Report Template Version = 09-08-04 

Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

ASSESSMENT OF SPONSORS’ 


MATERIALS UNDER THE 


TEMPORARY MEDICAREAPPROVED DRUG DISCOUNT 


CARD PROGRAM


Daniel R. Levinson


Inspector General 


October 2005


OEI-05-04-00190

Report Template Version = 09-08-04 

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-todate 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 OIG’s 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. 
Report Template Version = 09-08-04 

Δ SYNOPSIS 

Part D of the Medicare Prescription Drug, Improvement, and 

Modernization Act (MMA) of 2003 added outpatient prescription drug 

benefits to the Medicare program beginning in 2006. In the interim, the 

MMA also created the Medicare-Approved Drug Discount Card program 

(drug card program). The Centers for Medicare & Medicaid Services 

(CMS) administers the drug card program through private companies 

(sponsors) it has approved to offer the drug cards. CMS requires these 

sponsors to develop pre-enrollment packets, which must contain the 

information beneficiaries need to make informed choices. Sponsors may 

use pre-enrollment packets in their active outreach and/or may develop 

advertising materials to attract beneficiaries to their cards. CMS 

reviews and approves sponsors’ materials. Although we assessed 

sponsors’ materials under the drug card program, this report is 

intended to provide information to assist CMS in preparing for the 

Part D drug benefit. 

There are three sections to this report. First, we provide background 

information on the drug card program and the Part D drug benefit, as 

well as a brief description of our methodology. Second, we provide the 

results of our assessment of sponsors’ materials under the drug card 

program: the materials sponsors used in their outreach to potential 

enrollees, the compliance of selected sponsors’ materials with CMS’s 

requirements, and beneficiary understanding of key aspects of the drug 

card program based on reading sponsors’ materials. Finally, based on 

our assessment of the drug card program, we offer implications for CMS 

to consider for the new Part D drug benefit. In return, CMS provided 

extensive comments demonstrating how its ongoing and planned efforts 

related to the oversight of sponsors’ marketing materials for the drug 

benefit have incorporated our suggestions. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM i 
Report Template Version = 09-08-04 

Δ T ABLE OF CONTENTS 

SYNOPSIS ....................................................... i

INTRODUCTI ON ................................................ 1 

DRUG CARD MATE RIALS ..................................... 9 

Materials used in outreach............................... 10

 Compliance of materials ................................. 13

Beneficiary understanding of materials..................... 20

IMPLICATIONS : NEW DRUG BENE FIT .................... 25 

AGENCY COMME NTS ......................................... 29 

OFFICE OF I N SPECTOR GENERAL RESPONS E ........... 30

ENDNOTE S ..................................................... 32 

APPENDI XES .................................................. 38 

A: Detailed Methodology ................................ 38

B: Noncompliance for All Requirements Assessed and

 Sources of Error .................................... 41

C: Beneficiary Understanding ............................ 44

D: Agency Comments................................... 47

ACKN O W LEDGMENTS ......................................... 55

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM ii 
Report Template Version = 09-08-04 

Δ INTRODU C TION 

OBJECTIVE 

To assess drug card sponsors’ materials under the Medicare-Approved 

Drug Discount Card Program in an effort to assist CMS in preparing for 

the new Medicare drug benefit under Part D. In particular, to assess 

whether sponsors’ materials promote informed choice for beneficiaries 

and to review CMS oversight of sponsors’ materials. 

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 physician’s 

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 benefits 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 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 MedicareApproved Drug Discount Card program (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 can enroll in the drug card program at any time 

from May 3, 2004, through December 31, 2005. Discounts became 

available in June 2004 and end in 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 

manufacturers, health insurance companies, drug store groups, and 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 1 
Report Template Version = 09-08-04 

INTROD UCT ION 

managed care firms, to provide a total of 73 Medicare-approved drug 

discount cards. Sponsors offer 40 national drug cards and 33 regional 

drug cards.6 Throughout this report, we use the term “drug card 

sponsor” when referring to the entity contracted to offer an individual 

drug card. In some cases, one company actually has several contracts 

and offers multiple drug cards. 

Medicare beneficiaries are allowed to enroll in only 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.7 

Beneficiaries are expected to consider several program features when 

deciding which drug card is best for them. Discounts vary between 

cards and may vary within each card by drug, by pharmacy, and by 

geographic location; and the discounts may also change over time. Drug 

card sponsors can offer discounts on all drugs allowed by CMS or may 

cover only a select list of drugs, and the particular drugs covered by a 

card may vary throughout the life of the drug card program. Discounts 

are available only at network pharmacies that have agreed to accept the 

card. Network pharmacies also vary by drug card. Drug card sponsors 

may charge an annual enrollment fee of up to $30 or may offer a card 

without an enrollment fee.8 

In addition to the discounts available through the drug cards, the 

Medicare-Approved Drug Discount Card program provides $600 in 

Transitional Assistance credit for beneficiaries with incomes at or below 

135 percent of the Federal poverty level and without other drug 

coverage.9 Eligible beneficiaries may use the annual $600 credit toward 

prescription drug purchases in both 2004 and 2005. Medicare also will 

pay any drug card enrollment fees for these beneficiaries. According to 

CMS, 1.5 million drug card enrollees had begun receiving the $600 

Transitional Assistance credit by December 2004.10 

Sponsors and CMS Must Promote Informed Choice 

The MMA directs CMS and sponsors to make certain information 

available to eligible beneficiaries for the purpose of promoting informed 

choice among drug cards.11 CMS has conducted an outreach and 

education campaign and offers beneficiaries several other informational 

resources. CMS offers a toll-free hotline (1-800-MEDICARE) to help 

beneficiaries assess their eligibility, find out which drug cards are 

available in their area, and compare features of available drug cards 

including discounts on the drugs they take. CMS also offers this 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 2 
Report Template Version = 09-08-04 

INTROD UCT ION 

information on its Web site (www.medicare.gov), along with a price 

comparison feature. 

The MMA requires that each sponsor “shall make available to discount 

card eligible individuals . . . information that the Secretary identifies as 

being necessary to promote informed choice among endorsed discount 

card programs . . .”12 CMS has delineated this information in its 

Information and Outreach Materials Guidelines for sponsors’ materials. 

CMS’s regulations incorporate these Information and Outreach 

Materials Guidelines by reference.13 Examples of required information 

include how to become enrolled in a drug card, eligibility qualifications 

for the $600 credit, toll-free telephone numbers, enrollment fees, types 

of contracted pharmacies, types of prescription drugs offered for a 

negotiated price, how enrollees can obtain more complete information 

regarding drugs discounted and the pharmacy network, and a notice 

that drugs and prices may change. Drug card sponsors’ materials must 

explain enrollment rules, some of which imply that multiple drug cards 

are available (for example, materials must state that enrollees cannot 

enroll in a new drug card until January 1, 2005). However, materials 

are not required to explicitly state that beneficiaries have a choice of 

drug cards.14 

Sponsors’ Materials: Pre-Enrollment Packets and Advertising Materials 

CMS classifies sponsors’ drug card materials as either explanatory 

materials or advertising materials. 

Pre-Enrollment Packets and Other Explanatory Materials. Explanatory 

materials include information required by CMS to inform beneficiaries 

about the program. CMS requires sponsors to make explanatory 

materials available to beneficiaries upon request prior to enrollment 

(through pre-enrollment packets), at enrollment (e.g., notification of 

enrollment status), and after enrollment (e.g., member handbooks, 

membership cards).15 

Sponsors’ pre-enrollment packets must include information CMS has 

deemed necessary for promoting informed choice prior to enrolling in a 

sponsors’ drug card. These packets contain a cover letter, a program 

description (called a Summary of Program Features), enrollment 

instructions, and enrollment forms. According to CMS regulations, 

sponsors are required to provide pre-enrollment, explanatory 

information “through the Internet and some other tangible medium 

(such as a mailing)” to explain the sponsors’ drug card to eligible 

beneficiaries.16 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 3 
Report Template Version = 09-08-04 

INTROD UCT ION 

Advertising Materials. Advertising materials provide general information 

about a drug card and are intended to generate interest and encourage 

beneficiaries to get the additional information they need to enroll. 

Although advertisements are not necessarily intended to provide indepth information about sponsors’ drug cards, these materials may 

affect beneficiary choice by including some key information about 

program features. Advertising materials are required to include certain 

disclaimers when topics such as discounts and enrollment fees arise. 

Advertising materials cannot include enrollment forms and are not 

meant to be used to enroll. However, beneficiaries who see sponsors’ 

advertisements may enroll over the phone (through a sponsor’s call-in 

center) and may not have the benefit of reviewing a pre-enrollment 

packet prior to enrolling. 

CMS Oversight of Sponsors’ Materials 

The MMA requires the Secretary to provide “appropriate oversight to 

ensure compliance of endorsed discount card programs and their 

sponsors with the requirements of this section.”17 CMS uses several 

mechanisms to ensure that sponsors’ materials are in compliance. 

In January 2004, CMS issued specific requirements and guidance for 

sponsors’ explanatory and advertising materials in its Information and 

Outreach Materials Guidelines. These requirements outline the key 

program information that materials must include, as well as specific 

disclaimers, specific terminology, and requirements for presenting 

information clearly such as font size specifications. These guidelines 

were revised and updated in August 2004. CMS has also provided 

sponsors with a list of suggested terminology and model materials for 

member handbooks, enrollment instructions, and enrollment forms that 

sponsors can choose to adopt.18 

To ensure that materials promote informed choice, drug card sponsors 

must obtain CMS’s approval of all materials before distributing them to 

beneficiaries.19 CMS has hired a contractor (hereinafter referred to as 

CMS’s contractor) to review and approve sponsors’ materials. Materials 

are reviewed within 30 days and approved, disapproved, or approved 

with stipulations. In the last category, sponsors are expected to make 

small changes to their materials before distributing them and to submit 

a copy of the final material to CMS’s contractor. CMS’s contractor 

conducts a retrospective review of a portion of these materials to 

determine whether the stipulated changes are made. Materials that 

follow CMS models receive a streamlined 10-day review. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 4 
Report Template Version = 09-08-04 

INTROD UCT ION 

Finally, CMS may opt to randomly retrieve and review sponsor 

materials from the marketplace to ensure that sponsors have not 

modified these materials without CMS’s approval. 

Implications for the Full Medicare Prescription Drug Benefit Under Part D 

Our assessment of sponsors’ materials and CMS oversight under the 

drug card program has particular relevance for CMS’s implementation 

of the Part D drug benefit. While the drug card program will end with 

the start of the Part D drug benefit in 2006, prescription drug plan 

sponsors’ materials will play a similar role in informing beneficiaries’ 

choice under the Part D program. Specifically, beneficiaries will rely on 

information from CMS and prescription drug plan sponsors when 

enrolling in the Part D program. Prescription drug plan sponsors will 

be required to produce materials similar to those under the drug card 

program and submit their materials to a similar review process under 

Part D. In some cases, drug card sponsors are likely to apply to become 

prescription drug plan sponsors. 

CMS and prescription drug plan sponsors’ outreach to beneficiaries 

needs to be sufficiently thorough and clear to allow beneficiaries to 

make an informed decision about enrollment. Beneficiaries’ 

understanding of the Part D drug benefit will be even more crucial than 

their understanding of the drug card program because the choices about 

enrolling in the Part D drug benefit will be considerably more complex. 

For example, Part D benefits will vary with beneficiary drug 

expenditures and with beneficiary income. Further, beneficiaries with 

private prescription drug coverage will need to compare that coverage to 

the prescription drug plans available under Part D to determine which 

program best meets their needs. And, though Part D is voluntary, 

beneficiaries who delay enrollment will face financial consequences, 

including increased premiums. 

