Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

TEMPORARY MEDICAREAPPROVED DRUG DISCOUNT 


CARD: BENEFICIARIES’ 


AWARENESS AND USE OF 


INFORMATION RESOURCES


Daniel R. Levinson


Inspector General 


October 2005


OEI-05-04-00200

Office of Inspector General 

http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services (HHS) 

programs, as well as the health and welfare of beneficiaries served by those programs. This 

statutory mission is carried out through a nationwide network of audits, investigations, and 

inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits examine 

the performance of HHS programs and/or its grantees and contractors in carrying out their 

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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. 
Δ EXECUTIVE SUMMAR Y 

OBJECTIVE 

To determine the extent of beneficiaries’ awareness and use of 

information resources for the Medicare-approved Drug Discount Card 

(drug card) program for the purpose of maximizing the effectiveness of 

outreach and education efforts for the new Medicare drug benefit. 

BACKGROUND 

The Medicare Prescription Drug, Improvement, and Modernization Act 

of 2003 (MMA) created the temporary drug card program to provide 

immediate access to discounted drugs. Under the drug card program, 

some low-income beneficiaries also qualify for a $600 annual credit 

toward drug purchases. The MMA also added a new outpatient 

prescription drug benefit to Medicare under Part D that becomes 

effective in January 2006. 

The Centers for Medicare & Medicaid Services (CMS) is required to 

broadly disseminate information to beneficiaries about the drug card 

program. CMS offers information through a toll free number (1-800-

MEDICARE) and a Web site, both of which allow beneficiaries to 

compare drug prices and program features across available drug cards. 

CMS also developed television and radio ads and mailed information 

about the drug card program to all eligible beneficiaries. In addition, 

CMS has awarded grants to State Health Insurance Assistance 

Programs (SHIP) to provide beneficiary education and counseling. 

Private companies that sponsor drug cards (card sponsors) are also 

required to make available specific information to promote informed 

choice. 

To measure beneficiary awareness and use of information, we conducted 

a national survey of a stratified random sample of beneficiaries. We 

stratified based on drug card enrollment status as of August 1, 2004, 

and our sample included 550 enrolled beneficiaries (population of about 

1.8 million) and 620 nonenrolled beneficiaries (population of about 

33.4 million). 

This inspection is intended to assist CMS in maximizing the 

effectiveness of beneficiary information and outreach efforts for the new 

drug benefit. As such, we are reporting on beneficiaries’ awareness and 

use of drug card resources so that CMS can take these behaviors into 

account for current and future efforts. 

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EXE CUTIVE S CUTIVE S CUTIVE S U MMAR Y

AWARENESS AND USE OF RESOURCES 

Almost three-quarters of beneficiaries are aware of at least one 

source they could contact for information about the drug card 

program. Seventy-two percent of all beneficiaries are aware of at least 

one of the following five sources that they could contact for drug card 

program information: 1-800-MEDICARE, Medicare Web site, drug card 

sponsors, pharmacies, and SHIPs. Awareness seems highest for 1-800-

MEDICARE and lowest for SHIPs. Enrolled beneficiaries are more 

likely to be aware of information sources than nonenrolled beneficiaries. 

Beneficiaries most commonly used passive sources such as news 

media and mail for drug card information. Only one-fifth of 

beneficiaries contacted a source requiring self-initiated action. 

Overall, 65 percent of beneficiaries used the news media and 53 percent 

used information in their mail to make enrollment decisions. We 

categorized news media and mail as “passively acquired” sources 

because obtaining information from these sources does not require the 

self-initiated action by the beneficiary needed to contact any of the 

“actively acquired” sources. Actively acquired sources are 1-800-

MEDICARE, the Medicare Web site, card sponsors, pharmacies, and 

SHIPs. Twenty-one percent of all beneficiaries have contacted one or 

more of these sources for information on the drug card program. 

Enrolled beneficiaries had a much higher rate of use (77 percent) of any 

actively acquired sources than nonenrolled beneficiaries (17 percent). 

Among nonenrolled beneficiaries, those with drug coverage are less 

likely to contact any actively acquired sources for information than 

those without drug coverage. Those who used news media or mail are 

more likely to also use an actively acquired source. 

Just over one-third of enrolled beneficiaries needed help with the 

enrollment process. Thirty-seven percent of enrolled beneficiaries 

needed help with the process of signing up after they decided to enroll. 

These beneficiaries most frequently needed help completing the 

enrollment form or applying for the $600 credit. Among the 

beneficiaries who needed help signing up, the most common sources 

that provided enrollment help were pharmacies and 1-800-MEDICARE. 

IMPLICATIONS FOR THE NEW DRUG BENEFIT 

To maximize the effectiveness of beneficiary education, we suggest that 

CMS consider the following implications for the new drug benefit. 

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EXE CUTIVE S U MMAR Y 

For the new drug benefit, CMS should consider expanding the 

efforts it used to inform beneficiaries about the availability of 

information resources for the drug card program. Overall, CMS’s 

efforts to make beneficiaries aware of information resources, including 

1-800-MEDICARE, seem effective in reaching most beneficiaries. 

However, the information did not reach all beneficiaries. Expanding 

these efforts and extending them to additional sources could help to 

increase awareness of specific information resources. 

CMS should recognize and consider capitalizing on beneficiaries’ 

propensity to use passively acquired information. More beneficiaries 

obtained information through news media and mail than any other 

sources, so CMS could take advantage of these mechanisms to reach the 

greatest number of beneficiaries. CMS could use these sources to 

promote increased use of other sources of information on the new drug 

benefit, including 1-800-MEDICARE, drug plan sponsors, SHIPs, and 

community-based organizations. 

CMS should consider collaborating with the sources that 

beneficiaries contact most frequently, including pharmacies and 

sponsors. CMS should consider working to assist pharmacies, the 

most commonly contacted information source, in responding to 

beneficiary inquires. CMS could provide fact sheets and materials to 

pharmacists to give to beneficiaries and referrals to direct beneficiaries 

to other sources of assistance, such as 1-800-MEDICARE or SHIPs. In 

its oversight capacity, CMS should work with drug plan sponsors to 

ensure that they provide beneficiaries with useful information about the 

new drug benefit. This is particularly important because drug card 

sponsors were the second most commonly contacted source for the drug 

card program. 

Anticipating the need for enrollment assistance, CMS could 

promote available sources of assistance and continue to invest in 

the capacity of those sources to meet beneficiary needs. Over onethird of enrolled beneficiaries needed help enrolling in a drug card, and 

drug plan enrollment will likely be more complicated. CMS should 

anticipate and continue to prepare to meet beneficiary need for 

enrollment assistance. We support CMS’s plan to develop an online 

enrollment system and encourage continued efforts to facilitate drug 

plan enrollment. 

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EXE CUTIVE S U MMAR Y

AGENCY COMMENTS 

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

“lessons learned” for outreach and education strategies for the drug 

benefit and agreed with each of the implications for the drug benefit 

that we suggested. CMS noted that it has substantially more time to 

plan for the drug benefit, as compared to the drug card program, and 

thus has been able to develop stronger collaborations and partnerships 

to achieve these goals. CMS detailed several planned and ongoing 

outreach and education activities related to our suggestions. The 

agency described a targeted education effort that incorporates media 

advertising, simple fact sheets, detailed publications, direct mail, and 

community-based grassroots outreach with numerous partners 

(including pharmacies). CMS also highlighted the personalized 

information available through the Drug Plan Compare web tool and 

1-800-MEDICARE. CMS thanked OIG for providing constructive and 

timely information. The complete text of CMS’s comments is included 

in Appendix F. 

OFFICE OF INSPECTOR GENERAL RESPONSE 

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

descriptions of its ongoing and planned beneficiary outreach and 

education efforts for the drug benefit. This inspection is intended to 

assist CMS in maximizing the effectiveness of beneficiary information 

and outreach efforts for the drug benefit. We are pleased that CMS 

found this information to be constructive and agrees with our 

suggestions. We recognize that CMS is devoting substantial effort 

toward beneficiary outreach and education. 

