the drug 
benefit.  We are pleased that CMS found this information to be 
constructive and agrees with our suggestions.  We recognize that CMS 
is devoting substantial effort toward beneficiary outreach and 
education. 
OEI-05-04-00200  TEMPORARY MEDICARE-APPROVED DRUG CARD:  BENEFICIARIES AWARENESS AND USE OF INFORMATION RESOURCES 18    E N D N O T E S  

1 Centers for Medicare & Medicaid Services, 2004 CMS Statistics,  
Table 1, October 2004. 
2 Part B summary data, CMS National Claims History file, calendar year 
2003. 
3 Centers for Medicare & Medicaid Services, Medicare Fact Sheet:  Final 
Rules Implementing the New Medicare Law:  A New Prescription Drug 
Benefit for All Medicare Beneficiaries, Improvements to Medicare 
Health Plans and Establishing Options for Retirees, p. 3, January 21, 
2005. 
4 Congressional Budget Office, The Budget and Economic Outlook: Fiscal 
Years 2006 to 2015, p. 55.  January 2005.  Also, Centers for Medicare 
& Medicaid Services, Releasing the HHS proposed budget for FY2006, 
February 7, 2005. 
5 Centers for Medicare & Medicaid Services, Fact Sheet:  Medicare 
Modernization Benefits in the First Year, December 8, 2004.   
6 Low-income beneficiaries who receive Medicaid, TRICARE (military 
health insurance), the Federal Employees Health Benefit Program, or 
an employers health plan are not eligible to enroll in the Transitional 
Assistance program. 
7 Centers for Medicare & Medicaid Services, Fact Sheet:  Medicare 
Modernization Benefits in the First Year, December 8, 2004. 
8 HHS Press Release, March 25, 2004. 
9 Centers for Medicare & Medicaid Services, Press Release:  CMS Begins 
to Award $21 Million in Grants to SHIPs, April 6, 2004.  Available 
online at 
http://www.cms.hhs.gov/media/press/release.asp?Counter=1004.   
10 Medicare Prescription Drug, Improvement, and Modernization Act of 
2003, P.L. 108-173,  101, subpart 4, codified in  1860D-31 (d)(2)(A) of 
the Social Security Act. 
OEI-05-04-00200  TEMPORARY MEDICARE-APPROVED DRUG CARD:  BENEFICIARIES AWARENESS AND USE OF INFORMATION RESOURCES 19  11 P.L. 108-173. 
12 42 CFR  403.806(g)(5)(i) requires sponsors to . . . comply with the 

Information and Outreach Materials Guidelines published by CMS.  

CMS initially published the Medicare Prescription Drug Discount 

Card and Transitional Assistance Program, Information & Outreach 

Materials Guidelines on January 22, 2004, and subsequently revised 

these guidelines in August 2004.   

13 68 Fed. Reg. 69867-8 (December 15, 2003). 
14 68 Fed. Reg. 69869 (December 15, 2003). 
15 Medicare News Release, Saturday, April 17, 2004. 
16 Centers for Medicare & Medicaid Services, Ensuring the Success of 

the New Medicare Drug Benefit, Issue Paper #24, January 19, 2005.  

Available online at

http://www.cms.hhs.gov/medicarereform/pdbma/aiandocs/issue_paper_24__ensuri 
ng_success-aian.pdf. 
17 In our survey instrument, we used the proper name and abbreviation 

of the State Health Insurance Assistance Program in the beneficiarys 

State. For example, for respondents in New York, we referred to the 

New York State Health Insurance Information, Counseling, & 

Assistance Program (HICAP) in all relevant questions. 

18 We were not able to test for statistically significant differences in 
awareness across each source as beneficiaries could indicate awareness 
of multiple sources. 
19 Centers for Medicare & Medicaid Services, Press Release:  CMS 

Begins to Award $21 Million in Grants to SHIPs, April 6, 2004.  

Available online at

http://www.cms.hhs.gov/media/press/release.asp?Counter=1004. 

