DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850 
 
Center for Medicaid, CHIP, and Survey & Certification 
 
CMCS Informational Bulletin 
  
 
DATE:  June 29, 2011 
 
FROM:  Cindy Mann, Director 
  Center for Medicaid, CHIP and Survey and & Certification (CMCS) 
 
SUBJECT:  Update on Medicaid/CHIP and Annual Re-determination of Medicare Part D  
 
This Informational Bulletin covers two important topics of interest to States: 
  New Medicaid Tobacco Cessation Services; and 
  Annual Re-determination of Medicare Part D Low-Income Subsidy Deemed Status:  Re-
deeming   
 
New Tobacco Cessation Services 
 
On Friday, June 24, 2011, CMCS released a State Medicaid Directors letter providing 
information that we hope will be helpful to States as they work to reduce tobacco utilization.  
The letter provides guidance on the implementation of section 4107 of the Patient Protection and 
Affordable Care Act to provide Medicaid coverage of tobacco cessation services, including 
counseling and pharmacotherapy, to pregnant women as recommended by the 2008 Public 
Health Service (PHS) Clinical Practice Guidelines.   
 
The guidance further encourages States to provide tobacco cessation services for all Medicaid 
beneficiaries and clarifies that telephone quitlines will be coverable for the first time as an 
optional administrative activity in Medicaid and eligible for the 50 percent federal matching rate.  
 
For more information on the new tobacco cessation services, please visit:  
http://www.cms.gov/smdl/downloads/SMD11-007.pdf. 
 
Annual Re-determination of Medicare Part D Low-Income Subsidy Deemed Status:  Re-
deeming 
 
The Centers for Medicare & Medicaid Services (CMS) is now preparing for the annual re-
determination of Medicare Part D low-income subsidy (LIS) deemed status, also known as      
re-deeming.   
 
The information below is to help States understand the process and their role in ensuring that 
dual eligible beneficiaries have timely, affordable, and comprehensive coverage under the 
Medicare Part D prescription drug benefit. 
 
  2 | P a ge-  Info rm a t i onal  Bul l et i n 
 
 
Background 
 
The Medicare LIS provides extra help for beneficiaries who have limited income and resources 
to help pay their Medicare prescription drug plans premiums, co-payments and the annual 
deductible.  Medicare beneficiaries who automatically qualify (are deemed eligible) for LIS 
include full-benefit dual eligible individuals, partial dual eligible individuals (Qualified Medicare 
Beneficiaries [QMB-only], Specified Low-Income Medicare Beneficiaries [SLMB-only], 
Qualifying Individuals [QI]), and people who receive Supplemental Security Income (SSI) 
benefits but not Medicaid.  Additionally, individuals with limited incomes and resources who do 
not automatically qualify can apply for a LIS and have their eligibility determined by either the 
Social Security Administration (SSA) or their State Medicaid agency.  Details on the LIS benefit 
may be found in Chapter 13 of the Medicare Prescription Drug Benefit Manual, on our website 
at http://www.cms.gov/PrescriptionDrugCovContra/Downloads/R7PDB.pdf.    
    
Process for Re-determining LIS Eligibility for People who automatically Qualify  
 
In July of each year, CMS begins the process of determining if beneficiaries with LIS in the 
current calendar year will automatically qualify for LIS in the next calendar year.  During this 
time, CMS uses State Medicare Modernization Act (MMA) and SSA files to initiate the 
eligibility process in re-deeming full dual and partial dual eligible individuals and SSI-only 
eligible individuals.   
 
Individuals reported as full-benefit dual eligible beneficiaries, partial dual eligible beneficiaries, 
or SSI recipients for any month between July and December of the current year will have their 
LIS deemed status extended to December 31 of the next calendar year. For example, if a 
beneficiary is determined to have full or partial dual status in July 2011, their eligibility will be 
extended to December 31, 2012.  Additionally, a beneficiarys co-payment level for 2012 will be 
determined by type of dual eligibility, income, and institutional status reported in or after July 
2011. 
 
The CMS will continue to look for individuals whom States report as full or partial duals after 
July and will re-deem them for the next calendar year.  For example, if a beneficiary is reported 
on a September MMA file as retroactively eligible for just the month of August 2011, the person 
will be re-deemed for 2012; if a person is reported on that same file as retroactively eligible for 
only May 2011, s/he will not be re-deemed for 2012.  
 