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Δ T ABLE OF CONTENTS 

EXECUTI VE SUMMARY ........................................ i

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

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

Almost three-quarters of beneficiaries aware of at least one 

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

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

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

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

IMPLICATIONS : NEW DRUG BENE FIT .................... 15 

AGENCY COMME NTS ......................................... 18

ENDNOTE S ..................................................... 19 

APPENDI XES .................................................. 22 

A: Detailed Methodology ................................ 22

B: Confidence Intervals for Key Statistics .................. 26

C: Logistic Regression Models ............................ 30

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

E: Beneficiary Knowledge of Drug Card Program ............ 35

F: Agency Comments ................................... 37

ACKN O W LEDGMENTS ......................................... 42
Δ INTRODU C TION 

OBJECTIVE 

To determine the extent of beneficiaries’ awareness and use of 

information resources for the Medicare-approved Drug Discount Card 

(drug card) program to maximize the effectiveness of outreach and 

education efforts for the new Medicare drug benefit. 

BACKGROUND 

Medicare Coverage of Prescription Drugs 

In 2004, Medicare provided health insurance for approximately 

41.8 million Americans; this includes more than 35 million seniors and 

6.5 million nonelderly people with disabilities.1 Medicare Part B covers 

a limited range of drugs, primarily those administered in a 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 benefit to Medicare under Part D. Effective January 2006, all 

Medicare beneficiaries will be able to enroll in private plans, which will 

cover a percentage of their drug costs. Assistance with premiums and 

cost sharing will also be provided to an estimated 11 million low-income 

beneficiaries.3 Estimates of the Part D drug benefit cost range from 

$47 billion to $58.9 billion for fiscal year (FY) 2006.4 

Medicare-Approved Drug Discount Card Program 

While the full Medicare prescription drug benefit will not be 

implemented until January 2006, the MMA also created the drug card 

program to provide immediate access to discounted prescription drugs. 

All Medicare beneficiaries who are enrolled in Medicare Part A and/or 

Part B and do not have outpatient prescription drug coverage under 

Medicaid are eligible. Beneficiaries were able to enroll at any time from 

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

in June 2004 and end January 2006 with the advent of the full 

prescription drug benefit. The Centers for Medicare & Medicaid 

Services (CMS) reported in December 2004 that 5.8 million beneficiaries 

had enrolled in the drug card program.5 

In early 2004, CMS approved private companies (sponsors) including 

health insurance companies, drugstore groups, and managed care firms, 

to provide a total of 73 Medicare-approved drug discount cards. 

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INTROD UCT ION

Sponsors offer approximately 40 different national drug cards and

33 regional drug cards. 

Medicare beneficiaries are only allowed to enroll in one drug card per 

year. Once beneficiaries are enrolled, they are not allowed to switch to 

a different drug card until the next open-enrollment period. 

Beneficiaries are expected to consider several program features when 

deciding which drug card is best for them. These features relate to each 

card’s specific discounts, formulary, enrollment fee, and network of 

pharmacies that will accept the card. Drug card discounts vary between 

cards and may vary within each drug card program. Drug card 

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

only a select list of drugs (i.e., a formulary). A drug card formulary may 

vary throughout the life of the program. Drug card sponsors may 

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

without an enrollment fee. Finally, discounts are redeemable only at 

network pharmacies, which also vary by drug card. 

$600 Transitional Assistance Credit 

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

$600 transitional assistance credit ($600 credit) is available for 

beneficiaries with incomes at or below 135 percent of the Federal 

Poverty Level and without other drug coverage.6 Eligible beneficiaries 

may use the annual $600 credit toward prescription drug purchases in 

both 2004 and 2005. CMS also will pay any enrollment fees for these 

beneficiaries. According to CMS, 1.5 million drug card enrollees were 

receiving the $600 credit as of December 2004.7 

Beneficiary Education 

CMS. The MMA requires CMS to broadly disseminate information to 

individuals eligible for the drug card program. Required information 

includes enrollment procedures, a comparison of cards’ annual 

enrollment fees, and information on the variability of discounts and 

drug prices under an approved drug card. In accordance with this 

mandate, CMS has emphasized the importance of Medicare 

beneficiaries’ access to “all the information available to make decisions 

about choosing the card that best fits their needs.”8 

CMS has initiated several efforts to reach out to beneficiaries and to 

ensure their access to information on the drug card program. CMS 

mailed program information to all eligible beneficiaries and has spent 

$60 million for an advertising campaign. In addition, CMS established 

a Web site (www.Medicare.gov) and a toll free number 

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INTROD UCT ION 

(1-800-MEDICARE) where beneficiaries may compare enrollment fees, 

discounted drug prices, and formularies offered by the drug card 

programs available in their geographic areas. These sources also 

provide information on eligibility and how to apply for the $600 credit. 

Representatives at 1-800-MEDICARE also refer callers to additional 

resources, including State Health Insurance Assistance Programs 

(SHIP), as needed. In April 2004, CMS awarded $21.1 million in grants 

to States in support of local SHIPs to help Medicare beneficiaries 

understand and take advantage of new benefits and programs in 

Medicare.9 SHIPs provide one-on-one counseling to beneficiaries. 

CMS and other stakeholders targeted additional education efforts 

toward low-income beneficiaries likely to be eligible for the 

$600 transitional credit. For example, CMS collaborated with the Social 

Security Administration (SSA). SSA mailed letters to all Social Security 

recipients who were likely to be eligible for the $600 credit informing 

them of this benefit. CMS also developed TV and radio advertisements 

(ads) that focus on the $600 credit and target low-income beneficiaries. 

Approved Card Sponsors. The MMA requires each card sponsor to make 

available information on enrollment fees, negotiated price information 

for covered drugs, and other information deemed necessary by the 

Secretary of the Department of Health and Human Services to promote 

informed choice. 10 Each card sponsor must have a mechanism, 

including a toll free number, for providing specific information to 

individuals enrolled in the program. The Secretary is required to 

provide “appropriate oversight to ensure compliance of card program 

sponsors with the requirements.”11 

CMS describes the required sponsor information in its Information and 

Outreach Materials Guidelines for sponsors’ materials. CMS 

regulations incorporate these Information and Outreach Materials 

Guidelines by reference.12 Examples of required information include: 

3⁄4 information on how to become enrolled in a program, 

3⁄4 eligibility qualifications for the $600 credit, 

3⁄4 toll-free telephone numbers, 

3⁄4 enrollment fees, 

3⁄4 a list of contracted pharmacies and prescription drugs offered for a 

negotiated price, and 

3⁄4 a notice that drugs and prices may change and a description of how 

enrollees can obtain information regarding those changes.13 

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INTROD UCT ION 

Drug card sponsors also are required to obtain CMS approval of all 

information and outreach materials before distributing them to 

beneficiaries. According to CMS, the goal of this review of beneficiary 

materials is to ensure that information and outreach materials promote 

informed choice.14 Card sponsors began sending CMS-approved 

information and materials to beneficiaries in May 2004. 

Enrollment 

To participate in the drug card program, Medicare beneficiaries 

(excluding those automatically enrolled through a Medicare Advantage 

program or their State’s Pharmancy Assistance Program) must directly 

enroll with the drug card sponsor of their choice. CMS issued a 

standard enrollment form accepted by all approved drug card sponsors. 

CMS intends the standard form to make it easier for community-based 

organizations, health professionals, and consumer groups to assist 

beneficiaries with the enrollment process.15 To enroll, beneficiaries 

must complete either CMS’s or their selected drug card sponsor’s 

enrollment form and send it to their selected card sponsor. 

Implications for the New Medicare Drug Benefit Under Part D 

This inspection is intended to assist CMS in maximizing the 

effectiveness of beneficiary information and outreach efforts for the new 

drug benefit. As such, we are reporting on beneficiaries’ awareness and 

use of drug card resources so that CMS can take these behaviors into 

account for ongoing and future efforts. CMS plans to spend 

$300 million in 2005 to educate Medicare beneficiaries about the new 

drug benefit, including initiatives with SSA, States, and national and 

community-based organizations.16 While the drug card program will 

end with the start of this benefit in 2006, understanding beneficiaries’ 

awareness and use of information resources for the drug card program 

is instructive for the new drug benefit. It is reasonable to expect that 

beneficiaries will become aware of and obtain information about the 

drug benefit through channels similar to those they used for the drug 

card program. 

Concurrent Office of Inspector General Inspections 

The Office of Inspector General (OIG) conducted two additional studies 

related to the drug card program. One study, Assessment of Sponsors’ 

Materials Under the Medicare-Approved Drug Discount Card Program 

(OEI-05-04-00190), assessed the extent to which drug card sponsors’ 

materials promote informed choice for beneficiaries. The second study, 

Analysis of Drug Card Sponsors’ Drug Prices (OEI-05-05-00020), 

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INTROD UCT ION 

monitored the prescription drug prices posted on the Medicare Web site 

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

METHODOLOGY 

We conducted a national survey of a stratified random sample of 

Medicare beneficiaries eligible for the drug card program. The following 

provides a general overview of our methodology. See Appendix A for 

more details on our methodology. 

