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34–647 PDF 2007

S. HRG. 110–56

MEDICARE PART D:

IS IT WORKING FOR LOW–INCOME SENIORS?

HEARING

BEFORE THE

SPECIAL COMMITTEE ON AGING 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

WASHINGTON, DC

JANUARY 31, 2007

Serial No. 110–1

Printed for the use of the Special Committee on Aging

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

SPECIAL COMMITTEE ON AGING 

HERB KOHL, Wisconsin, Chairman 

RON WYDEN, Oregon 

BLANCHE L. LINCOLN, Arkansas 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

BILL NELSON, Florida 

HILLARY RODHAM CLINTON, New York 

KEN SALAZAR, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

CLAIRE McCASKILL, Missouri 

SHELDON WHITEHOUSE, Rhode Island 

GORDON SMITH, Oregon 

RICHARD SHELBY, Alabama 

SUSAN COLLINS, Maine 

MEL MARTINEZ, Florida 

LARRY E. CRAIG, Idaho 

ELIZABETH DOLE, North Carolina 

NORM COLEMAN, Minnesota 

DAVID VITTER, Louisiana 

BOB CORKER, Tennessee 

ARLEN SPECTER, Pennsylvania 

JULIE COHEN, Staff Director 

CATHERINE FINLEY, Ranking Member Staff Director 

(II) 

C O N T E N T S 

Page 

Opening Statement of Senator Herb Kohl ............................................................. 1

Statement of Senator Gordon Smith ...................................................................... 3

Prepared Statement of Senator Larry Craig ......................................................... 35

PANEL I 

Beatrice Disman, new york regional commission, Social Security Administration, New York, NY .............................................................................................. 4

Larry Kocot, senior advisor to the Administrator, Centers for Medicare and 

Medicaid Services (CMS), U.S. Department of Health and Human Services, 

Washington, DC ................................................................................................... 17

PANEL II 

Howard Bedlin, vice president for public policy and advocacy, Access to Benefits Coalition, Washington, DC ........................................................................... 41

Ellen Leitzer, J.D., executive director, Health Assistance Partnership, Washington, DC ............................................................................................................. 116

APPENDIX 

Questions from Senator Lincoln for Beatrice Disman, SSA ................................. 139

Questions from Senator Carper for Beatrice Disman, SSA ................................. 140

Questions from Senator Kohl for Larry Kocot, CMS ............................................ 141

Questions from Senator Lincoln for Larry Kocot, CMS ....................................... 141

Questions from Senator Carper for Larry Kocot, CMS ........................................ 144

Questions from Senator Lincoln for Ellen Leitzer, HAP ...................................... 145

Statement submitted by Center for Medicare Advocacy, Inc. .............................. 147

Statement submitted by America’s Health Insurance Plans ............................... 173

Statement submitted by David Kyllo, executive director, National Center 

for Assisted Living ............................................................................................... 181

Statement submitted by National Senior Citizens Law Center .......................... 184

Statement submitted by AARP ............................................................................... 190

(III) 

(1)

MEDICARE PART D: IS IT WORKING FOR LOWINCOME SENIORS? 

WEDNESDAY, JANUARY 31, 2007 

U.S. SENATE, 

SPECIAL COMMITTEE ON AGING, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:35 a.m., in room 

SD–562, Dirksen Senate Office Building, Hon. Herb Kohl (chairman of the committee) presiding. 

Present: Senators Kohl, Smith, Craig, Carper, Lincoln, Nelson, 

Casey, and Whitehouse. 

OPENING STATEMENT OF SENATOR HERB KOHL 

The CHAIRMAN. Good morning. This hearing will commence now. 

We welcome all of our witnesses. 

Before we begin, I would like very much to thank Senator Gordon Smith for the great work that he has done as Chairman of this 

Committee over the past few years. 

Senator Smith, this Committee was thoughtful, diligent and very 

active under your stewardship, and we applaud your leadership 

and your enthusiasm, and we will try to build on much of the work 

that you started. As you know, our Committee has a history of bipartisanship, and in that spirit we look forward to working together. 

Even though most of us mark the passage of a year with cake 

and ice cream, I don’t know anyone who says growing older is really a piece of cake, and that is why this Committee’s work is so important. We are charged with finding solutions to the pressing 

problems that seniors face, and our agenda for the 110th Congress 

will tackle many of them. 