Concurrent OIG Inspections 

OIG has conducted two additional studies related to the drug card 

program. One, Medicare-Approved Drug Discount Card: Beneficiaries’ 

Awareness and Use of Information Resources (OEI-05-04-00200), 

assesses the extent of beneficiaries’ awareness and use of information 

resources to decide whether to enroll in the drug card program and 

navigate the enrollment process. The second study, Analysis of Drug 

Card Sponsors’ Drug Prices (OEI-05-05-00020), monitors the 

prescription drug prices posted by sponsors on the Medicare Web site 

and determines the extent to which sponsors are changing these prices. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 5 
Report Template Version = 09-08-04 

INTROD UCT ION

METHODOLOGY 

This inspection focuses on sponsors’ materials that are likely to inform 

beneficiary decisions about enrolling in the drug card program: 

pre-enrollment packets and advertising materials. To assess the extent 

to which sponsors’ materials promote informed choice, we reviewed a 

selection of materials and conducted interviews with sponsors that 

administer 62 drug cards. Although there are 73 cards in the program, 

we excluded 11 drug cards from our study. Some of these 11 drug cards 

were not available to beneficiaries at the time of our interviews or 

served only long-term care beneficiaries. See Appendix A for additional 

information about our methodology. 

Assessing Whether Sponsors’ Materials Promote Informed Choice 

To assess the extent to which pre-enrollment packets and advertising 

materials promote informed choice, we assessed selected sponsors’ 

materials in two ways: we conducted a structured review of sponsors’ 

materials and conducted cognitive interviews with beneficiaries who 

read selected materials and answered questions based on their reading. 

Selected sponsors’ materials. We selected 62 pre-enrollment packets and 

20 advertising materials for our review. We selected 1 pre-enrollment 

packet for each of the 62 drug cards included in our study. Based on our 

interviews with sponsors, we determined that the 62 drug card sponsors 

used a total of 80 pre-enrollment packets. We found that 45 sponsors 

use only 1 pre-enrollment packet. For the 17 sponsors that use 2 or 

3 pre-enrollment packets, we selected the packet that sponsors 

indicated was used to target the most beneficiaries. 

For our review, we selected one tangible advertising material from each 

of 20 drug card sponsors that use tangible advertising materials. 

Tangible advertising materials include such things as direct mail, print 

ads, and flyers; they do not include radio or TV ads, posters, 

presentations, etc. For sponsors that sent tangible advertising 

materials via direct mail, we selected the direct mail material that 

targeted the most beneficiaries. Similarly, for sponsors that did not use 

direct mail to send advertising materials, we selected the tangible 

advertisement that targeted the most beneficiaries. 

Structured review of sponsors’ materials. We conducted a structured review 

of selected sponsors’ materials to identify whether CMS-approved 

materials include required information. We discussed the 

noncompliance we found in our structured review with CMS and CMS’s 

contractor. Our report includes the results of these discussions. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 6 
Report Template Version = 09-08-04 

INTROD UCT ION 

We selected 25 requirements applicable to pre-enrollment packets and 

7 requirements applicable to advertisements.20 Because some 

requirements are only applicable to certain drug cards or materials, 

between 20 and 24 requirements are applicable to each selected 

pre-enrollment packet and 2 to 7 requirements are applicable to each 

selected advertisement. All selected materials were approved between 

March and July 2004. Although CMS revised its requirements for 

sponsors’ materials in August 2004, we assessed materials’ compliance 

with requirements applicable at the time the material was approved. 

As a result, some portion of materials that met all the requirements we 

assessed may not meet all current CMS requirements.21 See Appendix 

B for a complete list of the requirements we selected for our review. 

Cognitive interviews with beneficiaries. To assess whether sponsors’ 

materials are clear and understandable to Medicare beneficiaries, we 

interviewed 151 Medicare beneficiaries in 5 cities: Chicago, IL, Tucson, 

AZ, Seattle, WA, Providence, RI, and Jackson, MS. We selected these 

cities because they vary by population size and geographical region, 

because more than 10 percent of each city’s population is over age 65, 

and because beneficiaries in these cities’ State Pharmacy Assistance 

Programs were not automatically enrolled in the drug card program.22 

We excluded cities that CMS visited to conduct similar beneficiary 

interviews to test Medicare outreach materials. We conducted 

interviews at four or five community-based senior centers in each city. 

Prior to the interviews, we screened respondents to ensure that they 

were eligible for the drug card program and that they made their own 

health care decisions. Further, we only included beneficiaries who 

reported that they were comfortable reading and discussing materials. 

Each respondent was assigned a short 5- to 15-minute reading selection 

consisting of either an advertising material or a selection from a 

pre-enrollment packet. Thirty-eight respondents read an advertisement 

and 113 respondents read a selection from a pre-enrollment packet. 

Respondents then answered questions about the drug card program 

based on the material. Although we allowed respondents to take their 

time and refer back to materials throughout the interview, beneficiaries 

in a real-world setting may have assistance from others in 

understanding sponsors’ materials, which our respondents did not have 

during our interview. Overall, individual interviews lasted 

approximately 20 to 30 minutes. (As previously mentioned, OIG is 

assessing how beneficiaries made enrollment decisions in real-world 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 7 
Report Template Version = 09-08-04 

INTROD UCT ION 

settings in our concurrent inspection on beneficiary use of information 

resources.) 

In cases in which multiple drug card sponsors used the same 

pre-enrollment packet or advertisement, we included only one copy of 

the material for beneficiary interviews. Because several sponsors 

developed identical or “template” materials that were used for multiple 

drug cards, our original selection of 62 pre-enrollment packets and 

20 advertisements was reduced to 35 unique pre-enrollment packets 

and 12 unique advertisements as reviewed by beneficiaries. Since each 

beneficiary read 1 material and there were 47 selected materials 

(35 unique pre-enrollment packets and 12 unique advertisements), each 

material was read by 3 or 4 beneficiaries, for a total of 151 interviews. 

Interviews With Sponsors 

We conducted structured telephone interviews with 33 sponsor 

companies that offer a total of 62 general drug cards. We used these 

interviews to identify sponsors’ materials for our review and to 

determine how sponsors use pre-enrollment packets and advertising 

materials in their outreach to beneficiaries. (As indicated previously, 

we use the term “drug card sponsor” when referring to the entity 

contracted to offer an individual drug card; thus, there are 62 drug card 

sponsors included in this study. In some cases, one company actually 

has several contracts and offers multiple drug cards. Because of this, 

we use the term “sponsor companies” when referring to the 33 parent 

companies that administer the 62 drug cards included in this study.) 

Limitations 

The data in this report are restricted to the 62 pre-enrollment packets 

and 20 advertisements we assessed and to the sponsors and 

beneficiaries we interviewed. Although we do not project our results to 

all sponsors’ materials, our data represent the primary outreach 

materials used to target the largest number of beneficiaries for the vast 

majority of drug card sponsors. 

Standards 

This inspection was conducted in accordance with the “Quality 

Standards for Inspections” issued by the President’s Council on 

Integrity and Efficiency. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 8 
Report Template Version = 09-08-04 

Δ DRUG CARD MA TERIALS 

As mentioned previously, CMS requires sponsors’ materials to provide 

information deemed necessary to promoting beneficiaries’ informed 

choice. When considering the information needed to inform 

beneficiaries’ choice, it is helpful to use the following framework. To 

make an informed decision about enrolling in the Medicare-Approved 

Drug Discount Card program (as opposed to other drug coverage 

options), beneficiaries need to understand: 

o Whether the drug card program itself applies to them (their 

eligibility), and 

o The benefits and limitations of the drug card program. 

To make an informed decision about enrolling in a particular drug card, 

beneficiaries need to understand: 

o That there are multiple drug cards to choose from, and 

o How drug cards can vary, so they can compare cards and decide 

which card is best for them. 

CMS requires that sponsors’ pre-enrollment packets include information 

relevant to this decision framework, including eligibility requirements; 

disclaimers on key aspects of program benefits; and information about 

features that vary among drug cards, such as enrollment fees, drug 

prices, and pharmacy networks. 

Our assessment of whether sponsors’ materials promote informed choice 

for beneficiaries follows in three parts. First, to convey this required 

information, drug card sponsors distribute information to potential 

enrollees. Thus we first assessed materials used in outreach, including 

which materials are used, how they are distributed, how many 

beneficiaries potentially received them, and barriers to distributing 

materials through outreach. Second, sponsors’ materials must supply 

potential enrollees with required information. We assessed this by 

looking at compliance of materials. Third, sponsors’ materials must be 

clear and understandable to potential enrollees who will use the 

information in making decisions about enrollment. We addressed this 

topic by assessing whether beneficiaries understand key aspects of the 

drug card program, as it would apply to them, after reading sponsors’ 

materials. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 9 
Report Template Version = 09-08-04 

-

D RUG CAR D M A T E R I ALS 

Mate By the end of July 2004, 47 of the rials used in outreach 

62 drug card sponsors we 

interviewed had engaged in outreach to inform beneficiaries about their 

drug cards. These efforts were designed to reach out to beneficiaries 

rather than rely on them to seek out information on sponsors’ drug 

cards. The remaining drug card sponsors made information available to 

beneficiaries in more passive ways, such as through Web sites or call-in 

centers. Of the 15 sponsors not conducting outreach activities at the 

time of our interviews, 9 indicated that they had plans to begin doing so 

by September 2004. 

Nearly all drug card sponsors that engaged in outreach distributed 

pre-enrollment packets to beneficiaries, rather than relying solely on 

promotional advertising 

Of the 47 drug card sponsors that conducted outreach, 46 used 

pre-enrollment packets in these efforts. Pre-enrollment packets are 

required to contain information needed to promote beneficiaries’ ability 

to make informed decisions regarding enrolling in the program and 

selecting the appropriate drug card. In addition to distributing 

pre-enrollment packets, many sponsors also engaged in advertising 

campaigns to encourage beneficiaries to inquire about their drug cards. 

Drug card sponsors most commonly distributed pre-enrollment packets 

through the mail, but many also provided them to beneficiaries in person 

The majority of drug card sponsors distributed pre-enrollment packets 

via traditional direct mail campaigns, as noted in Table 1 below. 

TABLE 1: Number of Drug Card Sponsors That Distributed Pre Enrollment 

Packets to Beneficiaries, by Outreach Method 

Sponsors’ Outreach Method 

Number of Drug Card Sponsors 

That Used Method to Distribute 

Pre-Enrollment Packets 

Direct Mail/E-mail 

In-Person Outreach to Beneficiaries 

Providing Written Material for Distribution 

Other 

32 

21 

14 

4 

Total (Unduplicated) Drug Card Sponsors That Used PreEnrollment Packets in at Least One Outreach Method 46 

Source: Office of Inspector General analysis of drug card sponsor interviews, 2004. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 10 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

Sponsors used direct mail to deliver their pre-enrollment packets to as 

few as 2,250 beneficiaries and as many as 4 million beneficiaries. The 

median number of beneficiaries targeted by a sponsor’s direct mail 

campaign was 270,000.23 

However, the pre-enrollment packet material alone may not be 

sufficient to explain the program or promote informed choice. Some 

drug card sponsors noted the difficulty of explaining the program in a 

written format. One sponsor noted that the complexity of the program 

was difficult to capture in a “small brochure” and “necessitates face-toface contact where you can walk the beneficiary through the program.” 

In fact, many drug card sponsors did engage in in-person outreach to 

market their drug cards. Some drug card sponsors provided 

information to beneficiaries at town hall meetings and health fairs. 