Sampling 

Our population is Medicare beneficiaries who are eligible to participate 

in the drug card program, excluding beneficiaries who were 

automatically enrolled by their Medicare Advantage plan. All Medicare 

beneficiaries except for those who receive drug benefits under Medicaid 

are eligible to enroll in the drug card program. 

From this population, we selected a stratified random sample of 

beneficiaries from four mutually exclusive strata based on two criteria: 

enrollment status as of August 1, 2004, and eligibility for the 

$600 credit. For beneficiaries enrolled in the drug card program, we 

stratified based on whether the beneficiary was also enrolled in the 

$600 credit. For nonenrolled beneficiaries, we used low-income ZIP 

codes as a proxy to ensure that our sample would include some 

nonenrolled beneficiaries eligible for the $600 credit. Table 1 describes 

our four strata. 

TABLE 1: Population and Sample Size, by Strata 

Strata Description 

Population 

Size 

Sample 

Size 

1. Enrolled beneficiaries receiving $600 credit 

2. Enrolled beneficiaries not receiving $600 credit 

3. Nonenrolled beneficiaries residing in low-income ZIP code 

4. Nonenrolled beneficiaries not residing in low-income ZIP code 

817,969 

928,928 

38,524 

33,346,431 

300 

250 

400 

220 

Totals 35,131,852 1,170 

Survey and Response Rates 

We developed two survey instruments, one for enrolled beneficiaries and 

one for nonenrolled beneficiaries. Most of our key survey questions on 

awareness and use of resources were identical across the two surveys. 

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INTROD UCT ION 

This allows us to combine information across all respondents and 

project to the total population. 

We conducted these surveys primarily by mail. In addition, we hired a 

contractor to call beneficiaries who did not respond to the mail survey. 

Surveys were completed between September and December 2004. 

Our overall response rate was 65 percent. Enrolled beneficiaries 

responded at a higher rate than nonenrolled beneficiaries. By strata, 

our response rates ranged from 50 percent (nonenrolled beneficiaries 

residing in a low-income ZIP code) to 77 percent (enrolled beneficiaries 

not receiving the $600 credit). We conducted a nonresponse analysis 

that found no evidence of nonresponse bias. Details of this analysis are 

included in the detailed methodology in Appendix A. 

Analysis 

We used several methods to analyze the survey data and focused on the 

key questions related to our objective, i.e., questions about awareness 

and use of information resources, and the enrollment process. Appendix 

A provides details of our analysis and Appendix B provides confidence 

intervals for key statistics at the 95 percent confidence level. We 

weighted the data based on probability of selection to project to the 

population. It is important to note that beneficiaries in strata four have 

a substantially greater weight than the other three strata because this 

strata (not enrolled, not low-income ZIP code) represents 95 percent of 

our total sampling population. 

In addition to our key questions on awareness, use, and enrollment, we 

analyzed information pertaining to nonenrolled beneficiaries’ 

enrollment decisions and beneficiaries’ knowledge of the drug card 

program. This information may be found in Appendixes D and E. 

This inspection was conducted in accordance with the “Quality 

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

Integrity and Efficiency. 

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Δ A W ARENESS AND USE OF 

INFORMA T ION 

Almost three-quarters of beneficiaries are aware 

of at least one source they could contact for 

information about the drug card program 

Seventy-two percent of all 

beneficiaries are aware of at least 

one of five information resources 

that they could contact to obtain 

information about the drug card program. These five sources include: 

1-800-MEDICARE, the Medicare Web site, drug card sponsors, 

pharmacies, and SHIPs.17 Ninety-one percent of enrolled beneficiaries 

and 71 percent of nonenrolled beneficiaries are aware that they can get 

information about the drug card program from at least one of these 

sources. Of these five sources, enrolled beneficiaries are aware of 2.4 

sources on average and nonenrolled beneficiaries are aware of an 

average of 1.9 sources. 

Among both enrolled and nonenrolled beneficiaries, most beneficiaries are 

aware of 1-800-MEDICARE and the fewest are aware of SHIPs 

We ordered the sources by awareness, and we found a similarity in this 

ordering for enrolled and nonenrolled beneficiaries. For both groups, 

most beneficiaries are aware of 1-800-MEDICARE and the fewest are 

aware of SHIPs.18 As shown in Table 2, 75 percent of enrolled and 

56 percent of nonenrolled beneficiaries are aware that they could 

contact 1-800-MEDICARE for information about the drug card program. 

Twenty-two percent of enrolled and 21 percent of nonenrolled 

beneficiaries are aware of SHIPs as a source of information about the 

drug card program. 

TABLE 2: Beneficiary Awareness of Available Information Sources 

Information Resource 

Enrolled Beneficiaries 

Aware 

Nonenrolled Beneficiaries 

Aware 

1-800-Medicare*

Card sponsors* 

Pharmacy* 

Medicare.gov* 

SHIP 

75% 

65% 

60% 

58% 

22% 

56% 

38% 

41% 

47% 

21% 

* Statistically significant difference between enrolled and nonenrolled beneficiaries using the chi square test, 

p<0.05. 

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

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A W ARE N ESS AND USE OF INFORMA T ION

Profile of those aware of 1-800-MEDICARE. We explored the 

characteristics of beneficiaries who are aware of 1-800-MEDICARE to 

identify any useful lessons for educating beneficiaries about available 

resources. We found that receiving mail, seeing television ads, and 

hearing radio ads about the drug card program are significantly related 

to awareness of 1-800-MEDICARE. Beneficiaries who received no mail 

about the drug card program are much less likely to be aware of 

1-800-MEDICARE. Also, among enrolled beneficiaries, those who have 

seen television ads or heard radio ads about the drug card program are 

more likely to be aware of 1-800-MEDICARE than those who have not 

seen or heard such ads. Demographic characteristics (including income, 

age, education, and gender) are not related to awareness of 1-800-

MEDICARE. Appendix C provides details of this logistic regression 

analysis. 

CMS promoted this information source through the written materials it 

mailed to beneficiaries and through television and radio ads. It is 

plausible that beneficiaries learned that they could call this source for 

drug card information through CMS’s mail and ads, suggesting that 

these education efforts are effective for those whom they reach. 

However, not all beneficiaries heard ads or received any mail. 

Profile of those aware of SHIPs. We also analyzed characteristics of 

beneficiaries who are aware of SHIPs to identify any useful patterns. In 

April 2004, CMS awarded $21.1 million in grants for SHIPs to help 

Medicare beneficiaries understand and take advantage of new benefits, 

including the drug card.19 

We found three characteristics related to awareness of SHIPs. Two of 

these are hearing radio ads and receiving mail about the drug card 

program. Beneficiaries who have heard radio ads about the drug card 

program are more likely to be aware of SHIPs than those who have not. 

For example, 42 percent of the beneficiaries who have heard radio ads 

about the drug card are aware of SHIPs, compared to 12 percent of 

those who have not heard radio ads. Also, beneficiaries who received no 

mail about the drug card were less likely to be aware of SHIPs than 

those who received mail. It is possible that radio ads or mail informed 

beneficiaries about SHIPs, or they could have indirectly led to SHIP 

awareness by encouraging the beneficiary to seek out more information. 

The third characteristic is eligibility for the $600 credit, which was 

significant only among enrolled beneficiaries. Twenty-six percent of 

enrolled beneficiaries eligible for the $600 credit are aware of SHIPs as 

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A W ARE N ESS AND USE OF INFORMA T ION 

a source of information about the drug card, compared to 17 percent of 

those ineligible for the $600 credit. This difference is small but 

statistically significant. Other demographic characteristics (including 

age, education, and gender) are not significantly related to awareness of 

SHIPs. Appendix C provides details of this logistic regression analysis. 

 Beneficiaries most commonly used 

passive sources such as news media and mail 

for drug card information. Only one-fifth of 

beneficiaries contacted a source requiring 

self-initiated action 

Most beneficiaries obtained information 

about the drug card program by reading 

newspaper articles, seeing television 

news stories, or reading their mail. 

Overall, 65 percent of beneficiaries used 

the news media (i.e., newspaper articles 

or televised news stories) and 53 percent 

used information in their mail to make enrollment decisions. We 

categorized news media and mail as “passively acquired” sources 

because obtaining information from these sources does not require the 

self-initiated action by the beneficiary needed to contact any of the other 

“actively acquired” sources. 