For example, we must rein in health-care costs, and we ought to 

start by promoting affordable generic drugs. We also must improve 

nursing-home oversight to make sure seniors get safe and quality 

care. With the baby-boom generation set to retire en masse, we 

have to make sure older Americans can stay in the workforce 

longer, if they so choose, and we must also help people prepare for 

their long-term care needs. 

Finally, we intend to hold a series of hearings to fix the problems 

with Medicare’s prescription drug program, so that seniors can finally enjoy a simple, affordable benefit. Today, more than 24 million people are receiving their drug coverage through Medicare 

Part D, and we have a responsibility to make sure that the program works for all seniors. 

2

To start today’s hearings, we will explore problems with the lowincome subsidy benefit and identify practical solutions. It is worth 

noting that this extra help for low-income seniors was one of the 

major selling points cited by supporters of the law when it passed, 

and, so far, that reality is far from the promise. 

Last year got off to a rocky start, as many low-income seniors 

were denied the drugs they needed at the pharmacy. While some 

of those problems were resolved, serious challenges remain that are 

preventing low-income seniors from getting the low-income subsidy. 

First, many prescription drug plans have changed their benefit, 

and not all participate in the low-income subsidy program. Some 

seniors did not receive the letters notifying them that they need to 

choose a new plan. So many are showing up at the pharmacy confused and frustrated. 

Some seniors did switch plans, but their pharmacy has not been 

given an up-to-date record, so these seniors are being charged incorrect copays, or leaving without their drugs. Seniors faced many 

of these same problems last year, and we believe they should have 

been fixed by now. 

So I believe it is time for CMS to put together a comprehensive 

plan and report back to this Committee on how they intend to fix 

these problems. Second, I am also concerned about the more than 

3 million seniors who are projected to be eligible for the low-income 

subsidy, but are not receiving it. 

In November 2006, Health and Human Services’ Inspector General recommended that the Social Security Administration have access to IRS data so that they can better target potentially eligible 

low-income seniors. I am working on legislation to fix this, and I 

hope my colleagues on the Committee will join me. 

Finally, some 600,000 poor seniors are losing the subsidy altogether. Some may still be able to obtain extra help, but they will 

need to apply, and since the application process is so onerous, we 

know that some seniors simply give up. The Administration needs 

to do everything in its power to find eligible seniors and make the 

application process a simple one. 

We also need to take a serious look at the asset test to make 

sure that it is fair, easy to navigate and does not exclude seniors 

who are truly low-income and need extra help with their drug 

costs. As we enter the second year of the Medicare drug benefit, we 

have an obligation to make sure it is working for all seniors, but 

particularly for our poorer seniors, who need the help most. 

The recommendations from our witnesses can lead to real solutions, and, of course, we all hope and trust and expect that the Administration is willing to work with us to implement them. 

Again, we thank you all for being here. 

We turn now to Senator Gordon Smith for his statement.

3

OPENING STATEMENT OF SENATOR GORDON H. SMITH 

Senator SMITH. Thank you, Senator Kohl. It was a pleasure to 

work with you last Congress, and it will be so in this, as well. Our 

bipartisan tradition on this Committee will certainly continue on 

my account. So I appreciate very much your calling this important 

hearing. 

It is the first for the Aging Committee in the 110th Congress, on 

the issue of low-income subsidy. LIS is one of the best features of 

Medicare’s new prescription drug benefit. Millions of seniors now 

have access to affordable prescription drug therapies, many for the 

first time. 

Last year, the Committee looked at the difficulties many dual-eligible beneficiaries had in transitioning to the new program. I look 

forward to revisiting some of the issues that were raised at that 

hearing. 

Since Medicare Part D became effective last year, the Centers for 

Medicare and Medicaid Services and the Social Security Administration have made a great deal of progress to ensure that the benefit is working well for all beneficiaries. However, there are still a 

number of improvements that can be made to the program, especially to the LIS benefit. 

Ultimately, it is Congress’s responsibility to ensure that all lowincome seniors who have difficulty paying for prescription drug 

costs get the help that they need and the help that we intended 

they have. Last spring, I filed legislation to create a special enrollment period for newly eligible LIS beneficiaries and to waive their 

late-enrollment penalty. 

Fortunately, CMS made changes administratively, but I would 

like to write the changes they made into law. Giving low-income 

seniors additional time to enroll in Medicare Part D ensures they 

are able to choose a plan that best fits their health-care needs. 