20 The rate of any use across these five sources may overestimate use 
based on the way we calculated it.  Our survey included a question on 
use for each source, and a respondent only had to tell us they used one 
of these sources to be counted as a yes for any use.  However, a 
OEI-05-04-00200  TEMPORARY MEDICARE-APPROVED DRUG CARD:  BENEFICIARIES AWARENESS AND USE OF INFORMATION RESOURCES 20  respondent would have to answer all five questions to be counted as a 
no for any use.  If a beneficiary said I did not use to four sources 
and left the fifth source blank, that beneficiary is excluded from this 
calculation, making the denominator (no use) smaller. 
21 All rates of use are based on beneficiaries who definitively indicated 
that they used or did not use a specific source.  Dont know or missing 
values are excluded. 
22 We did not ask a general question about whether beneficiaries had any 
source of drug coverage.  These 51% of nonenrolled beneficiaries 
indicated having drug coverage either by checking I have other 
prescription drug insurance in the list of reasons why the beneficiary 
was not going to sign up or was undecided about signing up for a drug 
card, or by checking the specific coverage types about which we asked 
Employee/Retiree health plan, TRICARE for Life, or Federal 
Employees Health Benefit Program (FEHBP). 
23 We asked that if someone other than the beneficiary makes health care 
decisions on behalf of the beneficiary, then that person complete the 
survey.  Approximately 20 percent of surveys were completed by 
someone else on behalf of the beneficiary, i.e., a proxy respondent. 
24 Totals exceed 100 percent because some beneficiaries needed help with 
more than one step in the enrollment process. 
25 Assessment of Sponsors Materials under the Medicare-Approved 
Drug Discount Card Program (OEI-05-04-00190). 
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DETAILED METHODOLOGY 
Sampling 
Our population is Medicare beneficiaries who are eligible to participate 
in the drug card program, which includes all Medicare beneficiaries 
except for those who receive drug benefits under Medicaid.  We also 
excluded beneficiaries who were automatically enrolled in a particular 
drug card by their Medicare Advantage plan.  
From this population, we selected a stratified random sample of 
beneficiaries from four mutually exclusive strata based on two criteria: 
enrollment status and eligibility for the $600 credit.  To achieve our first 
stratification, we distinguished beneficiaries who had enrolled in the 
drug card program as of August 1, 2004 (enrolled beneficiaries), from 
those who had not enrolled by that date (nonenrolled beneficiaries).  
From the enrolled beneficiaries, we further stratified based on whether 
the beneficiary was enrolled in the $600 credit.  For the nonenrolled 
beneficiary population, we stratified based on whether the beneficiary 
resided in a low-income ZIP code. We used low-income ZIP codes as a 
proxy to ensure that our sample would include some nonenrolled 
beneficiaries who would be eligible for the $600 credit. Table 6 provides 
the description, population size, and sample size for each of our four 
strata. 
TABLE 6: Population and Sample Size, by Strata 
Population  Sample 
Strata Description  Size  Size 
1. Enrolled beneficiaries receiving $600 credit  817,969  300 
2. Enrolled beneficiaries not receiving $600 credit  928,928  250 
3. Nonenrolled beneficiaries residing in low-income ZIP code  38,524  400 
4. Nonenrolled beneficiaries not residing in low-income ZIP code  33,346,431  220 
Totals  35,131,852  1,170 
We obtained our populations of enrolled and nonenrolled beneficiaries 
(as of August 1, 2004) from CMS. For enrolled beneficiaries, the CMS 
data included an indicator for whether the beneficiary was also enrolled 
in the $600 credit.  We used this indicator to distinguish strata 1 from 
strata 2, and then randomly selected our samples from each strata.   
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To stratify the nonenrolled beneficiaries, we used data from the year 
2000 Bureau of the Census to identify low-income ZIP codes. We 
defined low-income ZIP codes as residential ZIP codes where the median 
income was at or below 135 percent of the Federal poverty level in 2000. 
We used 135 percent of poverty because this is the income threshold for 
eligibility for the $600 credit. 
Survey and Response Rates 
We developed two survey instruments, one for enrolled beneficiaries and 
one for nonenrolled beneficiaries.  Most of our key survey questions on 