Overall, 21 percent of beneficiaries have contacted one or more of the 

following actively acquired sources for information on the drug card 

program: 1-800-MEDICARE, the Medicare Web site, card sponsors, 

pharmacies, or SHIPs.20 A greater proportion of enrolled beneficiaries 

(77 percent) used any actively acquired sources compared to nonenrolled 

beneficiaries (17 percent). However, because there are many more 

nonenrolled than enrolled beneficiaries in the population, the overall 

rate of use more closely reflects the use among nonenrolled 

beneficiaries. 

Nonenrolled beneficiaries tended to use passively acquired sources 

exclusively, compared to enrolled beneficiaries who also used actively 

aquired sources 

The majority of all beneficiaries used at least one passively acquired 

source (i.e., news media or mail) for information about the drug card 

program. Eighty-four percent of enrolled beneficiaries and 76 percent of 

nonenrolled beneficiaries used at least one passively acquired source. 

News media and mail were the two most commonly used information 

sources among both enrolled and nonenrolled beneficiaries. 

However, enrolled and nonenrolled beneficiaries differed dramatically 

in their use of actively acquired sources. Enrolled beneficiaries are 

significantly more likely to contact those sources. While 77 percent of 

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A W ARE N ESS AND USE OF INFORMA T ION 

enrolled beneficiaries used any actively acquired sources, only 

17 percent of nonenrolled beneficiaries contacted any of those sources 

for information about the drug card program. 

Enrolled and nonenrolled beneficiaries also differed significantly in 

their rate of use of each source, but the order of sources (from highest to 

lowest use) appears to be similar across these two groups. Table 3 

provides the rates of use for enrolled and nonenrolled beneficiaries for 

each source in our survey. 21 

TABLE 3: Beneficiary Use of Information Resources 

Information Resource Enrolled Beneficiary Use Nonenrolled Beneficiary Use 

News Media (P) 

Mail (P) * 

Pharmacy (A) * 

Card Sponsors (A) * 

1-800-MEDICARE (A) * 

Medicare Web site (A) * 

SHIP (A) 

69% 

68% 

42% 

38% 

27% 

9% 

4% 

64% 

52% 

10% 

4% 

3% 

2% 

2% 

(A) denotes actively acquired source, (P) denotes passively acquired source. 

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

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

For nonenrolled beneficiaries, awareness of actively acquired sources often 

did not result in use of those sources 

Awareness of an information source is necessary but not sufficient to

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

source, we determined what proportion of nonenrolled beneficiaries 

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

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

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

pharmacies showed the highest proportion of users among nonenrolled

beneficiaries aware of pharmacies as an information resource. Of all 

nonenrolled beneficiaries who knew they could get information from 

their pharmacies, 21 percent contacted their pharmacies about the drug

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

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A W ARE N ESS AND USE OF INFORMA T ION 

of 1-800-MEDICARE called for information about the drug card. Table 

4 provides these rates for each source. 

TABLE 4: Nonenrolled Beneficiary Use by Those Aware of Source 

Information Resource Awareness 

For How Many Beneficiaries Did 

Awareness Result in Use? 

Pharmacy

Card Sponsors 

SHIP 

1-800-MEDICARE

Medicare Web site 

41% 

38% 

21% 

56% 

47% 

21% 

12% 

7% 

5% 

5% 

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

For nonenrolled beneficiaries, lack of drug coverage and use of passive 

sources predict use of actively acquired sources. As awareness does not 

necessarily lead to use, we explored other characteristics that might 

explain resource use among nonenrolled beneficiaries. Among 

nonenrolled beneficiaries aware of any sources, we found two factors 

that are related to their use of actively acquired sources. Appendix C 

provides details of this logistic regression analysis. 

Having other drug coverage is related to beneficiaries’ use (or lack of 

use) of actively acquired sources. Half of nonenrolled beneficiaries 

indicated that they have prescription drug coverage through another 

source such as retiree benefits.22 Among nonenrolled beneficiaries 

aware of any sources, those with existing drug coverage are less likely to 

contact any sources than those without drug coverage. Only 6 percent 

of nonenrolled beneficiaries with drug coverage contacted any actively 

acquired sources, compared to 41 percent of those without drug 

coverage. Drug coverage is not related to whether these beneficiaries 

used any passively acquired sources (news media or mail). One 

plausible explanation is that beneficiaries with drug coverage have less 

incentive to make an effort to contact an information source and instead 

rely on the information provided to them through the passively acquired 

sources. Appendix D provides information on existing drug coverage as 

an explanation for why some nonenrolled beneficiaries have decided not 

to enroll in a drug card. 

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A W ARE N ESS AND USE OF INFORMA T ION 

In addition, nonenrolled beneficiaries who have used any passively 

acquired sources are more likely to use any actively acquired sources 

than those who did not use news media or mail. Of those who used 

news media or mail, 30 percent also used at least one actively acquired 

source, compared to less than 1 percent of those who did not use news 

media or mail. It could be that use of mail or news media spurred 

beneficiaries to seek more information; alternatively, these beneficiaries 

may have greater interest in the program and therefore take advantage 

of multiple information sources. 

No other factors are significantly related to nonenrolled beneficiaries’ 

use of actively acquired sources. Factors tested include demographic 

characteristics (age, education, income, gender, and marital status), 

seeing television or hearing radio ads about the drug card, and whether 

a proxy respondent completed the survey for the beneficiary.23 

For enrolled beneficiaries, card sponsors and pharmacies seemed to help 

the greatest proportion of beneficiaries who used them 

When we asked beneficiaries about the information resources they used, 

we also asked them to specify whether their use of each source helped or 

did not help them to make their enrollment decision. For each source, 

we determined the rate of users who were helped. We focused this 

analysis on enrolled beneficiaries to identify sources that helped 

beneficiaries decide to enroll, as encouraging enrollment will be a 

primary goal of outreach and education efforts for the new drug benefit. 

Contacting card sponsors and pharmacies seemed to help the greatest 

proportion of beneficiaries who used them, helping 86 percent and 

83 percent of users, respectively. Though the greatest number of 

beneficiaries used news media, this source helped the lowest proportion 

(56 percent) of the beneficiaries who used it. Table 5 shows enrolled 

beneficiaries’ use and the proportion of users helped for each source. 

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A W ARE N ESS AND USE OF INFORMA T ION

TABLE 5: Proportion of Users Helped by Source, Enrolled Beneficiaries 

Information Resource Use Proportion of Users Helped 

News Media 

Mail 

Pharmacy

Card Sponsors 

1-800-MEDICARE

Medicare Web site 

SHIP 

61% 

61% 

41% 

34% 

25% 

8% 

4% 

56% 

65% 

83% 

86% 

68% 

(64%)* 

(77%)* 

* Because few beneficiaries used the Medicare Web site or SHIPs, confidence intervals for these estimates are wide. 

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

The closed-ended survey questions used to calculate the proportion of 

users helped measured whether each source helped or not, but they did 

not rank the sources by their helpfulness. To identify the most helpful 

sources, we used an open-ended question that asked beneficiaries, 

“What was the most helpful source to get information about the 

Medicare approved drug discount card?” Of the enrolled beneficiaries 

who responded, the most commonly named sources were pharmacy 

(21 percent); media, including media ads (12 percent); and resources 

provided by Medicare (10 percent). 

Just over one-third of enrolled beneficiaries Thirty-seven percent of enrolled 

beneficiaries needed help with the 

process of signing up after they 

decided to enroll. We asked beneficiaries to specify for which steps in 

the process they needed assistance. Of these beneficiaries who needed 

help, 51 percent needed help filling out the enrollment form. Forty-four 

percent of those requiring assistance needed help applying for the $600 

credit, and 36 percent needed help obtaining an enrollment form.24 

needed help with the enrollment process 

Among the beneficiaries who needed help signing up, the most common 

sources that provided enrollment help were the pharmacy and 

1-800-MEDICARE 

Of the enrolled beneficiaries who needed help signing up for a card, 

81 percent identified at least one source that provided them enrollment 

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A W ARE N ESS AND USE OF INFORMA T ION

help. Pharmacies and 1-800-MEDICARE were the most common 

sources of enrollment help. Among the beneficiaries who needed 

assistance, 41 percent received help signing up from a pharmacy. 

Twenty-one percent obtained enrollment help from 1-800-MEDICARE. 

Ten percent of these beneficiaries called card sponsors for assistance 

with enrollment. Few enrolled beneficiaries obtained help with signing 

up from either the Medicare Web site or SHIPs. 