Despite this progress, I do find it troubling that recent estimates 

still show that there may be at least 3 million seniors eligible for 

LIS who have yet to apply for it. It is essential that CMS and SSA 

and their community partners continue working to capture these 

seniors through targeted outreach efforts. 

I expect we could help many more seniors with their drug costs, 

if only they knew extra help was available to them. In addition to 

this, there are a number of things we can do in Congress to help 

ensure that all seniors who legitimately need help with their drug 

costs get it. 

So, in the coming weeks, I will introduce legislation with my colleague on the Finance Committee, Senator Bingaman, that will reform the asset tests used to determine eligibility for low-income 

subsidy. Our proposal, which was developed with input from 

groups like AARP and the National Council on Aging, aims to 

make it easier for seniors to meet some of the current test’s requirements and remove unnecessary administrative burdens. 

I believe the existing LIS application is too complex and it is preventing seniors from getting the help that they need. I also plan 

to reintroduce a bill filed last Congress that creates parity in the 

cost-sharing charged beneficiaries living in nursing homes and assisted-living facilities. 

4

Our current policy weighs the cost sharing for beneficiaries in 

nursing homes, but those who live in assisted-living and other community-based facilities illogically have to pay for it. Frankly, I find 

it unacceptable. I was pleased to be joined by colleagues on the 

Aging Committee, specifically Senators Nelson, Clinton and Lincoln, as cosponsors of that measure. I am glad they have agreed to 

work with me again this year. 

I look forward to hearing an update from CMS and SSA on how 

well the LIS benefit is working. While these two agencies have had 

some difficulty in sharing information in the past, particularly with 

determining subsidy eligibility and Medicare Part D premium withholding, I am confident they are putting forth all kinds of good 

faith and their best efforts to make this new benefit work for our 

seniors. 

I thank them for that work and what they did on a rushed basis 

last year to make a difficult situation easier. 

I am hopeful our discussions today will provide the Committee 

useful insights on how Congress can ensure that all beneficiaries 

in need, all those who are eligible, get the help they deserve with 

their drug costs. 

So, thank you, Mr. Chairman. Let’s carry on. 

The CHAIRMAN. Thank you, Senator Smith. 

We are pleased to welcome the first panel here today. 

Our first witness will be Beatrice Disman of the Social Security 

Administration. Ms. Disman has served for over a decade as SSA’s 

regional commissioner of the New York region. In 2003, Ms. 

Disman became chair of SSA’s Medicare Planning and Implementation Task Force. This task force is responsible for implementing 

SSA’s role in the Medicare Modernization Act. 

She will be followed by Larry Kocot of the Centers for Medicare 

and Medicaid Services, CMS. Mr. Kocot serves as senior advisor to 

the administration of CMS. In this capacity, he has worked closely 

with the administrator in the implementation of the Medicare Part 

D low-income subsidy benefit. 

So we welcome you both, and we look forward to your testimony. 

Ms. Disman. 

STATEMENT OF BEATRICE DISMAN, NEW YORK REGIONAL 

COMMISSIONER, SOCIAL SECURITY ADMINISTRATION, NEW 

YORK, NY 

Ms. DISMAN. Thank you so much, Mr. Chairman. 

Thank you so much, Senator Smith. 

Thanks for inviting Social Security today to discuss our ongoing 

efforts under the Medicare Prescription Drug Program to sign up 

Medicare beneficiaries for the low-income subsidy (LIS), or, as we 

commonly call it, ‘‘extra help’’. 

As you indicated, I am Bea Disman. I am the Regional Commissioner of the New York region, and I was really given this incredible opportunity to share the implementation of a very vital program to the American public. 

In this role, I have seen the dedicated efforts of so many Social 

Security employees and partners within and outside of Government, as they have reached out to those individuals who could benVerDate 0ct 09 2002 08:30 Jun 15, 2007 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 H:\DOCS\34647.TXT SAGING1 PsN: JOYCE
5

efit from the low-income subsidy. I am pleased to be able to share 

our story. 

I am also pleased to be here with our colleagues, who have 

played an important role in implementing this new program. 

In the past year, Social Security has continued its intensive efforts to locate low-income Medicare beneficiaries, and provide them 

with an opportunity to file for this important benefit. We have used 

targeted mailings, personal phone calls, computer data matches, 

community forums, partnerships with State agencies and nonprofit 

organizations, fact sheets, word of mouth—in short, any and all 

means at our disposal—to reach those eligible for the ‘‘extra help’’. 