Others made presentations about their drug cards at senior centers, 

pharmacies, and various other venues. In these settings, drug card 

sponsors not only distributed pre-enrollment packets, but also provided 

in-person education about their cards and were available to answer 

beneficiaries’ questions and resolve confusion that may be hindering 

beneficiaries’ decisions about enrolling. However, due to the timeconsuming and labor-intensive nature of this approach, fewer 

beneficiaries received their pre-enrollment packets in this manner than 

by mail. The number of beneficiaries at these events ranged from a few 

to 500, with a median of 33 beneficiaries. The median number of events 

attended or held by a drug card sponsor was 15. 

Another method drug card sponsors employed was providing third-party 

entities with pre-enrollment packets to distribute to beneficiaries on 

behalf of the sponsor. Typically these third-party entities were 

participating pharmacies, but they also included physicians’ offices, 

senior centers, and several other health care and government entities. 

This approach allows beneficiaries to receive information and ask 

questions about the drug cards from a trusted health-care professional. 

It also has the potential to reach a broader array of beneficiaries than 

the face-to-face presentations. The median number of beneficiaries 

targeted with this approach was 33,750. 

While beneficiaries are more likely to have confidence in information 

received from a trusted health care professional, there is the potential 

that some may enroll in the drug card offered by the trusted third-party 

and not receive the benefit of comparison shopping. As one sponsor 

indicated, “People are pretty tied to their pharmacist and will listen to 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 11 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

their advice.” Another sponsor indicated concern about the 

consequences of pharmacists’ promoting their card. They asked, if a 

pharmacy was promoting one card, “would the beneficiary get 

information from the pharmacist about what is the best card [for the 

beneficiary]?” 

Finally, four drug card sponsors sought to educate people who would be 

in a position to educate beneficiaries. This included conducting 

seminars with local businesses and sending pre-enrollment packets to 

church leaders and State staff. 

Thirty-five of the 47 drug card sponsors that conducted outreach used 

advertising materials 

Although most sponsors indicated that they relied on pre-enrollment 

packets as their main form of outreach, 35 of the 47 sponsors conducting 

outreach also used advertising materials. In these cases, an 

advertisement may be the only outreach material seen by beneficiaries 

who use the advertisement to decide whether to contact the sponsor or 

CMS for more information. 

As with pre-enrollment packets, drug card sponsors reported that they 

primarily distributed advertising materials via direct mail campaigns. 

They also relied on mass media, primarily using print advertisements. 

Substantially fewer sponsors advertised on radio or television, despite 

the fact that these offer the potential to reach far broader audiences. 

Drug card sponsors also used other, less conventional means to 

advertise their drug cards. Sixteen drug card sponsors distributed 

advertisements as part of their in-person outreach and 10 engaged third 

parties to display or distribute their advertisements. 

Sponsors cited a variety of obstacles to informing beneficiaries about their 

drug cards 

According to 29 of the 33 sponsor companies we interviewed, some CMS 

requirements or processes present barriers to outreach. We did not 

independently validate sponsor companies’ concerns but offer their 

feedback as we received it, as it provides an important perspective on 

the topic of promoting informed choice. Twenty-six of these sponsor 

companies indicated problems with the CMS Medicare Prescription 

Drug Discount Card and Transitional Assistance Program, Information 

& Outreach Materials Guidelines. Their primary frustration was that 

the guidelines were constantly changing, often leading to multiple 

iterations through the approval process. Twenty-two of the 29 sponsor 

companies also felt that the process for reviewing and approving the 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 12 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

materials presented problems. Twelve of these provided general 

comments about the process, describing it as “cumbersome,” “tedious,” 

and the “most frustrating challenge.” Twenty-one of the 22 sponsor 

companies provided specific issues of concern, including inconsistent 

review; length of the review process; unresponsiveness of CMS’s 

contractor; and communication between CMS and its contractor, 

resulting in confusion and inconsistent decisionmaking. 

These issues have the potential to negatively affect the information that 

beneficiaries receive about the program. Some impacts that sponsor 

companies mentioned included their ability to get information into the 

market in a timely way, their ability to alter their strategy in response 

to changes in the market, and their creativity in testing new ideas or 

options. One sponsor company found the review process so slow that 

the sponsor was deterred from developing new materials. Another 

refrained from correcting errors and improving a document because it 

“didn’t have time to wait on the review process.” 

On the other hand, the concerns mentioned by sponsor companies may 

be related to the challenges of implementing a new program in a very 

short timeframe. For example, as time went on, some sponsor 

companies saw improvements in the review process. One summed up 

this view, stating, “. . . the review/approval process was pretty rough at 

the beginning . . . it was a learning stage. It has improved now.” In 

addition, 13 sponsor companies, at the time of our interviews, indicated 

that they had no problems with CMS’s contractor or had positive 

comments about the process. 

CMS requires sponsors to include 

information necessary for 

promoting beneficiaries’ informed choice in their pre-enrollment 

packets. These requirements include information that beneficiaries can 

use to assess whether the program applies to them, whether the 

program will benefit them, and information for choosing among drug 

cards. 

Compliance of materials 

Of the 62 pre-enrollment packets we reviewed, we found 39 that were 

missing some information required by CMS 

These 39 noncompliant pre-enrollment packets were used in sponsors’ 

outreach to target approximately 8.6 million beneficiaries, primarily 

through direct mail. These 39 packets represent 20 unique 

pre-enrollment packets because some sponsor companies developed 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 13 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

identical or “template” pre-enrollment packets that were used by 

multiple drug cards.24 

Of the 39 noncompliant pre-enrollment packets, 32 did not meet 1 or 

2 requirements. The remaining 7 did not meet 3 or more requirements; 

2 of these pre-enrollment packets did not meet 14 requirements. 

The seven most commonly missed requirements relate to eligibility, 

program disclaimers, choice of cards, and comparative drug card 

information 

Of the 25 requirements we assessed, 7 requirements were missed most 

often by pre-enrollment packets. Each of these 7 requirements was 

missed by between 5 and 20 pre-enrollment packets. All other 

requirements were missed by zero to two pre-enrollment packets. See 

Appendix B for results for all requirements we assessed. 

The seven most commonly missed requirements relate to four 

categories: eligibility, program disclaimers, required information 

indicating that beneficiaries have a choice of cards, and information 

needed to compare the prices/discounts offered by drug cards. (See 

Table 2.) 

TABLE 2: Requirements Missed Most Often in Pre-Enrollment Packets 

Key Program 

Feature Requirements 

Pre-Enrollment 

Packets Not in 

Compliance (of 62) 

Eligibility Income definition for determining eligibility for 

Transitional Assistance 7 

Program 

Disclaimers 

Program description disclaimer: Not intended to 

replace other drug benefits 18 

Program description disclaimer: Not a Medicare 

benefit 17 

Drug prices/discounts disclaimer: Discounts subject 

to change [over time] 17 

Pharmacy network disclaimer: Beneficiaries must use 

network pharmacies for discount and $600 credit 9 

Choice of Cards Disclaimer: Beneficiaries may only be enrolled in one 

card at a time 20 

Comparative 

Program 

Information 

How to find information on drug prices/discounts, 

including Medicare price compare Web site 5 

Total (Unduplicated) Pre-Enrollment Packets Not in Compliance With at 

Least One of the Seven Requirements 39 

Source: Office of Inspector General analysis of selected sponsor materials, 2004. 

Eligibility. CMS requires that pre-enrollment packets include eligibility 

criteria that beneficiaries can use to determine whether they are eligible 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 14 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

for the drug card program and for the Transitional Assistance credit. 

We found that nearly all pre-enrollment packets included required 

eligibility criteria for both the drug card program and the credit. For 

example, all but two pre-enrollment packets stated that beneficiaries 

may be eligible for the $600 Transitional Assistance credit if “your 

income, plus your spouse’s income (if married) is no more than . . . 

Single: $12,569 or less, Married: $16,862 or less.”25 

However, we found that seven pre-enrollment packets did not include 

the following required definition of what counts as income: 

Income includes money that you receive through retirement 

benefits from Social Security, Railroad, the Federal or State 

governments, or other sources, and benefits you receive for a 

disability or as a Veteran, plus any other sources of the type 

that you would report for tax purposes.26 

CMS requires that sponsors’ enrollment instructions include a 

definition of income. In some cases, CMS contractor’s reviewers may 

have assumed that these sponsors included enrollment instructions in 

their pre-enrollment packets. However, four of the seven noncompliant 

pre-enrollment packets did not include a separate enrollment 

instructions document in their pre-enrollment packet. 

Program disclaimers. We found four disclaimers that were frequently not 

included in pre-enrollment packets. These include two disclaimers 

related to describing the program, one related to discounts, and one 

related to pharmacy networks. These disclaimers provide important 

information about the limitations of the program which may help 

beneficiaries compare this program to other drug coverage options. 

The following two disclaimers relate to describing the program: 

o [Program name] is not intended to replace prescription drug 

benefits obtained through participation in insurance plans 

including a Medicare Advantage plan, a Medigap policy, Medicaid, 

or an employer or retiree plan. 

o [Program name] is a prescription drug discount card program that 

is approved by Medicare but it is not a Medicare benefit.27 

We found that 18 pre-enrollment packets were missing the first 

disclaimer, and all but 1 of these were also missing the second 

disclaimer. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 15 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

The third frequently missed disclaimer is required for materials that 

include “any discussion of discounts.” These materials must include a 

disclaimer that discounts can change (i.e., over time). We found that 

17 pre-enrollment packets did not meet this requirement. This 

noncompliance is explained by a miscommunication about CMS policy 

changes. CMS’s contractor interpreted a new discount disclaimer to 

supersede this original disclaimer, although this interpretation was not 

intended by CMS.28 

The fourth frequently missed disclaimer relates to descriptions of 

pharmacy networks. CMS requires pre-enrollment packets to include 

the following disclaimer about pharmacy networks: 

Enrollees must use [Approved Card Program]’s network 

pharmacies in [service area] to obtain the prescription 

discount we offer and to apply Transitional Assistance to 

the prices of your drug. A network pharmacy is a 

pharmacy where our discounted drugs can be purchased 

and Transitional Assistance can be used.29 

Although all but one pre-enrollment packet we reviewed indicated that 

enrollees must use network pharmacies, we found that nine preenrollment packets did not include the full information required in the 

disclaimer—namely, that network pharmacies are also places that 

Transitional Assistance can be used. This noncompliance is also 

explained by a miscommunication of CMS policy changes. CMS’s 

contractor interpreted a CMS policy clarification related to describing 

pharmacy networks to supersede this original disclaimer, although this 

interpretation was not intended by CMS.30 

Choice of cards. The topic of choice of cards is slightly different from the 

other requirements we examined. Although the MMA notes the 

importance of promoting beneficiaries’ informed choice, drug card 

sponsors’ materials are not required to explicitly state that beneficiaries 

have a choice of drug cards. Despite this, we found 16 pre-enrollment 

packets that explicitly state that beneficiaries have a choice of cards. 

One pre-enrollment packet states, “There is a lot to know before you 

choose a discount card program . . . . We will help you find the program 

that is right for you.” Another pre-enrollment packet indicates, “. . . you 

can choose any Medicare-approved discount card you want. But you can 

choose only one.” 

However, CMS does require that pre-enrollment packets include 

information that implicitly indicates that beneficiaries have a choice of 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 16 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

cards (for example, how to disenroll in one card and enroll in a new one). 

We assessed whether pre-enrollment packets included the required 

statement: “you may be enrolled in only one Medicare-Approved [drug 

discount card] at one time.”31 Twenty pre-enrollment packets did not 

include this statement. 