awareness and use of resources were identical across the two surveys.  
This allows us to combine information across all respondents and 
project to the total population.  However, our questions regarding 
enrollment differed.  For example, we asked enrolled beneficiaries about 
whether they needed and received help with the enrollment process. 
We asked nonenrolled beneficiaries whether they plan to enroll in a 
card and why they had not enrolled. 
We allowed proxy respondents.  We asked that if someone other than 
the beneficiary makes health care decisions on behalf of the beneficiary, 
then that person complete the survey.  Approximately 20 percent of 
surveys were completed by someone else on behalf of the beneficiary. 
We conducted these surveys primarily by mail.  In addition, we hired a 
contractor to call beneficiaries who did not respond to the mail survey. 
For beneficiaries with valid phone numbers, we made three attempts by 
mail and eight attempts by phone to obtain their responses. For 
beneficiaries without valid phone numbers, we made five mail attempts.  
These surveys were conducted between September and December 2004. 
Our overall response rate was 65 percent.  Enrolled beneficiaries 
responded at a higher rate (75 percent) than nonenrolled beneficiaries 
(56 percent). Table 7 provides the response rates by strata and in total.  
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TABLE 7: Response Rates by Strata 
Sample  Response 
Strata Description  Size  Rate 
1. Enrolled beneficiaries receiving $600 credit  300  74% 
2. Enrolled beneficiaries not receiving $600 credit  250  77% 
3. Nonenrolled beneficiaries residing in low income ZIP code  400  50% 
4. Nonenrolled beneficiaries residing in non-low income ZIP code  220  67% 
Total  1,170  65% 
Nonresponse Analysis 
Nonresponse can bias survey estimates if nonrespondents would have 
answered questions differently than respondents did, so we analyzed 
how nonresponse to our survey may have affected our survey estimates. 
We examined potential nonresponse bias effects on key survey questions 
related to awareness and use of each information source in our survey. 
Variables we had available for both respondent and nonrespondent 
beneficiaries were age, sex, race, and strata.  We also categorized our 
respondents as either early or late responders depending on how 
many attempts it took to obtain their response. 
Our analysis provides no evidence that our survey results are biased 
due to nonresponse.  Our general approach for each key variable was to 
impute missing data values, calculate a point estimate that included 
these imputed values, and compare this point estimate to our survey 
estimate from only respondent data.  We imputed missing values using 
a two-stage method.  First, we conducted multiple logistic regression 
analysis using the age, sex, race, and strata variables to predict 
response propensity to each key question.  Second, we used information 
on how late responders answered key questions to impute specific 
values for nonrespondents.  We assumed our imputed estimate was 
unbiased, and if it fell within the 95-percent confidence interval of the 
respondent-only estimate, then we judged our survey estimate 
unbiased. All point estimates using both respondent and 
nonrespondent-imputed data fell within the confidence intervals of our 
respondent-only estimates, indicating no evidence of bias. 
Survey Analysis 
We used several methods to analyze the survey data and focused on the 
key questions related to our objective, i.e., questions about awareness 
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and use of information resources and the enrollment process.  We first 
calculated basic frequencies, weighted proportions, and confidence 
intervals using the statistical package SUDAAN.  Appendix B provides 
confidence intervals for key variables at the 95 percent confidence level. 
We weighted the data based on probability of selection.  It is important 
to note that beneficiaries in strata 4 have a substantially greater weight 
than the other three strata because the strata (not enrolled, not low-
income ZIP code) represents 95 percent of the total sampling population. 
Next, we ran Cochran-Mantel Haenszel chi-square (CMH) tests (a chi-
square test designed for stratified samples) to identify significant 
difference between enrolled and nonenrolled beneficiaries.  We also 
tested for significant associations among our key awareness and use 
variables.  We considered associations to be statistically significant if 