Throughout 2005 and 2006, Social Security provided a number of 

alternatives for beneficiaries who applied for ‘‘extra help’’ assistance. Scanable paper applications, in office applications, community application-taking events, Internet and media telephone applications all have been a part of this effort. 

Even though means testing, by its very nature, is complex, Social 

Security created an application which allows individuals to apply 

for the ‘‘extra help’’ as quickly and as easily as possible. 

During these past 2 years, Social Security held or participated in 

more than 76,000 Medicare Part D/LIS outreach events. In many 

of these events, we were joined by Centers for Medicare and Medicaid Services (CMS) and other partners, including my colleagues 

who will testify later this morning. 

We have been in the communities, in senior citizen centers, pharmacies, public housing, churches any place where we thought senior citizens or the disabled were likely to be found. 

We worked with State pharmaceutical programs, State Health 

Insurance Programs, Area Agencies on Aging, local housing authorities, community health clinics, prescription drug providers and 

others to identify people with limited income and resources who 

might be eligible for the ‘‘extra help’’. 

Throughout these efforts, Social Security’s goal has been to reach 

every potentially eligible Medicare beneficiary multiple times, in a 

variety of ways. As you know, there are many estimates out there 

as to the size of the eligible population, but whether there are 300 

or 3 million people, Social Security’s job is the same—find them. 

Find them where they live, find them in the communities where 

they work, and find them any way we can. 

Our message is simple: if you could possibly benefit from the program, SSA will help you apply. As you may recall, during the initial launch phase of the ‘‘extra help’’ program in the spring of 2005, 

we mailed almost 19 million applications. We cast a very wide net. 

Such agency mailings continue to be a valuable tool in our efforts 

to inform the public. For example, the annual cost of living adjustment notices, sent to over 50 million Social Security beneficiaries, 

as well as our annual notice to individuals potentially eligible for 

the Medicare Savings Programs, included ‘‘extra help’’ information. 

Also, Social Security identified approximately 1.5 million disability beneficiaries who received an ‘‘extra help’’ application, but 

did not return it. We mailed a special follow-up letter to these 

beneficiaries in the spring of 2006, explaining that ‘‘extra help’’ will 

not reduce their disability payments. 

6

In addition, Social Security contracted with a vendor, who made 

more than 9 million follow-up calls. Subsequently, Social Security 

personally called 400,000 beneficiaries who the vendor identified as 

needing assistance. In another outreach, we personally called over 

300,000 beneficiaries who had previously received the Medicare 

$600 assistance under the Medicare drug discount card but had not 

applied for the ‘‘extra help’’. 

Social Security has also reached specific beneficiary communities, 

those with representative payees, those who speak Spanish, AsianAmerican and African-American households and those aged 79 and 

older. Social Security has made special efforts to help the recipients 

who have lost their deemed status. 

In September 2006, Social Security and CMS together mailed 

more than 600,000 applications, with notices to the Medicare beneficiaries who were no longer automatically eligible. To date, more 

than 230,000 have reapplied. This is in addition to those who have 

regained automatic eligibility through the States. 

Social Security has started a pilot to personally call 10,000 individuals who have lost their deemed status and have not yet filed 

for ‘‘extra help’’. The results of the pilot will guide our approach in 

following up with the rest of the population. 

Social Security also sends out between 120,000 and 130,000 

‘‘extra help’’ applications each month to individuals who are newly 

enrolled in Medicare. As of mid-January 2007, Social Security has 

found more than 2.3 million individuals eligible for ‘‘extra help’’. 

Just as important, we continue to receive between 30,000 and 

40,000 applications for ‘‘extra help’’ almost every week, over 

600,000 since the beginning of the fiscal year. While SSA employees across the Country continue to promote this valuable benefit, 

we realize our job is not completed and we continue to look for 

more ways to reach those eligible for the ‘‘extra help’’ program. 

In conclusion, I want to express my personal thanks to this Committee for their continuing support of the agency. As you know, Social Security is operating under a continuing resolution, with funding levels significantly below the President’s request. 

This means Social Security faces considerable challenges in managing all of our vital workloads. However, I can tell you from my 

own experience that the dedicated employees of Social Security will 

continue to do our very best, not only in administering the low-income subsidy, but also in providing our important traditional services. 

We look forward to our continuing dialog with organizations, advocacy groups and, of course, the Committee. 

Thank you, and I will be glad to answer any questions you have. 