For 13 of these pre-enrollment packets, CMS contractor’s reviewers did 

not apply the correct review protocol to the material, which accounts for 

the noncompliance. When submitting materials for review and 

approval, sponsors are not required to designate whether a material will 

be included in their pre-enrollment packet. Pre-enrollment packets can 

contain a variety of different materials, such as a Summary of Program 

Features, enrollment instructions, and forms. However, some sponsors 

included simple brochures in their pre-enrollment packets, as opposed 

to their Summary of Program Features. Because of this, reviewers 

assumed that materials submitted as “direct mail brochures” were not 

pre-enrollment packet materials but advertisements. Sponsors that 

included a brochure in their pre-enrollment packet in place of their 

standard explanatory materials may have been unclear on CMS’s 

requirements, or may have intended to take advantage of the fact that 

CMS does not require them to report how they intend to use submitted 

materials. 

Comparative information. Nearly all pre-enrollment packets included 

required information about some comparative features, including 

annual enrollment fees, and a description of how to get more 

information about pharmacies in a drug card’s network. In addition, all 

pre-enrollment packets included sponsor contact information, and most 

listed the CMS Web site. (See Table 5 in Appendix B for more detail.) 

However, we found five pre-enrollment packets that did not meet the 

requirement to describe how to get more complete information about 

drug prices and/or discounts, including both visiting the Medicare price 

compare Web site and contacting the drug card sponsor. Referring 

beneficiaries to Medicare’s Web site is especially relevant since 

beneficiaries can use the site to compare different drug cards’ prices on 

the specific drugs the beneficiary uses. 

Of the 20 advertising materials we reviewed, 15 were noncompliant with one 

or more of the requirements we assessed 

Of the 20 advertising materials we reviewed, 15 did not include 

information related to at least one of the 2 to 7 requirements we 

assessed. These 15 noncompliant advertisements were used to target 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 17 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

approximately 4.7 million beneficiaries through direct mail and an 

unknown number of beneficiaries through a print advertisement and a 

pharmacy flier. These 15 materials represent 7 unique advertising 

materials, since 1 “template” postcard was used by 9 cards. (See 

Appendix B for results for all requirements we assessed.) 

A communication error between CMS and its contractor accounts for all 

the noncompliance that we found. All 15 advertisements were missing a 

description of how to get more complete information about discounts, 

including visiting the Medicare Web site and contacting the sponsor. 

Thirteen of these fifteen were also missing the disclaimer that discounts 

are subject to change.32 Similar to pre-enrollment packets, CMS’s 

contractor considered both of these requirements for advertisements to 

be superseded by a new requirement.33 

CMS oversight processes did not prevent noncompliance found relatively 

early in the program 

CMS oversight processes, including Information and Outreach 

Materials Guidelines for sponsors’ materials, review and approval of 

materials, and CMS model documents, did not prevent the 

noncompliance we found. CMS provided sponsors with some model 

documents, including a model cover letter for pre-enrollment packets, a 

model member handbook, and model enrollment instructions and forms. 

We found evidence that many drug card sponsors were interested in 

following model documents. Fifty-nine of 62 pre-enrollment packets 

followed at least some model language offered by the CMS model 

handbook, model enrollment instructions, or model cover letter. 

However, CMS staff did not develop a model Summary of Program 

Features. CMS staff indicated that a model Summary of Program 

Features may have assisted sponsors in understanding the 

requirements for their pre-enrollment packets. 

All the materials we reviewed were approved by CMS relatively early in 

the program (between March and July 2004), which was a time 

characterized by very tight deadlines and by many changes and 

clarifications regarding requirements for sponsors’ materials. These 

constraints increased the potential for communication problems both 

with sponsors and with CMS’s contractor. 

We found three sources of error that explain all noncompliance found in 

39 pre-enrollment packets and 15 advertisements: reviewer error, 

sponsor error, and miscommunication about policy changes. Each 

source of error is described below. Many of the 39 noncompliant 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 18 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

pre-enrollment packets had more than one source of error, so the 

following description contains a duplicated count of pre-enrollment 

packets. (See the final table in Appendix B for an unduplicated 

accounting of sources of error.) 

Reviewer error. Twenty of the thirty-nine noncompliant pre-enrollment 

packets were noncompliant due, at least in part, to reviewer error. 

Eleven of these cases relate to two “template” pre-enrollment packets. 

Some reviewer error may be attributable to challenges CMS’s contractor 

faced in the early implementation of the program, including frequent 

changes to review policies, high volume of materials for review, and 

confusing communication from CMS. 

Sponsor error. Eighteen of the thirty-nine noncompliant pre-enrollment 

packets were noncompliant, at least in part, due to sponsor error (such 

as using an advertising brochure in the pre-enrollment packet as 

opposed to standard explanatory materials, or failing to include 

enrollment instructions in their pre-enrollment packet). Sponsors may 

have failed to include correct materials in their pre-enrollment packets 

due to unclear standards. For instance, CMS’s original Information and 

Outreach Materials Guidelines do not clearly explain that sponsors are 

responsible for including all required materials in any packet to be used 

directly for enrollment. CMS had not used formal methods of 

communicating to sponsors (for example, a bulletin) to clarify 

pre-enrollment packet requirements. Although CMS staff indicated 

that this issue might have been raised during weekly conference calls 

with sponsors, CMS did not record or distribute minutes for these calls. 

However, CMS has somewhat clarified this issue in its revised 

guidelines. 

We also found evidence that some sponsors did not follow CMS 

requirements prior to distributing materials. For instance, some 

sponsors apparently changed materials after approval and did not notify 

CMS. In most cases, these changes were minor. In addition, we noted 

that some sponsors did not revise materials to address stipulations on 

approval. After reviewing a sample of 105 materials, CMS’s contractor 

found that 61 materials failed to address stipulations. Finally, we found 

two instances in which it appears that sponsors used unapproved 

materials. CMS reserved the right to conduct a review of sponsors’ 

materials in the marketplace, but has not conducted this review. 

Miscommunication of policy changes. Twenty-three of the thirty-nine 

noncompliant pre-enrollment packets and all 15 advertisements were 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 19 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

noncompliant due to miscommunication about policy changes. CMS and 

its contractor developed an “issues matrix” to communicate policy 

changes and to identify and resolve questions about interpreting 

requirements for sponsors’ materials. When CMS resolved a policy 

question, the matrix would be updated with the decision and decision 

date. Reviewers used the issues matrix along with a standard review 

protocol while reviewing sponsors’ materials. Although this system 

appeared to work effectively to address many policy questions, it 

apparently failed in relation to disclaimers for discounts and pharmacy 

networks, as previously discussed. In one case, CMS issued a policy 

clarification through a brief e-mail, which was outside CMS’s typical 

communication structure. 

Beneficiary understanding of materials Prior to enrolling in a drug

card, beneficiaries need to 

receive key information that is relevant to making an informed choice. 

In addition, this information must be understandable. Materials that 

include required information do not fully inform beneficiaries’ decisions 

unless they can grasp key concepts, including eligibility, benefits and 

limitations of the card, choice of cards, and comparative information to 

select the card that best meets their needs. We assessed beneficiary 

understanding of five key program features related to these decision 

elements: eligibility, program limitations related to drugs covered, 

limitations related to drug prices, choice of cards, and comparative 

enrollment fee information. 

Each of five key features was understood by between 54 to 74 percent of 

beneficiary respondents reading pre-enrollment packets; however, only 

21 percent understood all five 

We asked 113 beneficiaries to review selected pre-enrollment packets to 

assess whether they could understand five key program features. In 

doing so, we found that each individual feature was understood by a 

majority of respondents. In fact, all but three respondents understood 

at least one key program feature. Table 3 outlines these results. (In all 

cases, denominators vary depending on the number of respondents 

answering each question. See Appendix C for more detail.) 

Respondents misunderstood key program features that were 

particularly complex (such as eligibility), not explicitly stated (such as 

choice of cards), and discussed only briefly (such as limitations on drugs 

covered). Nearly 80 percent of beneficiaries we interviewed did not 

understand all key features of the program. 

OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 20 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

TABLE 3: Proportion of Respondents Who Understood Key Program Features 

Based on Reading Sponsors’ Pre-Enrollment Packets 

Key Program Feature 

Proportion of 

Respondents Who 

Understood Key Feature 

Transitional 

AssistanceEligible 

Respondents 

Non-Transitional 

AssistanceEligible 

Respondents* 

Eligibility 58% 63% 55% 

Program Limitations: Drugs 

Covered Can Change 

59% 44% 64% 

Program Limitations: Drug 

Prices Can Change 

74% 67% 78% 

Choice of Cards 54% 45% 59% 

Comparative Information: 

Annual Enrollment Fee 58% 50% 62% 

All Key Program Features 21% 22% 21% 

* This category includes 13 respondents whose eligibility for Transitional Assistance could not be determined. 

Source: Office of Inspector General analysis of Medicare beneficiary interviews, 2004. 

A greater proportion of Transitional Assistance-eligible (TA-eligible) 

respondents understood eligibility than those not eligible for 

Transitional Assistance; however, this was not the case for other topics. 

Sixty-three percent of TA-eligible respondents understood eligibility, 

compared to 55 percent of non-TA-eligible respondents. (See Appendix 

C for further results related to beneficiary understanding by eligibility 

status for Transitional Assistance.) 

Eligibility: Fifty-eight percent of respondents correctly assessed their 

eligibility; most confusion concerned income requirements 

Based on the material reviewed, 58 percent of respondents were able to 

correctly determine their program eligibility.34 Some respondents 

correctly determined their eligibility despite indicating confusion about 

eligibility at some point in the interview. Respondents had to take into 

consideration their Medicare status, income, and other prescription 

drug coverage to determine their eligibility for both the drug card 

program and the Transitional Assistance credit.35 

A greater proportion of respondents correctly assessed their eligibility 

for the Transitional Assistance credit than correctly assessed their 

eligibility for the drug card program. Eighty-four percent of 

respondents correctly judged whether they were eligible for the 

Transitional Assistance credit. Of these, the vast majority provided at 

least one correct reason for their eligibility (for example, low income, 

lack of other drug coverage). However, only 66 percent of respondents 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 21 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

correctly judged that they were eligible for the drug card program.36 Of 

these, 15 respondents gave an incorrect reason for their eligibility. 

Respondents who did not understand their eligibility for the drug card 

program most frequently misunderstood the nature of the income 

requirement described in pre-enrollment packets. Some respondents 

erroneously believed the drug card program to have income 

requirements. In addition, many respondents did not understand that 

the drug card program and the Transitional Assistance credit were two 

separate programs with distinct eligibility requirements. For instance, 

some respondents characterized the material as describing a program 

solely for low-income individuals. Eligibility for the Part D prescription 

drug benefit will be similarly complex, with low-income beneficiaries 

eligible for enhanced drug coverage. 

In addition to income, respondents expressing confusion about eligibility 

mentioned specific confusion about the role of existing prescription drug 

coverage and current prescription drug expenditures. Twelve 

respondents indicated concern that existing drug coverage (other than 

Medicaid) disqualified them from the drug card program. Existing 

prescription drug coverage does exclude beneficiaries from receiving 

Transitional Assistance but not from enrolling in the drug card 

program. Nine respondents reported that the amount they spent on 

drugs either qualified them or made them ineligible for the drug card 

program. However, prescription drug expenditures are not a factor in 

assessing eligibility for either the drug card program or the Transitional 

Assistance credit. 