the p-value was less than 0.05.  Finally, we used SUDAAN to conduct 
logistic regression analysis to identify significant predictors of key 
variables, including awareness and use of specific sources. Appendix C 
provides additonal details on our logitic regression analysis. 
In addition to our key questions on awareness, use, and enrollment, we 
analyzed information pertaining to beneficiaries knowledge of the drug 
card program and nonenrolled beneficiaries enrollment decisions. This 
information is presented in Appendixes D and E. 
This inspection was conducted in accordance with the Quality 
Standards for Inspections issued by the Presidents Council on Integrity 
and Efficiency. 
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CONFIDENCE INTERVALS FOR KEY STATISTICS 
Table 8 provides confidence intervals for key statistics presented in the 
report for the overall population of beneficiaries (enrolled and 
nonenrolled).  Tables 9 and 10 present confidence intervals for the 
enrolled beneficiary population for key statistics on awareness and use 
of information resources.  Tables 11 and 12 provide information on the 
same statistics for the nonenrolled beneficiary population.  Table 13 
presents confidence intervals for statistics on enrollment assistance. 
TABLE 8: Key Statistics, All Beneficiaries 
95 Percent 
Point  Confidence 
Percent of Beneficiaries:  n  Estimate  Interval 
Aware of any of the following information resources: 
1-800-MEDICARE, Medicare Web site, card sponsor,  741  72%  64-79% 
SHIP, or pharmacy 
Used any of the following actively acquired sources:    
1-800-MEDICARE, Medicare Web site, card sponsor,  586  21%  15-29% 
SHIP, or pharmacy 
Used any of the following passively acquired sources:  
664  76%  68-82% 
news media or mail   
Used news media  662  65%  56-72% 
Used mail  660  53%  45-61% 
Saw television ads about the drug card  706  71%  63-77% 
Heard radio ads about the drug card  698  26%  19-33% 
Received no mail about the drug card program  721  48%  40-56% 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
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TABLE 9: Awareness Statistics, Enrolled Beneficiaries 
95 Percent 
Percent of enrolled beneficiaries who are aware they  Point  Confidence 
can get drug card information from:  n  Estimate  Interval 
Any of the following information resources:                  
1-800-MEDICARE, Medicare Web site, card sponsor,  408  91%  87-93% 
SHIP, or pharmacy 
1-800-MEDICARE  406  75%  70-79% 
Card sponsors  407  65%  60-70% 
Pharmacy  409  60%  55-65% 
Medicare Web site  405  58%  53-63% 
State Health Insurance Assistance Program   410  22%  18-26% 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
TABLE 10: Use Statistics, Enrolled Beneficiaries 
95 Percent 
Percent of enrolled beneficiaries who used  the  Point  Confidence 
following sources for information about the drug card:  n  Estimate  Interval 
Any actively acquired sources (i.e., 1-800-MEDICARE, 
341  77%  72-81% 
Medicare Web site, card sponsor, SHIP, or pharmacy) 
Any passively acquired sources (i.e., news media or 
372  84%  80-87% 
mail) 
News media  365  69%  64-73% 
Mail  370  68%  63-73% 
Pharmacy  389  42%  38-47% 
Card sponsors  336  38%  33-44% 
1-800-MEDICARE  360  27%  23-32% 
Medicare Web site  351  8%  6-12% 
State Health Insurance Assistance Program   330  4%  2-6% 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
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TABLE 11: Awareness Statistics, Nonenrolled Beneficiaries 
95 Percent 
Percent of nonenrolled beneficiaries who are aware  Point  Confidence 
they can get drug card information from:  n  Estimate  Interval 
Any of the following information resources:                  
1-800-MEDICARE, Medicare Web site, card sponsor,  333  71%  63-78% 
SHIP, or pharmacy 
1-800-MEDICARE  336  56%  47-64% 
Medicare Web site  333  47%  39-55% 
Pharmacy  334  41%  33-49% 
Card sponsors  330  38%  30-46% 
State Health Insurance Assistance Program   332  21%  15-29% 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
TABLE 12: Use Statistics, Nonenrolled Beneficiaries 
95 Percent 
Percent of nonenrolled beneficiaries who used  the  Point  Confidence 
following sources for information about the drug card:  n  Estimate  Interval 
Any actively acquired sources (i.e., 1-800-MEDICARE, 
245  17%  11-26% 
Medicare Web site, card sponsor, SHIP, or pharmacy) 
Any passively acquired sources (i.e., news media or 
292  76%  67-83% 
mail) 
News media  297  64%  56-72% 
Mail  290  52%  39-57% 
Pharmacy  314  10%  6-16% 
Card sponsors  326  4%  2-9% 