[The prepared statement of Ms. Disman follows:]

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The CHAIRMAN. Thank you for your testimony. 

Mr. Kocot. 

STATEMENT OF LARRY KOCOT, SENIOR ADVISOR TO THE ADMINISTRATOR, CENTERS FOR MEDICARE AND MEDICAID 

SERVICES (CMS), U.S. DEPARTMENT OF HEALTH AND 

HUMAN SERVICES, WASHINGTON, DC 

Mr. KOCOT. Thank you, Chairman Kohl, Senator Smith and distinguished members of the Committee. I am Larry Kocot. I am senior advisor to the Administrator of the Centers for Medicare & 

Medicaid Services. As you mentioned, Mr. Chairman, I have been 

deeply involved in policy development and implementation of Medicare Part D. 

Yesterday, CMS released the latest enrollment numbers for the 

Medicare prescription drug benefit. More than 1.4 million beneficiaries have enrolled in Medicare’s Part D program since June 

2006, bringing the total number of people with comprehensive prescription drug coverage to more than 39 million. 

Over 90 percent of all people eligible for the Medicare prescription drug benefit are receiving the prescription drug coverage they 

need. Five separate surveys have reported independently that more 

than 75 percent of beneficiaries are satisfied with the program. 

Without question, Part D has been a positive change to the lives 

of Medicare beneficiaries, especially for the people who receive the 

Medicare low-income subsidy. One of the main objectives, as you 

mentioned, of the Medicare Modernization Act, was to provide the 

greatest assistance through access to prescription medication to 

those with the greatest need. That is what CMS is doing today. 

The low-income subsidy provides substantial help to Medicare 

beneficiaries with limited incomes, including a Federal subsidy 

ranging from 25 to 100 percent of the monthly premium cost for 

qualified plans and minimal cost sharing for covered drugs. Recognizing the importance of this benefit to this vulnerable population, 

CMS began taking steps to reach out to beneficiaries with limited 

incomes immediately after the bill was signed. 

As of today, nearly 10 million low-income beneficiaries are getting comprehensive drug coverage for little or no cost. 6.9 million 

were enrolled through our automated processes and an additional 

2.3 million enrolled beneficiaries submitted applications that were 

approved by SSA. 

In comparison with other means-tested programs, the Medicare 

low-income subsidy benefit enrollment numbers are impressive. 

However, we will not rest until we have reached and assisted every 

beneficiary that qualifies and wants to apply for the low-income 

subsidy. 

With the recently extended special election period that allows 

low-income subsidy-approved beneficiaries to enroll through the 

end of 2007 without a penalty, these numbers should continue to 

grow. Additionally, as Ms. Disman mentioned, of the 632,000 beneficiaries who lost their low-income eligibility status for this year, so 

far about 35 percent have regained their eligibility and now qualify 

for the low-income subsidy. 

People who are receiving the low-income subsidy are very satisfied with the coverage they received. According to a recent survey, 

18

87 percent of dual eligibles—that is, beneficiaries eligible for both 

Medicare and Medicaid—who are receiving benefits through Part D 

feel peace of mind now that they are enrolled in Part D. 

More than nine out of 10 dual eligibles are satisfied. Forty-six 

percent of the people who reported skipping or splitting dosages 

prior to Medicare’s prescription drug coverage say they no longer 

have to do so because of Part D. 

Nevertheless, as I said, we still need to reach people who may 

be eligible, but have not applied for the low-income subsidy. Our 

work to identify and enroll these beneficiaries has been a multifaceted, continuous effort that did not stop with the end of the first 

enrollment period. 

Given that many beneficiaries are difficult to reach through traditional means, CMS has ongoing special initiatives targeting beneficiaries in areas which may be isolated from the general community outreach efforts. 

We are working closely with over 40,000 partners who have 

sponsored and participated in the 12,700 events that we have held 

to date. Some of our strongest partners include the organizations 

represented here today, the Access to Benefits Coalition, the 

Health Assistance Partnership, the National Council on Aging and 

our sister agency, the Social Security Administration. 

The one-on-one counseling and personalized attention that these 

partnerships made possible enabled CMS to reach tens of millions 

of people, one person at a time. Another critical component of 

CMS’s outreach initiatives has been the direct engagement of the 

provider community and especially the tens of thousands of pharmacists who did so much to get this program off the ground. 

One year ago, with the startup of the most significant change in 

Medicare since its creation in 1965, CMS faced a number of systems and process issues that, if left unaddressed, would have curtailed some Part D enrollees access to covered drugs. 