Program limitations: Between 59 and 74 percent of respondents understood 

key limitations of the drug card program 

More respondents understood that drug prices could change than that 

drugs covered could change. Seventy-four percent of respondents 

understood that drug prices could change. Most pre-enrollment packet 

selections read by respondents described discounts or drug prices, and 

many included a percent discount that beneficiaries could expect. 

However, only 59 percent of respondents understood that drugs covered 

could change, perhaps due to a lack of description of drugs covered in 

the pre-enrollment packet. Aside from the disclaimer that drugs 

covered could change, pre-enrollment packet selections tended to 

mention the topic of drugs covered only briefly. For example, the vast 

majority of selections read by respondents did not mention specific 

drugs covered by the drug card. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 22 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

Choice of cards: Fifty-four percent of respondents understood that they had 

a choice of Medicare-approved drug discount cards 

Overall, 54 percent of respondents interviewed correctly identified that 

more than one Medicare-approved drug discount card is available, based 

on the pre-enrollment packet they reviewed.37 Twenty-six percent of 

respondents incorrectly identified that the card described in the preenrollment packet they read was the only one available, and 20 percent 

did not know if there were other available cards. Although most 

selections read by beneficiaries implicitly indicated that beneficiaries 

have a choice of drug cards, CMS does not require sponsors to explicitly 

state that beneficiaries have a choice of drug cards. Respondents 

reading pre-enrollment packets understood this topic least often out of 

all topics we assessed. 

Some beneficiaries indicated that they knew from sources other than 

the material they reviewed that several Medicare-approved drug 

discount cards were available. Five of these respondents volunteered 

that, based on the selected material reviewed, they were led to believe 

there was only one available Medicare-approved drug discount card, but 

that they knew from outside sources that there were others.38 

Comparative information: Fifty-eight percent of respondents correctly 

determined the annual enrollment fee of the drug card 

For the drug card offered by the pre-enrollment packet they reviewed, 

58 percent of respondents correctly assessed both the amount and the 

frequency of the enrollment fee, if applicable.39 For the amount of the 

enrollment fee alone, 73 percent of respondents reported a correct 

response, and 75 percent of respondents reported a correct response for 

the frequency of the enrollment fee alone. 

Respondents reading advertisements understood key program features less 

often than those reading pre-enrollment packets 

Overall, respondents reading advertisements answered questions 

correctly less often than respondents reading pre-enrollment packets. 

Twenty-seven percent answered the vast majority of test questions 

correctly, compared with nearly half of respondents who reviewed 

pre-enrollment packets. In contrast, 57 percent of respondents reading 

advertisements answered half or fewer test questions correctly. About 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 23 
Report Template Version = 09-08-04 

D RUG CAR D M A T E R I ALS 

one-third of respondents who reviewed pre-enrollment packets 

answered half or fewer of their questions correctly.40 (See Table 4 

below.) 

TABLE 4: Proportion of Key Test Questions Answered Correctly 

Proportion of Test Questions 

Answered Correctly 

Respondents Reviewing 

Advertisements 

Respondents Reviewing 

Pre-Enrollment Packets 

50% or Less 

51%-79% 

80% or More 

57% 

16% 

27% 

32% 

22% 

46% 

Source: Office of Inspector General analysis of Medicare beneficiary interviews, 2004. 

Similar to beneficiaries who read pre-enrollment packets, a greater 

proportion of respondents who read advertisements correctly assessed 

their eligibility for the Transitional Assistance credit than correctly 

assessed their eligibility for the drug card program. Of the 

14 respondents who were asked to judge their eligibility for the 

$600 Transitional Assistance credit, 11 both understood their eligibility 

and provided the correct reason for their eligibility. Of the 20 

beneficiaries asked to judge their eligibility for the drug card program, 

11 understood that they were eligible, and 4 of these gave the correct 

criteria for their eligibility. 

Roughly half of respondents reading advertisements understood choice 

of cards and enrollment fee. Sixteen of the 34 respondents asked were 

able to correctly identify that there is more than one Medicare-approved 

drug discount card available. Of the 14 respondents asked the amount 

of the enrollment fee, 8 correctly reported the amount of the fee and 

6 responded that they did not know the amount. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 24 
Report Template Version = 09-08-04 

Δ IMPLICA T IONS: NEW DRUG BENEFIT

Under Medicare’s new Part D prescription drug benefit, beneficiaries 

will face choices very similar to those they have under the drug card 

program. They will need complete, accurate, and understandable 

information about the Part D drug benefit to assess whether the 

program is appropriate for them and, if so, which prescription drug plan 

best meets their needs. For instance, beneficiaries will need to 

understand whether they are eligible for the basic Part D drug benefit 

or the subsidies available to low-income individuals. They will need to 

understand the advantages and limitations of the drug benefit, as well 

as how to compare different plans available to them. While similar, 

many of the choices facing beneficiaries will be more complex under the 

Part D drug benefit, and will have greater implications for beneficiaries 

who delay enrollment. 

CMS will play a lead role in providing quality beneficiary education 

while reaching the number of beneficiaries who need to be informed 

about the new drug benefit. To do this, CMS will need to first establish 

effective oversight systems. Second, these oversight systems should 

ensure that prescription drug plan sponsors’ materials provide clear 

information about their plans. Finally, CMS outreach to beneficiaries 

must provide key comparative information about prescription drug 

plans to ensure that all beneficiaries are aware of their options under 

the Part D drug benefit. 

In light of our review of drug card materials, and to promote informed 

choice for beneficiaries, we believe that CMS should consider the 

following as it implements oversight of prescription drug plan sponsors’ 

materials and develops outreach for the full prescription drug benefit 

under Part D. 

CMS Management and Communication Systems 

CMS should anticipate implementation challenges to ensure that its 

management and communication systems are consistent, clear, and 

formalized. 

Anticipate implementation challenges. As we found with the drug card 

program, CMS will likely run into challenges in the early months of 

implementing the new drug benefit. CMS may find it must make 

unexpected clarifications to policies or processes and will face high 

volumes of materials for review as plan sponsors will be eager to begin 

marketing their programs. CMS may want to anticipate these 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 25 
Report Template Version = 09-08-04 

IMPLICA TION S : N E W D R UG B E NEF I T 

implementation challenges by ensuring that there are enough staff and 

resources to review the high volume of materials likely to be submitted 

in the few months before prescription drug plan marketing begins. 

CMS will need to ensure that all reviewers are well trained on reviewer 

protocols and should consider pretesting review protocols and the 

review process. 

Establish consistent, clear communication. CMS should ensure that it uses 

consistent and clear communication with prescription drug plan 

sponsors and with CMS’s contractor. Clear communication is especially 

important given the abbreviated timeframe CMS has to implement the 

full Part D drug benefit. CMS should ensure that plan sponsors and 

reviewers receive the same information related to materials and should 

coordinate instructions to both the CMS contractor and CMS regional 

staff who will review materials for Medicare Advantage prescription 

drug plans. 

Formalize communication. Further, CMS should formalize communication 

with prescription drug plan sponsors and reviewers when feasible. 

While frequent conference calls may be an efficient way to address 

questions and any unforeseen issues, policy changes, clarifications, and 

guidance discussed on these calls should be documented and distributed 

to plan sponsors and reviewers. CMS may want to continue to use an 

“issues matrix,” such as the one used in the drug card program, to track 

clarifications and instructions to reviewers. 

CMS Oversight of Prescription Drug Plans’ Materials 

CMS oversight of prescription drug plan sponsors’ pre-enrollment 

packets and advertising materials should ensure that beneficiaries have 

all the information necessary to make informed decisions about 

participating in the Part D drug benefit. CMS requirements and 

oversight mechanisms should aim to facilitate the development and 

distribution of informative pre-enrollment packets and responsible 

advertisements. In particular, CMS should consider incorporating the 

following items in its oversight of plan sponsors’ materials: 

Require development of pre-enrollment materials that contain specified 

information needed prior to enrollment. CMS should consider requiring that 

prescription drug plan sponsors develop pre-enrollment packets (or their 

equivalent) for the Part D drug benefit. Similar to the drug card 

program, CMS should specify the minimum information that these 

pre-enrollment materials should contain to ensure that beneficiaries can 

use them to make an informed decision about enrolling. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 26 
Report Template Version = 09-08-04 

IMPLICA TION S : N E W D R UG B E NEF I T 

CMS may want to keep these requirements as concise as possible. In 

our interviews, many drug card sponsors reported that pre-enrollment 

packet requirements and the review and approval process for their 

materials were burdensome. Prescription drug plan sponsors may also 

find the review process burdensome, and thus may be unlikely to 

dedicate the time and resources needed to develop these explanatory 

materials unless required. 

Requirements that result in extensive pre-enrollment packets may 

discourage prescription drug plan sponsors from using them in their 

outreach, due to printing and distribution costs. 

Identify pre-enrollment packet materials. If CMS decides to require 

pre-enrollment packets (or their equivalent), it will need to require 

prescription drug plan sponsors to identify materials they will include 

in their packets to facilitate correct review. Further, CMS should 

clearly state that plan sponsors are responsible for including these 

materials when they distribute enrollment forms. Prescription drug 

plan sponsors should have no confusion about the information 

beneficiaries should receive when preparing to enroll. 

Provide model materials. To streamline requirements for and facilitate 

compliance of materials, CMS should consider developing model 

materials for prescription drug plan sponsors to use. We found evidence 

that many drug card sponsors were interested in following model 

documents. Because model materials are likely to be adopted by plan 

sponsors, CMS should consider pretesting its model materials by 

conducting focus groups or cognitive interviews with beneficiaries. 

Require “choice of plans” statement. To ensure that beneficiaries realize 

they have a choice when considering the Part D drug benefit, CMS could 

require that prescription drug plan sponsors’ materials clearly state 

this. Specifically, CMS could require that all materials, including 

advertisements, include a CMS-sponsored label clearly stating that 

beneficiaries have a choice of Medicare prescription drug plans, 

describing the main ways in which plans vary, encouraging 

beneficiaries to find the best plan to meet their needs, and providing 

Medicare contact information to compare plans. 

Spot check materials. CMS should consider conducting spot checks of 

prescription drug plan sponsors’ materials in the marketplace to 

determine whether plans are using unapproved outreach materials. If 

CMS finds that plan sponsors are using such materials, it should take 

enforcement measures to address noncompliant plan sponsors and 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 27 
Report Template Version = 09-08-04 

IMPLICA TION S : N E W D R UG B E NEF I T 

consider focusing more efforts on reviewing final submitted versions of 

materials that were approved with stipulations. 

CMS Outreach to Beneficiaries 

CMS should enhance its outreach efforts to ensure that beneficiaries 

have all information necessary to make informed decisions about 

participating in the Part D drug benefit. Exposure to information about 

a particular prescription drug plan alone may not provide beneficiaries 

with a full understanding of the array of choices available. This could 

result in beneficiaries’ signing up for the plan that was marketed to 

them rather than the plan that best suits their health care needs. For 

example, they may simply sign up for the plan that their pharmacist 

has endorsed. Thus, CMS outreach will be a critical component in 

promoting informed choice by providing comparative information on 

prescription drug plans. CMS should consider the following steps in its 

efforts to inform beneficiaries about the Part D drug benefit, to ensure 

that beneficiaries can make an informed decision about their 

enrollment. 

Distribute regionally tailored letters at the beginning of the new drug benefit. 

To facilitate beneficiaries’ informed choice at the beginning of the Part 

D drug benefit, CMS could distribute to beneficiaries regionally tailored 

letters that include a list of all prescription drug plans available in their 

area. This letter could provide comparative information about these 

plans, such as premiums and basic plan benefits. The letter could also 

inform beneficiaries about the benefits and limitations of the program 

and how to compare plans. For instance, the letter could indicate that 

premiums vary, that plans’ formularies may vary, and that plans use 

different networks of pharmacies. 