1-800-MEDICARE  333  3%  1-8% 
Medicare Web site  326  2%  1-7% 
State Health Insurance Assistance Program   253  2%  0-7% 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
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TABLE 13: Enrollment Assistance, Enrolled Beneficiaries 
95 Percent 
Point  Confidence 
Percent of Enrolled Beneficiaries:  n  Estimate  Interval 
Needed help signing up for a drug card  416  37%  32-41% 
Of those beneficiaries who needed help enrolling, 
percent: 
Needed help filling out the enrollment form  155  51%  43-59% 
Needed help applying for the $600 credit  155  44%  36-52% 
Needed help obtaining the enrollment form  155  36%  29-44% 
Obtained enrollment assistant from any source   155  81%  74-86% 
Obtained enrollment assistance from a pharmacy  155  41%  33-49% 
Obtained enrollment assistance from 1-800-MEDICARE  155  21%  15-28% 
Obtained enrollment assistance by calling a card sponsor  155  10%  6-16% 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
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LOGISTIC REGRESSION MODELS 
We used logistic regression to identify predictors of several key 
variables. We first ran CMH tests (a chi-square test designed for 
stratified samples) to identify variables that were significantly related 
(p value <0.05) to our variable of interest.  Then, we included these 
significant variables in a logistic regression model predicting the 
dependent variable of interest. 
The following tables display the odds ratios for each of the significant 
predictors (at p< 0.05 level) in each of those logistic regressions.  The 
nonsignificant variables are also listed below each table.  In logistic 
regression, an odds ratio of one is considered neutral, an odds ratio 
greater than one is considered a positive relationship, and anything less 
than one indicates a negative relationship.  For example, as shown in 
Model 1 below, beneficiaries who have seen television ads about the 
drug card are 2.80 times more likely to be aware of 1-800-MEDICARE 
than beneficiaries who have not seen such ads. 
Logistic Regression Model 1:   Awareness of 1-800-MEDICARE 
The model in Table 14 predicts whether an enrolled beneficiary is aware 
that he/she can obtain information about the drug card by calling     
1-800-MEDICARE. 
TABLE 14: TV and Radio Ads and Receiving Mail Predicting Awareness 
of 1-800-MEDICARE, Enrolled Beneficiaries 
Independent Variable  Odds Ratio  P-value 
Receiving no mail  0.33  0.000 
Seeing television ads about the drug card  3.91  0.024 
Hearing radio ads about the drug card  2.80  0.000 
Variables that were not significantly related: income, age, education, gender 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
We also tested relationships for all beneficiaries.  Among all 
beneficiaries, not receiving any mail about the drug card strongly 
predicted that the beneficiary is not aware that he/she can get drug card 
information from 1-800-MEDICARE.  In fact, the odds ratio for this 
variable approached zero.  An odds ratio of zero would mean that a 
beneficiary who receives no mail has zero odds of being aware of 
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1-800-MEDICARE, i.e., awareness is impossible.  For all beneficiaries, 
seeing television ads and hearing radio ads were each significantly 
related to awareness of 1-800-MEDICARE among all beneficiaries in 
CMH significance tests, but they were no longer significant when 
included in the regression model along with receiving no mail. 
Logistic Regression Model 2:   Awareness of SHIP 
The model in Table 15 predicts whether a beneficiary will be aware that 
he/she can obtain information about the drug card by contact a SHIP. 
TABLE 15: Radio Ads and Receiving Mail Predicting Awareness of SHIP, 
All Beneficiaries 
Independent Variable  Odds Ratio  P-value 
Hearing radio ads about the drug card  3.88  0.005 
Receiving no mail about the drug card  0.32  0.028 
Variables that were not significantly related: income, age, education, gender 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
In contrast to the variables that were not related to awareness (such as 
gender), seeing television ads about the drug card was significantly 
related to SHIP awareness in a CMH significance test.  However, seeing 
television ads was no longer significant in the regression model above 
once the other variables were included.  Also, being eligible for the  
$600 credit was significantly related to SHIP awareness only among 
enrolled beneficiaries. 
Logistic Regression Model 3:   Nonenrolled Beneficiaries Use of Any