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Δ F I NDING S IMPLICA T IONS: NEW DRUG BENEFIT

When Medicare’s voluntary Part D drug benefit becomes available, 

beneficiaries will face more complicated enrollment decisions than they 

have under the drug card program. The potential costs and benefits to 

the beneficiaries are greater under the new drug benefit, and the 

program is more complex. Beneficiaries will need information, and 

perhaps individualized assistance, to decide whether to enroll in this 

drug benefit and to identify which plan best meets their needs. They 

may also need assistance completing the enrollment process. 

This inspection is intended to assist CMS in maximizing the 

effectiveness of their beneficiary education and outreach efforts for the 

new drug benefit. As such, we are reporting on beneficiaries’ awareness 

and use of drug card resources so that CMS can take these behaviors 

into account in implementing ongoing and future efforts. One might 

expect that beneficiaries will become aware of and obtain information 

about the drug benefit through channels similar to those they used for 

the drug card program. We suggest that CMS consider the following 

implications for the new drug benefit. 

IMPLICATIONS: BENEFICIARY AWARENESS OF RESOURCES 

For the new drug benefit, CMS should consider expanding the efforts it used 

to inform beneficiaries about the availability of information resources for the 

drug card program 

Overall, CMS’s efforts to inform beneficiaries about the availability of 

information resources seem to be effective in reaching most 

beneficiaries. Almost three-quarters of beneficiaries are aware of at 

least one source they could contact to obtain information about the drug 

card program. However, this message about availability of information 

resources did not reach all beneficiaries. Expanding these efforts and 

extending them to additional sources could help to increase awareness 

of some lesser-known sources of information. For example, we found 

that beneficiaries who received mail about the drug card, saw television 

ads, or heard radio ads were more likely to be aware of 

1-800-MEDICARE. We suggest that CMS continue to broaden its use of 

these and other methods to inform beneficiaries about the various 

information resources available for the new drug benefit. 

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

IMPLICATIONS: BENEFICIARY USE OF RESOURCES 

CMS should recognize and consider capitalizing on beneficiaries’ 

propensity to use passively acquired information 

Given that 91 percent of enrolled and 71 percent of nonenrolled 

beneficiaries used at least one passively acquired source of information 

(news media and mail), CMS could take advantage of these mechanisms 

to reach the greatest number of beneficiaries. Additionally, CMS could 

use these sources of information to promote increased use of actively 

acquired sources of information for the new drug benefit, including 

1-800-MEDICARE, the Medicare Web site, drug plan sponsors, SHIPs, 

and community-based organizations. Among nonenrolled beneficiaries, 

those who used passively acquired sources were more likely to contact 

any actively acquired sources. 

While CMS has less influence over the news media than other sources, 

news media is the most common source of information that beneficiaries 

used. CMS should consider making a concerted effort to properly 

educate the media about the new drug benefit. Efforts to reach out to 

news media outlets could help CMS to educate beneficiaries about the 

new drug benefit. These efforts could include holding press conferences; 

offering interviews with top Medicare officials; and disseminating press 

releases, fact sheets, and media information packets. 

Mail is also an important mechanism, commonly used by both enrolled 

and nonenrolled beneficiaries. We suggest that CMS continue to invest 

in developing and disseminating useful outreach and education 

materials by mail. CMS should consider using the mail to reach as 

many beneficiaries as possible but not rely solely on this method to 

reach all beneficiaries. Almost half of all beneficiaries indicated that 

they did not receive any mail about the drug card despite CMS’s efforts 

to mail information to all beneficiaries. 

CMS should consider collaborating with the actively acquired sources that 

beneficiaries contact most frequently, including pharmacies and sponsors 

CMS should consider working collaboratively with pharmacies because 

pharmacies were the most commonly contacted source of information 

about the drug card. In addition, among enrolled beneficiaries, 

pharmacies helped 83 percent of beneficiaries who contacted them. One 

might expect that beneficiaries will turn to pharmacies for similar 

assistance with the new drug benefit. Recognizing this, CMS could 

work with pharmacies to assist them in responding to beneficiary 

inquires. This assistance could include disseminating fact sheets or 

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

other materials to pharmacists to provide to beneficiaries and informing 

pharmacists about how to direct beneficiaries to other information 

sources, such as 1-800-MEDICARE, a local SHIP, or a community-based 

organization. 

Card sponsors were the second most commonly contacted source for 

drug card information. Also, among enrolled beneficiaries, card 

sponsors seemed to help the highest rate (86 percent) of beneficiaries 

who used them. In their oversight capacity, CMS should work with 

drug plan sponsors to ensure that they also provide beneficiaries with 

helpful information about the new drug benefit. OIG conducted another 

inspection, focused specifically on card sponsors’ beneficiary education 

materials, which provides more detailed suggestions to CMS on 

beneficiary education by drug plan sponsors. Suggestions include 

requiring sponsors to provide specific information critical to beneficiary 

understanding of the program, providing model materials for sponsors, 

and facilitating in-person education of beneficiaries.25 

IMPLICATIONS: ENROLLMENT PROCESS 

Anticipating the need for enrollment assistance, CMS could promote 

available sources of assistance and continue to invest in the capacity of 

those sources to meet beneficiary needs 

While the enrollment process has not been implemented yet, we 

anticipate that a significant number of beneficiaries may need help 

enrolling in a drug plan. More than one-third of enrolled beneficiaries 

needed help with the enrollment process for the drug card program, 

which is a simpler process than the drug benefit enrollment process will 

be. Of these beneficiaries, about half needed help filling out the 

enrollment form. 

Promoting available sources of enrollment assistance could help such 

beneficiaries to identify available information sources. Given the 

potentially large number of beneficiaries needing assistance, these 

sources may benefit from continued investment by CMS in the capacity 

of those sources to meet beneficiaries’ needs. For the drug card 

program, pharmacies and 1-800-MEDICARE were the most common 

sources where beneficiaries obtained help with enrollment. CMS plans 

to develop an online enrollment system to facilitate drug plan 

enrollment by SHIPs, community-based organizations, and other 

partners. We support this initiative and encourage CMS to continue to 

develop strategies for simplifying the enrollment process. 

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IMPLICA TION S: NEW DR UG B E NEF I T 

AGENCY COMMENTS 

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

“lessons learned” for outreach and education strategies for the drug 

benefit and agreed with each of the implications for the drug benefit 

that we suggested. CMS noted that it has substantially more time to 

plan for the drug benefit, as compared to the drug card program, and 

thus has been able to develop stronger collaborations and partnerships 

to achieve these goals. CMS detailed several planned and ongoing 

outreach and education activities related to our suggestions. The 

agency described a targeted education effort that incorporates media 

advertising, simple fact sheets, detailed publications, direct mail, and 

community-based grassroots outreach with numerous partners 

(including pharmacies). CMS also highlighted the personalized 

information available through the Drug Plan Compare web tool and 

1-800-MEDICARE. CMS thanked OIG for providing constructive and 

timely information. The complete text of CMS’s comments is included 

in Appendix F. 

OFFICE OF INSPECTOR GENERAL RESPONSE 

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

descriptions of its ongoing and planned beneficiary outreach and 

education efforts for the drug benefit. These descriptions highlight 

substantial efforts by CMS toward beneficiary outreach and education. 

This inspection is intended to assist CMS in maximizing the 

effectiveness of beneficiary information and outreach efforts for the drug 

benefit. We are pleased that CMS found this information to be 

constructive and agrees with our suggestions. We recognize that CMS 

is devoting substantial effort toward beneficiary outreach and 

education. 

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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, “The Budget and Economic Outlook: Fiscal 

Years 2006 to 2015,” p. 55. January 2005. Also, Centers for Medicare 

& Medicaid Services, “Releasing the HHS proposed budget for FY2006,” 

February 7, 2005. 

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

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

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

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

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

Assistance program. 

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

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

8 HHS Press Release, March 25, 2004. 

9 Centers for Medicare & Medicaid Services, Press Release: “CMS Begins 

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

online at 

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

10 Medicare Prescription Drug, Improvement, and Modernization Act of 

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

the Social Security Act. 

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11 P.L. 108-173. 

12 42 CFR § 403.806(g)(5)(i) requires sponsors to “. . . comply with the 

Information and Outreach Materials Guidelines published by CMS.” 

CMS initially published the “Medicare Prescription Drug Discount 

Card and Transitional Assistance Program, Information & Outreach 

Materials Guidelines” on January 22, 2004, and subsequently revised 

these guidelines in August 2004. 