Provide a short guide to choosing a prescription drug plan. In addition, CMS 

could produce a short guide to choosing a prescription drug plan and 

could require it to be included with all pre-enrollment packets. This 

guide could reduce the burden on plan sponsors for sharing specific 

information necessary to informing beneficiary choice. Alternatively, 

CMS could require each pre-enrollment packet to include a section on 

information “Medicare wants you to know.” CMS is a trusted source 

and could give plan sponsors’ materials added credibility, as well as 

point out the basic factors a beneficiary should consider when choosing 

a plan. 

Facilitate in-person education. Finally, CMS should continue to focus 

efforts on in-person education and should consider facilitating and 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 28 
Report Template Version = 09-08-04 

IMPLICA TION S : N E W D R UG B E NEF I T 

promoting prescription drug plan sponsors’ efforts to inform 

beneficiaries in person about the Part D drug benefit. Explaining the 

new drug benefit in person provides the greatest opportunity to help 

individual beneficiaries understand whether the Part D benefit is right 

for them. Some drug card sponsors found in-person outreach to be more 

effective than relying on written materials alone. Further, only 

21 percent of beneficiary respondents were able to understand all key 

program features after reading sponsors’ pre-enrollment packets. 

In-person education allows beneficiaries to ask questions and resolve 

confusion that may be hindering their decision about enrolling. 

As part of CMS’s education and outreach efforts, CMS should continue 

to emphasize local, in-person outreach. CMS currently partners with a 

variety of community-based organizations to provide local outreach to 

beneficiary populations that are sometimes difficult to reach. Congress 

has allotted funds for CMS to enhance its in-person education efforts for 

the Part D drug benefit (through the State Health Insurance Assistance 

Program). In addition to these efforts, CMS should continue to promote 

its toll-free hotline through which CMS representatives can provide 

quality information and answer beneficiaries’ questions. 

In addition to its own efforts, CMS should consider how to promote 

prescription drug plan sponsors’ use of in-person outreach to 

beneficiaries, including providing a forum in which plan sponsors can 

interact with beneficiaries. For instance, CMS could leverage its 

partnerships with community-based organizations, departmental 

grantees, and senior groups to provide such forums and invite 

prescription drug plan sponsors to provide in-person education to 

beneficiaries. CMS could also partner with State and local legislators to 

offer town hall-style meetings and invite regional plan sponsors to 

participate. 

AGENCY COMMENTS 

CMS stated that it views the drug card as an important opportunity for 

using “lessons learned” when implementing the new drug benefit and 

agreed with most of the implications for the drug benefit that we 

suggested. In fact, CMS noted that ongoing communications with OIG 

throughout the course of this project have already allowed it to 

incorporate some of our suggestions in the development and 

implementation of the marketing rules, guidelines, and oversight for 

sponsors’ materials and outreach to beneficiaries. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 29 
Report Template Version = 09-08-04 

IMPLICA TION S : N E W D R UG B E NEF I T 

CMS noted that it has had substantially more time to plan for the drug 

benefit, as compared to the drug card program, and thus has been able 

to address our suggestions to develop stronger management and 

communication systems, oversight of marketing materials, and outreach 

efforts. To ensure consistent, clear, and formalized communications, 

CMS indicated that it has set up multiple channels for communication 

with Part D sponsors and industry representatives. These include 

weekly Part D user group calls, a searchable MMA Question & Answers 

database, and a “PDP help line” to provide drug benefit sponsors with 

answers to marketing questions. Finally, a marketing guideline 

training program has been established. 

CMS stated that it has worked with an outside marketing contractor 

and received extensive public comment to help it develop marketing 

guidelines, model materials, and a streamlined marketing review to 

ensure the appropriate oversight of sponsors’ materials. Additionally, 

CMS stated that it has developed an oversight strategy to ensure that 

sponsors are complying with requirements for the content and 

distribution of makerting materials. Some components of this strategy 

include focused audits, routine audits, a complaints tracking system, 

and spot checks on a wide range of marketing materials. 

CMS detailed a comprehensive outreach effort with national, regional, 

and community-based outreach efforts related to our suggestions. The 

agency described a targeted education effort that incorporates a 

national multimedia campaign, simple fact sheets, audience-specific 

outreach materials, direct mail, and community-based grassroots 

outreach with numerous partners. CMS also highlighted the 

personalized information available through the Drug Plan Compare 

Web tool and 1-800-MEDICARE, as well as the one-on-one personalized 

advice and counseling available from the State Health Insurance 

Assistance Programs. The complete text of CMS’s comments is included 

in Appendix D. 

OFFICE OF INSPECTOR GENERAL RESPONSE 

OIG appreciates CMS’s response to this report and the detailed 

descriptions of its ongoing and planned efforts regarding the oversight 

of sponsors’ marketing marterials for the new drug benefit. These 

descriptions highlight substantial efforts by CMS toward ensuring the 

appropriate management, guidance, and oversight of sponsors’ 

marketing materials. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 30 
Report Template Version = 09-08-04 

IMPLICA TION S : N E W D R UG B E NEF I T 

We are pleased that CMS found this information to be constructive and 

is taking actions consistent with our findings and all of our suggestions, 

with the exception of two. While CMS is not requiring the use of 

specific pre-enrollment packets as we suggested, it is specifying 

pre-enrollment materials sponsors should use in the marketing 

guidelines. This guidance should help ensure that beneficaries receive 

the information they need prior to enrollment. CMS also disagreed with 

our suggestion to include a statement informing beneficiaries that they 

have a choice of plans in sponsors’ marketing materials. It indicated 

that this would not be consistent with industry standards, and that it is 

using other marketing techniques to inform beneficiaries of their 

choices. Based on our interviews with beneficiaries, we found that they 

may not fully understand the range of choices that they have. We 

encourage CMS to strongly emphasize this in its education and outreach 

campaigns. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 31 
Report Template Version = 09-08-04 

Δ ENDNOTE 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, “Comparison of CBO’s March 2005 

Medicare Prescription Drug Baseline and the CBO Estimate for the 

MMA,” March 4, 2005; and Centers for Medicare & Medicaid Services, 

“Releasing the HHS Proposed Budget for FY 2006,” February 7, 2005. 

5 Centers for Medicare & Medicaid Services, “Fact Sheet: Medicare 

Modernization Benefits in the First Year,” December 8, 2004. 

6 Centers for Medicare & Medicaid Services, “Approved General Drug 

Cards.” This list includes all approved general drug cards, including 

those with special endorsements such as long-term care pharmacies 

and U.S. Territories; May 17, 2004. 

7 Exceptions are made for beneficiaries under certain circumstances, 

such as moving outside the area served by their current drug card. 

8 These program limitations are described in the following documents: 

Medicare Prescription Drug, Improvement, and Modernization Act of 

2003, P.L. 108-173, § 101, subpart 4, codified in § 1860D-31(c)(1-2) and 

§ 1860D-31(d)(1-2) of the Social Security Act; and Centers for Medicare 

& Medicaid Services, “Medicare Prescription Drug Discount Card and 

Transitional Assistance Program, Information & Outreach Materials 

Guidelines,” pp. 51-62, revised August 2004. 

9 Low-income beneficiaries who receive Medicaid, TRICARE (military 

health insurance), the Federal Employees Health Benefit Program, or 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 32 
Report Template Version = 09-08-04 

an employer’s health plan are not eligible to enroll in the Transitional 

Assistance program. 

10 Centers for Medicare & Medicaid Services, “Fact Sheet: Medicare 

Modernization Benefits in the First Year,” December 8, 2004. 

11 Medicare Prescription Drug, Improvement, and Modernization Act of 

2003, P.L. 108-173, § 101, subpart 4, codified in § 1860D-31(d)(1) and 

§ 1860D-31(d)(2)(A) of the Social Security Act. 

12 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. 

13 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 revised these 

guidelines in August 2004. Revised guidelines are available on the 

CMS Web site: www.cms.hhs.gov/discountdrugs. 

14 42 CFR § 403.806(g)(1) and Centers for Medicare & Medicaid Services, 

“Medicare Prescription Drug Discount Card and Transitional 

Assistance Program, Information & Outreach Materials Guidelines,” 

pp. 24-25 and 39-51, January 22, 2004. 

15 Centers for Medicare & Medicaid Services, “Medicare Prescription 

Drug Discount Card and Transitional Assistance Program, 

Information & Outreach Materials Guidelines,” pp. 24-30, January 22, 

2004. 

16 Centers for Medicare & Medicaid Services, “Medicare Prescription 

Drug Discount Card and Transitional Assistance Program, 

Information & Outreach Materials Guidelines,” pp. 24-30, January 22, 

2004. Also, 42 CFR § 403.806(g)(1). 

17 Medicare Prescription Drug, Improvement, and Modernization Act of 

2003, P.L. 108-173, § 101, subpart 4, codified in § 1860D-31(i)(2) of the 

Social Security Act. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 33 
Report Template Version = 09-08-04 

18 Centers for Medicare & Medicaid Services, “Medicare Prescription 

Drug Discount Card and Transitional Assistance Program, 

Information & Outreach Materials Guidelines,” January 22, 2004, 

revised in August 2004. Revised guidelines are available on the CMS 

Web site: www.cms.hhs.gov/discountdrugs. Also, Centers for 

Medicare & Medicaid Services, “Drug Discount Card Preferred 

Terminology for Beneficiaries,” February 13, 2004. 

19 42 CFR § 403.806(g)(5)(ii) and 68 FR 69869, December 15, 2003. 

20 We excluded requirements related to other program features, such as 

grievance procedures, enrollment/disenrollment rules, and mail order 

pharmacies. 

21 CMS updated its Medicare Prescription Drug Discount Card and 

Transitional Assistance Program, Information & Outreach Materials 

Guidelines in August 2004. Although we assessed compliance with the 

original Information and Outreach Materials Guidelines, the 

requirements we assessed continue to be applicable to sponsors’ 

materials in the updated guidelines. 

22 Some State Pharmacy Assistance Programs automatically enrolled 

their low-income members in an exclusive drug card. These 

beneficiaries did not make a decision about enrolling in the program. 

23 It is important to note that all estimates of the number of beneficiaries 

targeted by particular outreach methods are based only on the 

estimations of drug card sponsors willing and able to supply the 

information. Therefore, these figures are only meant to provide a 

general sense of the potential of each outreach method and may not 

represent the actual number of beneficiaries who received information 

about the drug card program. 

24 The 39 noncompliant pre-enrollment packets are accounted for by 

20 different pre-enrollment packets: 3 “template” pre-enrollment 

packets that cover a total of 22 drug cards and 17 pre-enrollment 

packets for individual cards. Of the 23 pre-enrollment packets not 

found to be noncompliant, 19 were for individual cards and 

1 “template” pre-enrollment packet covered the remaining 4 drug 

cards. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 34 
Report Template Version = 09-08-04 

25 Centers for Medicare & Medicaid Services, “Model Enrollment Form 

Instructions,” March 9, 2004. Income requirements are accurate for 

2004. 

26 Centers for Medicare & Medicaid Services, “Model Enrollment Form 

Instructions,” March 9, 2004. 

27 Centers for Medicare & Medicaid Services, “Medicare Prescription 

Drug Discount Card and Transitional Assistance Program, 

Information & Outreach Materials Guidelines,” p. 40, January 22, 

2004. 