Actively Acquired Sources  

The model in Table 16 predicts whether a nonenrolled beneficiary, who 
is aware of any actively acquired source (1-800-MEDICARE, Medicare 
Web site, card sponsor, SHIP, pharmacy) will contact at least one of 
those sources. 
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TABLE 16: Predicting Use of Any Actively Acquired Sources, 
Nonenrolled Beneficiaries 
Independent Variable  Odds Ratio  P-value 
Having other drug coverage  0.13  0.014 
Using any passively acquired sources (news media or 
510.44  0.000 
mail) 
Variables that were not significantly related :  income, age, education, gender, marital status, 
proxy respondent, seeing television ads, hearing radio ads, receiving no mail  
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005. 
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ENROLLMENT DECISIONS AND EXPLANATIONS 
While our inspection report focused on beneficiaries awareness and use 
of information resources, we have additional information from our 
survey that falls outside this scope. The information here addresses the 
enrollment decisions of nonenrolled beneficiaries and the reasons they 
provided for those decisions.  
Enrollment Decisions of Nonenrolled Beneficiaries 
We asked nonenrolled beneficiaries about their enrollment decision.  In 
response to this closed-ended question, 47 percent of nonenrolled 
beneficiaries indicated that they will not sign up for a card, and  
40 percent indicated that they are undecided.  Five percent indicated 
that they have signed up for a drug card.  See Table 17.  As noted in the 
methodology, we pulled our sample of nonenrolled beneficiaries in 
August 2004, and surveys were completed between September and 
December 2004. 
TABLE 17: Enrollment Decisions of Nonenrolled Beneficiaries 
Decision 
I am not going to sign up for a Medicare drug card.  47% 
I have not yet decided whether to sign up for a Medicare drug card.  40% 
I am going to sign up for a Medicare drug card but have not applied.  8% 
I signed up for a Medicare drug card.  5% 
Source:  Office of Inspector General analysis of national survey of Medicare beneficiaries, 2005.  
Explanations for Enrollment Decisions 
Reasons for not signing up.  Many beneficiaries who say they are not 
going to sign up for the drug card may have decided against enrollment 
because they do not need the drug card or it would not benefit them.  
Eighty percent of the 47 percent of beneficiaries who decided not to sign 
up indicated it is because they have other drug coverage. Enrolling in 
the drug card may not be worthwhile for beneficiaries who already have 
insurance coverage.  Additional reasons for not signing up include:  The 
Medicare card will not save me money (23 percent),  I am not eligible 
or cannot tell if I am eligible (17 percent), and I do not have the 
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information I need (13 percent). Some beneficiaries provided more 
than one reason for not signing up.  
Reasons for being undecided about signing up. In general, nonenrolled 
beneficiaries who are undecided about signing up seem to need more 
information about the drug card.  The most common reasons these 
beneficiaries gave for being undecided are lack of information and 
confusion about eligibility. Forty-nine percent of those who are 
undecided about signing up indicated I do not have the information I 
need, and 49 percent said they could not determine if they would save 
money with the card. 
We considered whether beneficiaries who said they did not have the 
information they needed shared any characteristics that would help to 
explain their answer. We did not find any significant relationships. 
Lack of information was not related to awareness of any information 
resources. Nor was it related to the number of sources the beneficiary is 
aware of, number of sources used, or use of actively or passively 
acquired sources. 
Additonal reasons beneficiaries gave for being undecided about signing 
up include: I am not eligible or cannot tell if I am eligble (29 percent), 
I have other presrcription drug coverage (25 percent), and I am 
waiting to see if prices go down (20 percent).  
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BENEFICIARY KNOWLEDGE OF DRUG CARD PROGRAM 
While our inspection report focused on beneficiaries awareness and use 