13 68 Fed. Reg. 69867-8 (December 15, 2003). 

14 68 Fed. Reg. 69869 (December 15, 2003). 

15 Medicare News Release, Saturday, April 17, 2004. 

16 Centers for Medicare & Medicaid Services, “Ensuring the Success of 

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

Available online at

http://www.cms.hhs.gov/medicarereform/pdbma/aiandocs/issue_paper_24__ensuri 

ng_success-aian.pdf. 

17 In our survey instrument, we used the proper name and abbreviation 

of the State Health Insurance Assistance Program in the beneficiary’s 

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

New York State Health Insurance Information, Counseling, & 

Assistance Program (HICAP) in all relevant questions. 

18 We were not able to test for statistically significant differences in 

awareness across each source as beneficiaries could indicate awareness 

of multiple sources. 

19 Centers for Medicare & Medicaid Services, Press Release: “CMS 

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

Available online at

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

20 The rate of “any use” across these five sources may overestimate use 

based on the way we calculated it. Our survey included a question on 

use for each source, and a respondent only had to tell us they used one 

of these sources to be counted as a “yes” for “any use.” However, a 

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respondent would have to answer all five questions to be counted as a 

“no” for “any use.” If a beneficiary said “I did not use” to four sources 

and left the fifth source blank, that beneficiary is excluded from this 

calculation, making the denominator (“no use”) smaller. 

21 All rates of use are based on beneficiaries who definitively indicated 

that they used or did not use a specific source. “Don’t know” or missing 

values are excluded. 

22 We did not ask a general question about whether beneficiaries had any 

source of drug coverage. These 51% of nonenrolled beneficiaries 

indicated having drug coverage either by checking “I have other 

prescription drug insurance” in the list of reasons why the beneficiary 

was not going to sign up or was undecided about signing up for a drug 

card, or by checking the specific coverage types about which we asked— 

Employee/Retiree health plan,” “TRICARE for Life,” or “Federal 

Employees Health Benefit Program (FEHBP).” 

23 We asked that if someone other than the beneficiary makes health care 

decisions on behalf of the beneficiary, then that person complete the 

survey. Approximately 20 percent of surveys were completed by 

someone else on behalf of the beneficiary, i.e., a “proxy respondent.” 

24 Totals exceed 100 percent because some beneficiaries needed help with 

more than one step in the enrollment process. 

25 “Assessment of Sponsors’ Materials under the Medicare-Approved 

Drug Discount Card Program” (OEI-05-04-00190). 

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Δ APPENDIX ~ A 

DETAILED METHODOLOGY 

Sampling 

Our population is Medicare beneficiaries who are eligible to participate 

in the drug card program, which includes all Medicare beneficiaries 

except for those who receive drug benefits under Medicaid. We also 

excluded beneficiaries who were automatically enrolled in a particular 

drug card by their Medicare Advantage plan. 

From this population, we selected a stratified random sample of 

beneficiaries from four mutually exclusive strata based on two criteria: 

enrollment status and eligibility for the $600 credit. To achieve our first 

stratification, we distinguished beneficiaries who had enrolled in the 

drug card program as of August 1, 2004 (enrolled beneficiaries), from 

those who had not enrolled by that date (nonenrolled beneficiaries). 

From the enrolled beneficiaries, we further stratified based on whether 

the beneficiary was enrolled in the $600 credit. For the nonenrolled 

beneficiary population, we stratified based on whether the beneficiary 

resided in a low-income ZIP code. We used low-income ZIP codes as a 

proxy to ensure that our sample would include some nonenrolled 

beneficiaries who would be eligible for the $600 credit. Table 6 provides 

the description, population size, and sample size for each of our four 

strata. 

TABLE 6: Population and Sample Size, by Strata 

Strata Description 

Population 

Size 

Sample 

Size 

1. Enrolled beneficiaries receiving $600 credit 

2. Enrolled beneficiaries not receiving $600 credit 

3. Nonenrolled beneficiaries residing in low-income ZIP code 

4. Nonenrolled beneficiaries not residing in low-income ZIP code 

817,969 

928,928 

38,524 

33,346,431 

300 

250 

400 

220 

Totals 35,131,852 1,170 

We obtained our populations of enrolled and nonenrolled beneficiaries 

(as of August 1, 2004) from CMS. For enrolled beneficiaries, the CMS 

data included an indicator for whether the beneficiary was also enrolled 

in the $600 credit. We used this indicator to distinguish strata 1 from 

strata 2, and then randomly selected our samples from each strata. 

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APP E N D I X ~A 

To stratify the nonenrolled beneficiaries, we used data from the year 

2000 Bureau of the Census to identify low-income ZIP codes. We 

defined low-income ZIP codes as residential ZIP codes where the median 

income was at or below 135 percent of the Federal poverty level in 2000. 

We used 135 percent of poverty because this is the income threshold for 

eligibility for the $600 credit. 

Survey and Response Rates 

We developed two survey instruments, one for enrolled beneficiaries and 

one for nonenrolled beneficiaries. Most of our key survey questions on 

awareness and use of resources were identical across the two surveys. 

This allows us to combine information across all respondents and 

project to the total population. However, our questions regarding 

enrollment differed. For example, we asked enrolled beneficiaries about 

whether they needed and received help with the enrollment process. 

We asked nonenrolled beneficiaries whether they plan to enroll in a 

card and why they had not enrolled. 

We allowed proxy respondents. We asked that if someone other than 

the beneficiary makes health care decisions on behalf of the beneficiary, 

then that person complete the survey. Approximately 20 percent of 

surveys were completed by someone else on behalf of the beneficiary. 

We conducted these surveys primarily by mail. In addition, we hired a 

contractor to call beneficiaries who did not respond to the mail survey. 

For beneficiaries with valid phone numbers, we made three attempts by 

mail and eight attempts by phone to obtain their responses. For 

beneficiaries without valid phone numbers, we made five mail attempts. 

These surveys were conducted between September and December 2004. 

Our overall response rate was 65 percent. Enrolled beneficiaries 

responded at a higher rate (75 percent) than nonenrolled beneficiaries 

(56 percent). Table 7 provides the response rates by strata and in total. 

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APP E N D I X ~A 

TABLE 7: Response Rates by Strata 

Strata Description 

Sample 

Size 

Response 

Rate 

1. Enrolled beneficiaries receiving $600 credit 

2. Enrolled beneficiaries not receiving $600 credit 

3. Nonenrolled beneficiaries residing in low income ZIP code 

4. Nonenrolled beneficiaries residing in non-low income ZIP code 

300 

250 

400 

220 

74% 

77% 

50% 

67% 

Total 1,170 65% 

Nonresponse Analysis 

Nonresponse can bias survey estimates if nonrespondents would have 

answered questions differently than respondents did, so we analyzed 

how nonresponse to our survey may have affected our survey estimates. 

We examined potential nonresponse bias effects on key survey questions 

related to awareness and use of each information source in our survey. 

Variables we had available for both respondent and nonrespondent 

beneficiaries were age, sex, race, and strata. We also categorized our 

respondents as either “early” or “late” responders depending on how 

many attempts it took to obtain their response. 

Our analysis provides no evidence that our survey results are biased 

due to nonresponse. Our general approach for each key variable was to 

impute missing data values, calculate a point estimate that included 

these imputed values, and compare this point estimate to our survey 

estimate from only respondent data. We imputed missing values using 

a two-stage method. First, we conducted multiple logistic regression 

analysis using the age, sex, race, and strata variables to predict 

response propensity to each key question. Second, we used information 

on how “late responders” answered key questions to impute specific 

values for nonrespondents. We assumed our imputed estimate was 

unbiased, and if it fell within the 95-percent confidence interval of the 

respondent-only estimate, then we judged our survey estimate 

unbiased. All point estimates using both respondent and 

nonrespondent-imputed data fell within the confidence intervals of our 

respondent-only estimates, indicating no evidence of bias. 

Survey Analysis 

We used several methods to analyze the survey data and focused on the 

key questions related to our objective, i.e., questions about awareness 

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APP E N D I X ~A 

and use of information resources and the enrollment process. We first 

calculated basic frequencies, weighted proportions, and confidence 

intervals using the statistical package SUDAAN. Appendix B provides 

confidence intervals for key variables at the 95 percent confidence level. 

We weighted the data based on probability of selection. It is important 

to note that beneficiaries in strata 4 have a substantially greater weight 

than the other three strata because the strata (not enrolled, not lowincome ZIP code) represents 95 percent of the total sampling population. 