28 In March 2004, CMS added a requirement that when sponsors’ 

materials specify a percent discount, they must also include the 

disclaimer: “Discounts vary by drug. Contact [drug card sponsor] to 

find out . . . the discounted price.” CMS’s contractor interpreted this 

policy change to supersede all previous disclaimers for discounts, as 

opposed to adding this new disclaimer to the existing requirements. 

This miscommunication about policy changes seems to have occurred 

despite the formal structure CMS and its contractor had established to 

handle policy clarification issues. 

29 Centers for Medicare & Medicaid Services, “Medicare Prescription 

Drug Discount Card and Transitional Assistance Program, 

Information & Outreach Materials Guidelines,” p. 43, January 22, 

2004. 

30 In late April 2004, CMS attempted to clarify some of the requirements 

for sponsors’ pre-enrollment packets by listing the key information 

that must be included in a sponsor’s Summary of Program Features. 

In this listing, CMS indicated that Summaries of Program Features 

must describe types of pharmacies in a drug card’s network 

(e.g., retail, mail order, etc.). However, this listing omitted several 

required disclaimers, including the disclaimer about pharmacy 

networks. CMS’s contractor informed us that it interpreted this 

omission as superseding the original pharmacy network disclaimers. 

CMS’s policy clarification occurred outside the formal structure 

established to communicate policy changes between CMS and its 

contractor. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 35 
Report Template Version = 09-08-04 

31 Centers for Medicare & Medicaid Services, “Medicare Prescription 

Drug Discount Card and Transitional Assistance Program, 

Information & Outreach Materials Guidelines,” p. 47, January 22, 

2004. 

32 Fourteen of our twenty selected advertisements specified a percentage 

discount. All 14 included the required disclaimer: “Discounts vary by 

drug. Contact [drug card sponsor] to find out . . . the discounted price.” 

However, this disclaimer does not indicate that discounts are subject 

to change over time, nor that discounted prices may be found on CMS’s 

Web site. 

33 See endnote 28 above. 

34 All 151 respondents interviewed were eligible for the drug card 

program, and 53 respondents were eligible for the $600 Transitional 

Assistance credit according to demographic information they provided. 

We found that 82 respondents were not eligible for Transitional 

Assistance and 16 respondents did not provide enough demographic 

information to determine their eligibility. These 16 respondents are 

included (with the 82 respondents) in our analysis as not eligible for 

Transitional Assistance because the majority of Medicare beneficiaries 

are not eligible for Transitional Assistance. Of the 113 respondents 

reading pre-enrollment packets, 37 were eligible for Transitional 

Assistance, 63 were not eligible, and 13 did not provide enough 

demographic information to determine their eligibility. 

35 However, this does not account for the reason respondents gave for 

their eligibility. In some cases, respondents correctly assessed their 

eligibility but gave an incorrect reason or indicated that they did not 

know why they were or were not eligible. 

36 To be included in our interviews, respondents had to be eligible for the 

drug card program. That is, respondents were Medicare beneficiaries 

without Medicaid prescription drug coverage. 

37 Unlike our other key program topics, we did not remove this question 

from interviews if the material did not explicitly address choice of 

cards. This question was meant to assess the impression made on 

respondents by reading sponsors’ materials. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 36 
Report Template Version = 09-08-04 

38 These five responses were included in our analysis as answering 

“based on the material, there is only one drug card available.” We 

excluded from our quantitative analysis any response clearly based on 

outside knowledge and not on the material. In addition to the five 

responses above, seven beneficiaries indicated that they knew from 

outside knowledge that more than one drug card was available under 

the Medicare-approved drug discount card program. Eight other 

beneficiaries responded that they knew from outside knowledge that 

more than one drug card was available; however, these respondents 

referenced other, non-Medicare-approved drug cards. All 15 responses 

were removed from our quantitative analysis. 

39 Fourteen interviews were about cards that had no enrollment fee. 

These respondents were not asked to identify the frequency of the fee. 

In addition, respondents were not asked to identify the frequency of 

the fee if they incorrectly reported that there was no enrollment fee, or 

reported that they did not know the amount of the fee based on 

reading the material. 

40 Unlike pre-enrollment packets, advertising materials are not expected 

to provide in-depth information about the drug card program and thus 

are not required to include information about all key program 

features. Because we only asked respondents about topics covered in 

the material they read, the number of beneficiaries responding to each 

question varied from 3 to 34. We calculated the proportion of correct 

answers for each respondent by dividing the number of correct 

answers by the number of test questions included in the interview. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 37 
Report Template Version = 09-08-04 

ΔAPP E N D I X ~A  APPENDIX ~ A 

Detailed Methodology 

Scope 

This inspection focuses on sponsors’ materials that are likely to inform 

beneficiaries’ decisions about enrolling in the drug card program. Preenrollment packets are required to include information CMS has 

designated as necessary to promote informed choice prior to enrollment. 

Advertising materials are intended to generate interest and encourage 

beneficiaries to obtain the additional information they need to enroll. 

We did not review enrollment forms or postenrollment materials 

because these do not affect informed choice. Also, our review excludes 

any materials written in languages other than English as well as any 

materials specifically designed for persons with disabilities (such as 

materials in Braille). CMS guidelines encourage, but do not require, 

sponsors to develop these targeted materials. 

Materials from exclusive drug card sponsors were excluded from our 

review because these sponsors’ drug cards are offered exclusively to 

beneficiaries enrolled in the sponsor’s Medicare Advantage program. 

These beneficiaries choose only whether to enroll in the drug card 

offered by their Medicare Advantage program and do not have a choice 

among drug cards. 

Assessing Whether Sponsors’ Materials Promote Informed Choice 

To assess the extent to which sponsors’ materials promote informed 

choice, we reviewed a selection of materials and conducted interviews 

with sponsors that administer 62 drug cards. 

Selection of sponsors’ materials. We selected 62 pre-enrollment packets 

and 20 advertising materials as they were approved by CMS for our 

review. Because we obtained materials from CMS rather than directly 

from the sponsors, it is possible that the selected materials could be 

different from the ones sent to beneficiaries. For example, it is possible 

that a sponsor could send to beneficiaries materials that have not been 

reviewed and approved by CMS, or that a sponsor could fail to submit 

revised material to CMS prior to sending it to beneficiaries. 

The 20 advertising materials included 14 direct-mail materials 

(postcards, letters, brochures), 1 print ad, and 5 other tangible 

advertisements (brochures, pharmacy fliers) distributed either in person 

or through a third party. Although 28 drug card sponsors used some 

tangible advertising in their outreach, 6 used materials not approved by 

CMS’s contractor. Four of these were letters approved by CMS regional 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 38 
Report Template Version = 09-08-04 

APP E N D I X ~A 

offices to be sent to Medicare Advantage members; the other two should 

have been submitted for CMS’s review but were not. Finally, in two 

cases we made a sampling error by selecting an alternate version of the 

sponsor’s pre-enrollment packet instead of an advertisement. 

Structured Review of Sponsors’ Materials. We conducted a structured 

review of selected sponsors’ materials to identify whether approved 

materials include required information. We also collected some 

descriptive information about each material. Our review included 

requirements related to eight key program features: program 

description, eligibility, choice of cards, discounts/drug prices, enrollment 

fee, pharmacy network, contact information, and enrollment 

instructions/forms. 

We discussed the noncompliance we found in our structured review with 

CMS and CMS’s contractor. At our request, CMS’s contractor reviewed 

sponsor materials we found to be noncompliant. For most of the 

noncompliance we found, CMS’s contractor agreed that materials were 

noncompliant and provided an assessment of the source of error that led 

to noncompliance. In a few cases, CMS’s contractor indicated that our 

interpretation of certain CMS requirements did not match the protocol 

used in its approval process, and that some materials in question should 

be considered compliant. We discussed these cases with CMS staff, who 

clarified these requirements. As part of this discussion, CMS staff 

indicated that a miscommunication about policy changes between CMS 

and its contractor was a source of error. Our report includes the results 

of these discussions. 

Cognitive Interviews With Beneficiaries. We conducted interviews at a total 

of 24 community-based senior centers in five cities (we visited 4 senior 

centers in 1 city and 5 senior centers in each of the other cities). Within 

each city we sought to maximize the number of centers located in lowincome areas to increase the number of Transitional Assistance-eligible 

respondents. Respondents volunteered to be interviewed and were not 

compensated for their time. 

To allow beneficiaries to review pre-enrollment packets and answer 

questions in a relatively short interview, we found it was necessary to 

provide them with a selection from the pre-enrollment packet as 

opposed to a complete packet. We used a standard protocol to prepare 

pre-enrollment packet selections. Our selections included information 

relevant to the key program topics in the interview and excluded 

information not relevant to the interview or repetitive information. In 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 39 
Report Template Version = 09-08-04 

APP E N D I X ~ A 

cases in which key information was repeated in the pre-enrollment 

packet we included the more comprehensive section. Advertising 

materials were brief enough to be read in 5 to 15 minutes and were used 

in our cognitive interviews in their entirety. 

We excluded questions from each interview when the selected material 

did not contain answers to those questions. In addition, all interview 

questions were phrased to elicit responses based on the material. We 

attempted to ascertain if a respondent’s response was based on the 

selected material or on outside information. If it was clear that the 

respondent was answering a question based on knowledge other than 

from reading the material, we excluded that response from our analysis 

of that question. 

Key Demographic Information on Our Beneficiary Respondents 

Overall, 53 of the 135 respondents who provided information on income, 

marital status, and other prescription drug coverage were eligible for 

the $600 Transitional Assistance credit. The 2004 income limit for 

Transitional Assistance is $12,570 for single individuals and $16,862 for 

married beneficiaries. Medicare beneficiaries who also have Medicaid, 

TRICARE for Life, Federal Employees Health Benefit Program, or other 

employer-sponsored coverage are not eligible for Transitional 

Assistance. We found that 82 respondents were not eligible for 

Transitional Assistance and 16 respondents did not provide enough 

demographic information to determine their eligibility. These 

16 respondents are included (with the 82 respondents) in our analysis 

as not eligible for Transitional Assistance because most Medicare 

beneficiaries are not eligible for Transitional Assistance. 

Following are demographics for the beneficiaries we interviewed: 

o 74 percent were single and 76 percent were female. 

o 71 percent were Caucasian, 21 percent were African American, 

2 percent were Hispanic, 1 percent were Asian, and 5 percent 

were other races. 

o 79 percent of our respondents were 65 to 84 years old, 14 percent 

were 85 and over, and 7 percent were under 65. 

o 70 percent had less than a college degree (5 percent had some 

grammar school, 14 percent had some high school, 27 percent 

were high school graduates, and 24 percent had some college), 

15 percent were college graduates, and 15 percent had attended 

graduate school. 

OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 40 
Report Template Version = 09-08-04 

Δ APPENDIX ~ B 

Noncompliance for All Requirements Assessed and Sources of Error 

TABLE 5: Requirements Assessed for Pre-Enrollment Packets and Noncompliance Found 

Key Program 

Feature Requirements—Pre-Enrollment Packets Must Include the Following Information:* 

Pre-Enrollment 

Packets Not in 

Compliance (of 62) 

Eligibility for 

Transitional 

Assistance 

Annual income limits for both single and married beneficiaries 2 

Beneficiary cannot have other prescription drug coverage 2 

Definition of income: “Income includes money that you receive through retirement 

benefits from Social Security, Railroad, the Federal or State governments, or other 

sources, and benefits you receive for a disability or as a Veteran, plus any other 

sources of the type that you would report for tax purposes.” 