of information resources, we have additional information from our 
survey that falls outside this scope. The information here addresses 
beneficiary knowledge of the drug card program. 
General Card Program 
Nearly all beneficiaries are aware of the drug card program, but many 
nonenrolled beneficiaries are confused about eligibility for a drug card. 
One hundred percent of enrolled beneficiaries and 95 percent of 
nonenrolled beneficiaries are aware of the drug card program.  Only 
about half of nonenrolled beneficiaries know that they are eligible to 
sign up for a drug card. It is plausible that some of these beneficiaries 
confuse eligibility criteria for the $600 credit with eligibility for the card 
program.  When asked why they are not eligible for a drug card, the 
most common reasons beneficiaries offered relate to having too much 
income or having other insurance coverage. 
$600 Credit 
Most beneficiaries are aware of the $600 credit, although significantly 
more enrolled than nonenrolled beneficiaries know of this benefit.  We 
asked all beneficiaries whether they have ever heard that some low-
income beneficiaries can get a $600 credit on their Medicare drug cards. 
Ninety-one percent of enrolled beneficiaries are aware of the $600 credit 
compared to 76 percent of nonenrolled beneficiaries.  Higher awareness 
among enrolled beneficiaries is not surprising when we consider that in 
our survey population almost half of the beneficiaries enrolled in the 
drug card program are also enrolled in the $600 credit. 
In addition, we determined beneficiaries actual eligibility for the  
$600 credit based on their reported income, marital status, and 
insurance coverage.  We then compared actual eligibility to whether the 
beneficiaries think they are eligible for the $600 credit.  We found that, 
overall, only 30 percent of the beneficiaries who are actually eligible for 
the $600 credit realize they are eligible.  Comparing enrolled to 
nonenrolled beneficiaries, only 21 percent of nonenrolled beneficiaries 
who are eligible for the $600 realized they are eligible for the $600 
credit.  Seventy-two percent of enrolled beneficiaries who are eligible for 
the credit are aware of their eligibility.   
Most nonenrolled beneficiaries who think they are not eligible for the 
$600 credit cited income or assets as a reason for their ineligibility.  It is 
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possible that some of these beneficiaries mistakenly think that, despite 
their low income, their financial assets disqualify them from receiving 
the $600 credit. Alternatively, some might understand that income is a 
qualifying factor for the $600 credit, but do not know what level of 
income qualifies them. 
Choice of Cards   
Virtually no beneficiaries recognize the breadth of drug cards available 
from which to choose, and over one-quarter of beneficiaries do not 
realize they have a choice of cards at all.  When asked a closed-ended 
question about how many cards are available to choose from, less than 
one percent correctly identified that there are 16 or more drug cards 
available.  Nineteen percent of beneficiaries recognize that they have 
some choice by indicating 2 to 15 cards are available.  However, 
27 percent of beneficiaries do not think they have any choice of cards. 
The remaining 54 percent of beneficiaries responded dont know. 
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   A C K N O W L E D G M E N T S  

This report was prepared under the direction of William C. Moran, 
Regional Inspector General for Evaluation and Inspections in the 
Chicago regional office, and Ann Maxwell, Assistant Regional Inspector 
General. Other principal Office of Evaluation and Inspections staff who 
contributed include: 
Emily Melnick, Project Leader 
Erin Lemire, Lead Analyst 
Laura Torres, Program Analyst 
Beth Middendorf, Presidential Management Fellow 
Margarita Rodriguez, Program Assistant 
Jocelyn Moore, Intern 
Suzanne Bailey, Intern 
Lindsey Hoy, Intern 
April Rush, Intern 
Tricia Davis, Director, Medicare and Medicaid Branch 
Linda Boone Abbott, Program Specialist 
Technical Assistance: 
Barbara Tedesco, Mathematical Statistician 
Kevin Farber, Mathematical Statistician 
Scott Horning, Program Analyst 
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