Next, we ran Cochran-Mantel Haenszel chi-square (CMH) tests (a chisquare test designed for stratified samples) to identify significant 

difference between enrolled and nonenrolled beneficiaries. We also 

tested for significant associations among our key awareness and use 

variables. We considered associations to be statistically significant if 

the p-value was less than 0.05. Finally, we used SUDAAN to conduct 

logistic regression analysis to identify significant predictors of key 

variables, including awareness and use of specific sources. Appendix C 

provides additonal details on our logitic regression analysis. 

In addition to our key questions on awareness, use, and enrollment, we 

analyzed information pertaining to beneficiaries’ knowledge of the drug 

card program and nonenrolled beneficiaries’ enrollment decisions. This 

information is presented in Appendixes D and E. 

This inspection was conducted in accordance with the Quality 

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

and Efficiency. 

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Δ APPENDIX ~ B 

CONFIDENCE INTERVALS FOR KEY STATISTICS 

Table 8 provides confidence intervals for key statistics presented in the 

report for the overall population of beneficiaries (enrolled and 

nonenrolled). Tables 9 and 10 present confidence intervals for the 

enrolled beneficiary population for key statistics on awareness and use 

of information resources. Tables 11 and 12 provide information on the 

same statistics for the nonenrolled beneficiary population. Table 13 

presents confidence intervals for statistics on enrollment assistance. 

TABLE 8: Key Statistics, All Beneficiaries 

Percent of Beneficiaries: n 

Point 

Estimate 

95 Percent 

Confidence 

Interval 

Aware of any of the following information resources: 

1-800-MEDICARE, Medicare Web site, card sponsor, 

SHIP, or pharmacy 

Used any of the following actively acquired sources: 

1-800-MEDICARE, Medicare Web site, card sponsor, 

SHIP, or pharmacy 

Used any of the following passively acquired sources: 

news media or mail 

Used news media 

Used mail 

Saw television ads about the drug card 

Heard radio ads about the drug card 

Received no mail about the drug card program 

741 

586 

664 

662 

660 

706 

698 

721 

72% 

21% 

76% 

65% 

53% 

71% 

26% 

48% 

64-79% 

15-29% 

68-82% 

56-72% 

45-61% 

63-77% 

19-33% 

40-56% 

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

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APP E N D I X ~B 

TABLE 9: Awareness Statistics, Enrolled Beneficiaries 

Percent of enrolled beneficiaries who are aware they 

can get drug card information from: n 

Point 

Estimate 

95 Percent 

Confidence 

Interval 

Any of the following information resources: 

1-800-MEDICARE, Medicare Web site, card sponsor, 

SHIP, or pharmacy 

1-800-MEDICARE 

Card sponsors 

Pharmacy 

Medicare Web site 

State Health Insurance Assistance Program 

408 

406 

407 

409 

405 

410 

91% 

75% 

65% 

60% 

58% 

22% 

87-93% 

70-79% 

60-70% 

55-65% 

53-63% 

18-26% 

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

TABLE 10: Use Statistics, Enrolled Beneficiaries 

Percent of enrolled beneficiaries who used the 

following sources for information about the drug card: n 

Point 

Estimate 

95 Percent 

Confidence 

Interval 

Any actively acquired sources (i.e., 1-800-MEDICARE, 

Medicare Web site, card sponsor, SHIP, or pharmacy) 

Any passively acquired sources (i.e., news media or 

mail) 

News media 

Mail 

Pharmacy 

Card sponsors 

1-800-MEDICARE 

Medicare Web site 

State Health Insurance Assistance Program 

341 

372 

365 

370 

389 

336 

360 

351 

330 

77% 

84% 

69% 

68% 

42% 

38% 

27% 

8% 

4% 

72-81% 

80-87% 

64-73% 

63-73% 

38-47% 

33-44% 

23-32% 

6-12% 

2-6% 

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

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APP E N D I X ~B 

TABLE 11: Awareness Statistics, Nonenrolled Beneficiaries 

Percent of nonenrolled beneficiaries who are aware 

they can get drug card information from: n 

Point 

Estimate 

95 Percent 

Confidence 

Interval 

Any of the following information resources: 

1-800-MEDICARE, Medicare Web site, card sponsor, 

SHIP, or pharmacy 

1-800-MEDICARE 

Medicare Web site 

Pharmacy 

Card sponsors 

State Health Insurance Assistance Program 

333 

336 

333 

334 

330 

332 

71% 

56% 

47% 

41% 

38% 

21% 

63-78% 

47-64% 

39-55% 

33-49% 

30-46% 

15-29% 

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

TABLE 12: Use Statistics, Nonenrolled Beneficiaries 

Percent of nonenrolled beneficiaries who used the 

following sources for information about the drug card: n 

Point 

Estimate 

95 Percent 

Confidence 

Interval 

Any actively acquired sources (i.e., 1-800-MEDICARE, 

Medicare Web site, card sponsor, SHIP, or pharmacy) 

Any passively acquired sources (i.e., news media or 

mail) 

News media 

Mail 

Pharmacy 

Card sponsors 

1-800-MEDICARE 

Medicare Web site 

State Health Insurance Assistance Program 

245 

292 

297 

290 

314 

326 

333 

326 

253 

17% 

76% 

64% 

52% 

10% 

4% 

3% 

2% 

2% 

11-26% 

67-83% 

56-72% 

39-57% 

6-16% 

2-9% 

1-8% 

1-7% 

0-7% 

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

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APP E N D I X ~B 

TABLE 13: Enrollment Assistance, Enrolled Beneficiaries 

Percent of Enrolled Beneficiaries: n 

Point 

Estimate 

95 Percent 

Confidence 

Interval 

Needed help signing up for a drug card 416 37% 32-41% 

Of those beneficiaries who needed help enrolling, 

percent: 

Needed help filling out the enrollment form 

Needed help applying for the $600 credit 

Needed help obtaining the enrollment form 

Obtained enrollment assistant from any source 

Obtained enrollment assistance from a pharmacy 

Obtained enrollment assistance from 1-800-MEDICARE 

Obtained enrollment assistance by calling a card sponsor 

155 

155 

155 

155 

155 

155 

155 

51% 

44% 

36% 

81% 

41% 

21% 

10% 

43-59% 

36-52% 

29-44% 

74-86% 

33-49% 

15-28% 

6-16% 

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

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Δ APPENDIX ~ C 

LOGISTIC REGRESSION MODELS 

We used logistic regression to identify predictors of several key 

variables. We first ran CMH tests (a chi-square test designed for 

stratified samples) to identify variables that were significantly related 

(p value <0.05) to our variable of interest. Then, we included these 

significant variables in a logistic regression model predicting the 

dependent variable of interest. 

The following tables display the odds ratios for each of the significant 

predictors (at p< 0.05 level) in each of those logistic regressions. The 

nonsignificant variables are also listed below each table. In logistic 

regression, an odds ratio of one is considered neutral, an odds ratio 

greater than one is considered a positive relationship, and anything less 

than one indicates a negative relationship. For example, as shown in 

Model 1 below, beneficiaries who have seen television ads about the 

drug card are 2.80 times more likely to be aware of 1-800-MEDICARE 

than beneficiaries who have not seen such ads. 

Logistic Regression Model 1: Awareness of 1-800-MEDICARE 

The model in Table 14 predicts whether an enrolled beneficiary is aware 

that he/she can obtain information about the drug card by calling 

1-800-MEDICARE. 

TABLE 14: TV and Radio Ads and Receiving Mail Predicting Awareness 

of 1-800-MEDICARE, Enrolled Beneficiaries 

Independent Variable Odds Ratio P-value 

Receiving no mail 

Seeing television ads about the drug card 

Hearing radio ads about the drug card 

0.33 

3.91 

2.80 

0.000 

0.024 

0.000 

Variables that were not significantly related: income, age, education, gender 

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

We also tested relationships for all beneficiaries. Among all 

beneficiaries, not receiving any mail about the drug card strongly 

predicted that the beneficiary is not aware that he/she can get drug card 

information from 1-800-MEDICARE. In fact, the odds ratio for this 

variable approached zero. An odds ratio of zero would mean that a 

beneficiary who receives no mail has zero odds of being aware of 

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APP E N D I X ~C 

1-800-MEDICARE, i.e., awareness is impossible. For all beneficiaries, 

seeing television ads and hearing radio ads were each significantly 

related to awareness of 1-800-MEDICARE among all beneficiaries in 

CMH significance tests, but they were no longer significant when 

included in the regression model along with receiving no mail. 