7 

Eligibility for the 

Drug Card Program 

Who is eligible for drug card program 0 

Must be a Medicare beneficiary to be eligible for drug card program 0 

Must not be receiving drug benefits through Medicaid to be eligible for drug card 

program 

2 

“[Approved Card Sponsor Name] is available to all Medicare beneficiaries in [service 

area] except for those who have prescription drug coverage under their State's 

Medicaid.” 

2 

Pre-Enrollment 

Information 

Program description material (could be Summary of Program Features, Member 

Handbook, or other type) 0 

Enrollment instructions 2 

Enrollment form for the drug card program 1 

Enrollment form for Transitional Assistance 1 

Benefits of the 

Program 

IF AN ENROLLMENT FEE IS CHARGED: Must indicate that Medicare will pay the fee 

if a beneficiary is eligible for Transitional Assistance 0 

Program Disclaimers 

“[Program name] is not intended to replace prescription drug benefits obtained through 

participation in insurance plans including a Medicare Advantage plan, a Medigap policy, 

Medicaid, or an employer or retiree plan.” 

18 

“[Program name] is a prescription drug discount card program that is approved by 

Medicare but it is not a Medicare benefit.” 17 

WHEN PRE-ENROLLMENT PACKET DISCUSSES DISCOUNTS: Discounts and/or 

drug prices are subject to change [over time] 17 

Requirement that enrollees must use network pharmacies 1 

“Enrollees must use [Approved Card Program]’s network pharmacies in [service area] 

to obtain the prescription discount we offer and to apply Transitional Assistance to the 

prices of your drug. A network pharmacy is a pharmacy where our discounted drugs 

can be purchased and Transitional Assistance can be used.” 

9 

IF AN ENROLLMENT FEE IS CHARGED: Must mention that an enrollment fee is 

charged 2 

WHEN PRE-ENROLLMENT PACKET INDICATES THAT NO ENROLLMENT FEE IS 

CHARGED: Must indicate that there is a cost for drugs 

1 

* Drug card sponsors are allowed to paraphrase information in quotes. 

Source: Office of Inspector General analysis of selected sponsor materials, 2004.

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 41 
Report Template Version = 09-08-04 

APP E N D I X ~B 

TABLE 5 (cont.): Requirements Assessed for Pre-Enrollment Packets and Noncompliance Found 

Pre-Enrollment 

Packets Not in 

Key Program Compliance 

Feature Requirements—Pre-Enrollment Packets Must Include the Following Information:* (of 62) 

“You may be enrolled in only one [Medicare-Approved Rx Discount Approved Card 

Choice of Cards Program] at one time” OR “Medicare beneficiaries may be enrolled in only one [Approved 20 

Card Program] at a time.” 

IF AN ENROLLMENT FEE IS CHARGED: Must include the (correct) amount 1 

WHEN PRE-ENROLLMENT PACKET DISCUSSES DISCOUNTS: How to get more 

complete information about drug prices and/or discounts including both visiting Medicare 5 

Comparative Price Compare Web site and contacting sponsor 

Information About 

Drug Card Drug card sponsor toll-free number 0 

Medicare toll-free number 0 

Medicare Web site 2 

Total (Unduplicated) Pre-Enrollment Packets Not in Compliance With at Least One of the 25 Requirements 39 

* Drug card sponsors are allowed to paraphrase information in quotes. 

Source: Office of Inspector General analysis of selected sponsor materials, 2004.

TABLE 6: Requirements Assessed for Advertising Materials and Noncompliance Found 

Key Advertisements 

Program Not in Compliance 

Feature Requirements—Advertisements Must Include the Following Information:* (of 20) 

WHEN AD INDICATES THAT NO ENROLLMENT FEE IS CHARGED: Must indicate that 0 there is a cost for drugs 

WHEN AD DISCUSSES DISCOUNTS: Must indicate that discounts and/or drug prices are Program 13 subject to change [over time] Disclaimers WHEN AD SPECIFIES A PERCENT DISCOUNT: Must state that “Discounts vary by drug. 

Contact [Program Name] to find out [if your prescription drug is covered and] the discounted 0 

price.” 

WHEN AD INCLUDES ENROLLMENT INFORMATION: Must include “You may be enrolled Choice of in only one [Medicare-Approved Rx Discount Approved Card Program] at one time” OR 0 Cards “Medicare beneficiaries may be enrolled in only one [Approved Card Program] at a time.” 

WHEN AD INDICATES THAT AN ENROLLMENT FEE IS CHARGED: Must include the 0 (correct) amount Comparative WHEN AD DISCUSSES DISCOUNTS: Must describe how to get more complete Information 

information about drug prices and/or discounts including both visiting Medicare price 15 About Drug compare Web site and contacting sponsor Card 

Drug card sponsor toll-free number 0 

Total (Unduplicated) Advertisements Not in Compliance With at Least One of the Seven Requirements 

* Drug card sponsors are allowed to paraphrase information in quotes. 

Source: Office of Inspector General analysis of selected sponsor materials, 2004.

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 42 

15 
Report Template Version = 09-08-04 

APP E N D I X ~B 

TABLE 7: Sources of Noncompliance for Sponsors’ Pre-Enrollment 

Packets and Advertising Materials 

Source(s) of Error Pre-Enrollment Packets 

With Any Noncompliance 

Ads With Any 

Noncompliance 

Reviewer Error Only 13 0 

Sponsor Error Only 3 0 

Miscommunication of Policy Changes 

Only 

3 15 

Reviewer and Sponsor Error 0 0 

Reviewer Error and Policy 

Miscommunication 5 0 

Sponsor Error and Policy 

Miscommunication 13 0 

All Types of Error: Reviewer Error, 

Sponsor Error, and Policy 

Miscommunication 

2 0 

Total With Any Noncompliance 39 15 

Source: Office of Inspector General analysis of CMS verification of selected sponsor materials’ noncompliance, 2004. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 43 
Report Template Version = 09-08-04 

Δ A P P E NDI X ~ C

Beneficiary Understanding 

Although this report presents beneficiary interview data primarily 

using proportions, this appendix provides the actual number of 

respondents for our key data, as well as respondent understanding by 

eligibility for Transitional Assistance. 

As mentioned previously, the actual number of respondents answering 

each question varies. In many cases this is because the pre-enrollment 

packet or advertisement did not contain the information relevant to a 

particular question. In other cases, beneficiaries were unable to 

separate their outside knowledge of the program from the material, and 

so we excluded their response from our quantitative analysis. In all 

cases, the data in this report are restricted to our respondents and are 

not projectable to the entire Medicare population. 

TABLE 8: Proportion of Respondents Who Understood Key Program Features 

Based on Reading Sponsors’ Pre-Enrollment Packets 

Key Program Feature 

Proportion of 

Respondents Who 

Understood Key 

Feature 

Transitional 

AssistanceEligible 

Respondents 

Non-Transitional 

AssistanceEligible 

Respondents* 

Eligibility 58% (n=99) 63% (n=35) 55% (n=64) 

Program Limitations: Drugs 

Covered Can Change 59% (n=68) 44% (n=18) 64% (n=50) 

Program Limitations: Drug 

Prices Can Change 74% (n=82) 67% (n=24) 78% (n=58) 

Choice of Cards 54% (n=92) 45% (n=29) 59% (n=63) 

Comparative Information: 

Annual Enrollment Fee 58% (n=100) 50% (n=32) 62% (n=68) 

All Key Program Features 21% (n=113) 22% (n=37) 21% (n=76) 

* This category includes 13 respondents whose eligibility for Transitional Assistance could not be determined. 

Source: Office of Inspector General analysis of Medicare beneficiary interviews, 2004. 

To calculate the proportion of respondents who understood all key 

program features, we divided the number of correct answers by the 

number of test questions answered. Although we interviewed 

38 beneficiaries who reviewed advertising materials, one respondent 

reading an advertisement did not provide a response to any test 

question, although this respondent answered other opinion and 

descriptive questions in the interview. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 44 
Report Template Version = 09-08-04 

APP E N D I X ~C 

TABLE 9: Proportion of Key Test Questions Answered Correctly, by 

Advertisements vs. Pre-Enrollment Packets 

Proportion of Test Questions 

Answered Correctly 

Proportion of 

Respondents Reviewing 

Advertisements (n=37) 

Proportion of 

Respondents Reviewing 

Pre-Enrollment Packets 

(n=113) 

50% or Less 

51%-79% 

80% or More 

57% 

16% 

27% 

32% 

22% 

46% 

Source: Office of Inspector General analysis of Medicare beneficiary interviews, 2004. 

Respondent Understanding of Pre-Enrollment Packets, by Respondents’ 

Eligibility for Transitional Assistance 

Regardless of eligibility status, a greater proportion of respondents 

understood their eligibility for Transitional Assistance than for the drug 

card program. Of the TA-eligible respondents who assessed their 

eligibility, 80 percent understood that they were eligible for Transitional 

Assistance. However, 74 percent of TA-eligible respondents understood 

that they were eligible for the drug card program. Of non-TA-eligible, 

86 percent understood that they were not eligible for Transitional 

Assistance, and only 62 percent understood that they were eligible for 

the drug card program. 

More respondents understood that drug prices could change than 

understood that drugs covered could change. Sixty-seven percent of 

TA-eligible respondents understood that drug prices could change, as 

did 78 percent of non-TA-eligible respondents. Forty-four percent of 

TA-eligible respondents understood that drugs covered could change, as 

did 64 percent of non-TA-eligible respondents. 

Fewer TA-eligible respondents than non-TA-eligible respondents 

correctly identified that more than one Medicare-approved drug 

discount card existed. That is, 45 percent of TA-eligible respondents 

correctly identified that there was more than one available card, 

compared to 59 percent of non-TA-eligible respondents. 

Fewer TA-eligible respondents than non-TA-eligible respondents 

correctly identified the cost of the enrollment fee and reported that this 

information was clearly explained. Specifically, 69 percent of 

TA-eligible respondents correctly reported the amount of the enrollment 

fee for the material they reviewed, compared to 75 percent of 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 45 
Report Template Version = 09-08-04 

APP E N D I X ~C 

non-TA-eligible respondents. Similarly, 63 percent of respondents 

eligible for Transitional Assistance reported that the enrollment fee was 

clearly explained, compared to 78 percent of non-TA-eligible 

respondents. 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 46 
Report Template Version = 09-08-04 

Δ APPENDIX ~ D 

Agency Comments 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 47 
Report Template Version = 09-08-04 

APP E N D I X ~D 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 48 
Report Template Version = 09-08-04 

APP E N D I X ~D 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 49 
Report Template Version = 09-08-04 

APP E N D I X ~D 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 50 
Report Template Version = 09-08-04 

APP E N D I X ~D 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 51 
Report Template Version = 09-08-04 

APP E N D I X ~D 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 52 
Report Template Version = 09-08-04 

APP E N D I X ~D 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 53 
Report Template Version = 09-08-04 

APP E N D I X ~D 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 54 
Report Template Version = 09-08-04 

Δ ACKNOWLEDGMENTS 

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: 

Susan Otter, Team Leader 

Mara Siler-Price, Program Analyst 

Nicole Lawhorn, Intern 

Emily Melnick, Senior Program Analyst 

Laura Torres, Program Analyst 

Erin Lemire, Program Analyst 

Beth Middendorf, Presidential Management Fellow 

Tricia Davis, Director, Medicare and Medicaid Branch 

Linda Boone Abbott, Program Specialist 

Technical Assistance: 

Barbara Tedesco, Mathematical Statistician 

Kevin Farber, Mathematical Statistician 

 OE I-05-04-00 190 ASSESSM E N T O F S P O N S O R S ’ MA T E R I A L S UNDER THE T E M P O R A RY DR U G DI S C O U N T CARD P R O G R AM 55