Finally, if a beneficiary was previously deemed eligible for LIS based on State data, but does not 
appear as subsidy-eligible in July or subsequent State MMA files, s/he will not be re-deemed for 
the next calendar year. Deemed status will end on December 31 of the current calendar year.   
 
What Do States Need to Do?  
 
We cannot overemphasize the importance of the accuracy and completeness of State MMA files 
submitted starting in July for the process of re-determining deemed status. States inclusion or 
exclusion of beneficiaries from their July through December 2011 MMA files will determine 
whether those beneficiaries will be deemed eligible for the low-income subsidy for 2012.   
  3 | P a ge-  Info rm a t i onal  Bul l et i n 
 
 
We strongly recommend that States use the information in our September redeem file to screen 
these individuals for eligibility for Medicaid or any of the Medicare Savings Programs, or to 
work with them to apply for LIS.   
 
Notices to Beneficiaries  
 
In September, CMS and SSA will issue a joint mailing to beneficiaries whose deemed status will 
not continue into the next calendar year based on their absence from the States July or August 
State MMA files or SSAs August file.  This mailing will include a personalized letter on gray 
paper from CMS explaining their loss of LIS, an SSA application for extra help, and a postage-
paid return envelope to assist the individual in re-establishing eligibility for the subsidy for the 
following calendar year.   
 
In early October, individuals whose LIS will continue but will have a change in their co-payment 
level in the next calendar year will receive a personalized letter on orange paper from CMS 
outlining the changes that will be effective January 1.  
 
If any individual who received a gray notice informing them of their loss of deemed status 
subsequently becomes newly eligible for Medicaid in future months, CMS will mail them a new 
letter on purple paper informing them that they now automatically qualify for LIS. 
 
Model versions of these notices, along with a beneficiary fact sheet and partner tip sheet, will be 
available in August at 
http://www.cms.hhs.gov/LimitedIncomeandResources/LISNoticesMailings/list.asp#TopOfPage.   
 
Please note that individuals who continue to qualify for LIS without any change to their 
copayment level in 2012 will not receive a notice.   
 
CMS Notification to States  
 
In September, CMS will provide information to States about their residents who will lose 
deemed status effective January 1, 2012.  We strongly recommend that States use this 
information to screen these individuals for eligibility for Medicaid or any of the Medicare 
Savings Programs, or to work with them to apply for LIS.  More specific information, including 
the file format, will be provided separately.  
 
The CMS will also provide data on the MMA State response file on the re-deemed status of 
those reported on a given file.  For example, the results of data submitted by the State for  
re-deeming on July 12 will appear on the CMS-generated MMA response file that will be sent 
back to the State within an estimated 48 hours, or by July 14.  The following data will appear in 
the response file when the beneficiary has been re-deemed:  
   
     Beneficiary Copay Type = D 
    Beneficiary Copay Level = 1, 2, or 3  
    Copay Start Date = 01/01/2012 
    Copay End Date = 12/31/2012 
  4 | P a ge-  Info rm a t i onal  Bul l et i n 
 
 
Additional Information  
 
The CMS will continuously provide the resources and assistance individuals need to ensure that 
all eligible beneficiaries receive help paying for Medicare prescription drug coverage.  In support 
of this effort, we are working with States, SSA, State Health Insurance and Assistance Programs 
(SHIPs), physicians, pharmacists, prescription drug plans and hundreds of partner organizations 
across the country to reach beneficiaries with messages and guidance.  Our customer service 
representatives at 1-800-MEDICARE are prepared to answer questions and to guide 
beneficiaries through the process of applying for LIS, and relevant information is posted on our 
consumer website, www.medicare.gov. 
 
The CMS appreciates States continued assistance in ensuring that dual eligible beneficiaries 
have timely, affordable, and comprehensive coverage under the Medicare Part D prescription 
drug benefit.  For further information about the LIS re-deeming process, please contact Tracey 
Baker at 410-786-7794 or at tracey.baker@cms.hhs.gov. 
 
I hope you will find this information helpful.