Logistic Regression Model 2: Awareness of SHIP 

The model in Table 15 predicts whether a beneficiary will be aware that 

he/she can obtain information about the drug card by contact a SHIP. 

TABLE 15: Radio Ads and Receiving Mail Predicting Awareness of SHIP, 

All Beneficiaries 

Independent Variable Odds Ratio P-value 

Hearing radio ads about the drug card 

Receiving no mail about the drug card 

3.88 

0.32 

0.005 

0.028 

Variables that were not significantly related: income, age, education, gender 

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

In contrast to the variables that were not related to awareness (such as 

gender), seeing television ads about the drug card was significantly 

related to SHIP awareness in a CMH significance test. However, seeing 

television ads was no longer significant in the regression model above 

once the other variables were included. Also, being eligible for the 

$600 credit was significantly related to SHIP awareness only among 

enrolled beneficiaries. 

Logistic Regression Model 3: Nonenrolled Beneficiaries’ Use of Any

Actively Acquired Sources 

The model in Table 16 predicts whether a nonenrolled beneficiary, who 

is aware of any actively acquired source (1-800-MEDICARE, Medicare 

Web site, card sponsor, SHIP, pharmacy) will contact at least one of 

those sources. 

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APP E N D I X ~C 

TABLE 16: Predicting Use of Any Actively Acquired Sources, 

Nonenrolled Beneficiaries 

Independent Variable Odds Ratio P-value 

Having other drug coverage 

Using any passively acquired sources (news media or 

mail) 

0.13 

510.44 

0.014 

0.000 

Variables that were not significantly related : income, age, education, gender, marital status, 

proxy respondent, seeing television ads, hearing radio ads, receiving no mail 

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

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Δ APPENDIX ~ D 

ENROLLMENT DECISIONS AND EXPLANATIONS 

While our inspection report focused on beneficiaries’ awareness and use 

of information resources, we have additional information from our 

survey that falls outside this scope. The information here addresses the 

enrollment decisions of nonenrolled beneficiaries and the reasons they 

provided for those decisions. 

Enrollment Decisions of Nonenrolled Beneficiaries 

We asked nonenrolled beneficiaries about their enrollment decision. In 

response to this closed-ended question, 47 percent of nonenrolled 

beneficiaries indicated that they will not sign up for a card, and 

40 percent indicated that they are undecided. Five percent indicated 

that they have signed up for a drug card. See Table 17. As noted in the 

methodology, we pulled our sample of nonenrolled beneficiaries in 

August 2004, and surveys were completed between September and 

December 2004. 

TABLE 17: Enrollment Decisions of Nonenrolled Beneficiaries 

Decision 

I am not going to sign up for a Medicare drug card. 47% 

I have not yet decided whether to sign up for a Medicare drug card. 40% 

I am going to sign up for a Medicare drug card but have not applied. 8% 

I signed up for a Medicare drug card. 5% 

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

Explanations for Enrollment Decisions 

Reasons for not signing up. Many beneficiaries who say they are not 

going to sign up for the drug card may have decided against enrollment 

because they do not need the drug card or it would not benefit them. 

Eighty percent of the 47 percent of beneficiaries who decided not to sign 

up indicated it is because they have other drug coverage. Enrolling in 

the drug card may not be worthwhile for beneficiaries who already have 

insurance coverage. Additional reasons for not signing up include: “The 

Medicare card will not save me money” (23 percent), “I am not eligible 

or cannot tell if I am eligible” (17 percent), and “I do not have the 

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APP E N D I X ~D 

information I need” (13 percent). Some beneficiaries provided more 

than one reason for not signing up. 

Reasons for being undecided about signing up. In general, nonenrolled 

beneficiaries who are undecided about signing up seem to need more 

information about the drug card. The most common reasons these 

beneficiaries gave for being undecided are lack of information and 

confusion about eligibility. Forty-nine percent of those who are 

undecided about signing up indicated “I do not have the information I 

need,” and 49 percent said they could not determine if they would save 

money with the card. 

We considered whether beneficiaries who said they did not have the 

information they needed shared any characteristics that would help to 

explain their answer. We did not find any significant relationships. 

Lack of information was not related to awareness of any information 

resources. Nor was it related to the number of sources the beneficiary is 

aware of, number of sources used, or use of actively or passively 

acquired sources. 

Additonal reasons beneficiaries gave for being undecided about signing 

up include: “I am not eligible or cannot tell if I am eligble” (29 percent), 

“I have other presrcription drug coverage” (25 percent), and “I am 

waiting to see if prices go down” (20 percent). 

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Δ APPENDIX ~ E 

BENEFICIARY KNOWLEDGE OF DRUG CARD PROGRAM 

While our inspection report focused on beneficiaries’ awareness and use 

of information resources, we have additional information from our 

survey that falls outside this scope. The information here addresses 

beneficiary knowledge of the drug card program. 

General Card Program 

Nearly all beneficiaries are aware of the drug card program, but many 

nonenrolled beneficiaries are confused about eligibility for a drug card. 

One hundred percent of enrolled beneficiaries and 95 percent of 

nonenrolled beneficiaries are aware of the drug card program. Only 

about half of nonenrolled beneficiaries know that they are eligible to 

sign up for a drug card. It is plausible that some of these beneficiaries 

confuse eligibility criteria for the $600 credit with eligibility for the card 

program. When asked why they are not eligible for a drug card, the 

most common reasons beneficiaries offered relate to having too much 

income or having other insurance coverage. 

$600 Credit 

Most beneficiaries are aware of the $600 credit, although significantly 

more enrolled than nonenrolled beneficiaries know of this benefit. We 

asked all beneficiaries whether they have ever heard that some lowincome beneficiaries can get a $600 credit on their Medicare drug cards. 

Ninety-one percent of enrolled beneficiaries are aware of the $600 credit 

compared to 76 percent of nonenrolled beneficiaries. Higher awareness 

among enrolled beneficiaries is not surprising when we consider that in 

our survey population almost half of the beneficiaries enrolled in the 

drug card program are also enrolled in the $600 credit. 

In addition, we determined beneficiaries’ actual eligibility for the 

$600 credit based on their reported income, marital status, and 

insurance coverage. We then compared actual eligibility to whether the 

beneficiaries think they are eligible for the $600 credit. We found that, 

overall, only 30 percent of the beneficiaries who are actually eligible for 

the $600 credit realize they are eligible. Comparing enrolled to 

nonenrolled beneficiaries, only 21 percent of nonenrolled beneficiaries 

who are eligible for the $600 realized they are eligible for the $600 

credit. Seventy-two percent of enrolled beneficiaries who are eligible for 

the credit are aware of their eligibility. 

Most nonenrolled beneficiaries who think they are not eligible for the 

$600 credit cited income or assets as a reason for their ineligibility. It is 

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APP E N D I X ~E 

possible that some of these beneficiaries mistakenly think that, despite 

their low income, their financial assets disqualify them from receiving 

the $600 credit. Alternatively, some might understand that income is a 

qualifying factor for the $600 credit, but do not know what level of 

income qualifies them. 

Choice of Cards 

Virtually no beneficiaries recognize the breadth of drug cards available 

from which to choose, and over one-quarter of beneficiaries do not 

realize they have a choice of cards at all. When asked a closed-ended 

question about how many cards are available to choose from, less than 

one percent correctly identified that there are “16 or more” drug cards 

available. Nineteen percent of beneficiaries recognize that they have 

some choice by indicating “2 to 15” cards are available. However, 

27 percent of beneficiaries do not think they have any choice of cards. 

The remaining 54 percent of beneficiaries responded “don’t know.” 

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Δ APPENDIX ~ F 

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APP E N D I X ~ F

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APP E N D I X ~ F

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APP E N D I X ~ F

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APP E N D I X ~ F

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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: 

Emily Melnick, Project Leader 

Erin Lemire, Lead Analyst 

Laura Torres, Program Analyst 

Beth Middendorf, Presidential Management Fellow 

Margarita Rodriguez, Program Assistant 

Jocelyn Moore, Intern 

Suzanne Bailey, Intern 

Lindsey Hoy, Intern 

April Rush, Intern 

Tricia Davis, Director, Medicare and Medicaid Branch 

Linda Boone Abbott, Program Specialist 

Technical Assistance: 

Barbara Tedesco, Mathematical Statistician 

Kevin Farber, Mathematical Statistician 

Scott Horning, Program Analyst 

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