CMS has worked hard to find and fix the problems and improve 

this program, and we will continue to do so. As a result, better 

communications between plans and pharmacies, enhancements to 

file and data exchange with plans, SSA and the States and other 

systems and process improvements, have enabled us to take steps 

early to avoid similar issues in 2007. What a difference a year 

makes. 

Well before the year began, CMS worked with pharmacies and 

drug plans to closely monitor the program as it entered its second 

year. Though we continue to look for, and we are ready to solve, 

any problems that do arise, hundreds of thousands of newly enrolled beneficiaries have gone to pharmacies for the first time without a hitch in January. 

We continue to see operations run smoothly. Whether it is pharmacists at the drugstore or beneficiaries filling their prescriptions, 

very few of the problems that people encountered at the program’s 

implementation have been experienced this year. 

Thank you, again, Senator, Mr. Chairman, and thank you for 

this opportunity to be here with you today. I am happy to take any 

questions you might have. 

[The prepared statement of Mr. Kocot follows:]

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The CHAIRMAN. Thank you very much. 

More that 600,000 poor seniors are losing the low-income subsidy 

that covered nearly all of their drug costs last year. Some may still 

be able to obtain extra help, but they need to apply, as we know. 

Of the 600,000, how many have reapplied this year and are continuing to receive a low-income study. 

Ms. DISMAN. Within the Social Security Administration, of the 

230,000 that have applied at Social Security, at this point in time 

we have 132,000 that have been found eligible of the 191,000 that 

we have processed. 

The CHAIRMAN. Well, it is my understanding, as you point out, 

that these seniors receive letters notifying them that they were no 

longer automatically eligible. The question I ask is wouldn’t it have 

been easier, or simpler, if you had just started the applications for 

them and asked them to provide the necessary information to determine their true eligibility, instead of automatically removing 

them from the program? 

Ms. DISMAN. I will have to yield to my colleague in the Centers 

for Medicare and Medicaid Services, since that is within their jurisdiction. 

Mr. KOCOT. Well, Senator, as you know, we can only serve beneficiaries who are qualified for the low-income subsidy. Those beneficiaries that did lose some status in MSP or SSI, other than Medicaid, once they do drop off those rolls, we are required to have 

them apply for the subsidy and qualify for it, so we really have to 

have them qualified and applied for. 

We are required to get them to provide evidence that they do 

qualify, the burden of proof really shifts to them. 

The CHAIRMAN. Well, yes. What I have said is wouldn’t it have 

been better to simply send them the application, along with the notification that they need to reapply? 

Mr. KOCOT. Well, Senator, that is exactly what we did. We sent 

them a letter telling them that they were no longer automatically 

going to qualify and that they should apply as soon as possible and, 

in fact, many did. 

Ms. DISMAN. The application was with the notice that we wound 

up jointly drafting and sending. 

The CHAIRMAN. So the application went out with the notification 

that they are no longer eligible. 

Mr. KOCOT. That is right. That they are no longer automatically 

eligible. 

The CHAIRMAN. Right. 

Mr. KOCOT. It did encourage them. As a matter of fact, many of 

these people probably are eligible, but they do have to apply. 

Senator, if I might add, we also followed up with plans, and CMS 

itself followed up with a lot of different communication, as did a 

lot of other outreach groups, pharmacies and plans working cooperatively to reach these people one-on-one. We have really taken on 

quite a bit of effort to get them to reapply and, as a result, many 

have. But this, we acknowledge, is the hardest population to reach 

and the hardest population to spur to action, but we will continue 

trying. 

The CHAIRMAN. Well, with so many who have not been able to 

regain their admission to the program, what is it that you intend 

33

to do to reach them that we haven’t done yet? What are your ideas 

for improving on your ability to reach these people? 

Mr. KOCOT. Well, we are working with many of our partners that 

we have been working with over the last 2 years, and many are 

submitting ideas to us and we will be working with them to come 

up with an action plan to reach the rest of these beneficiaries. As 

a matter of fact, Senator, many of these beneficiaries—our experience doesn’t show a large number, but some are showing up at 

pharmacies, some are telling us they didn’t know. 

What we are doing is we are getting them into the process, having them apply and working with the plans to take care of their 

immediate needs if they are emergency needs. So we are taking 

these on a one-by-one, case-by-case basis so that no one falls 

through the cracks. 

Ms. DISMAN. Senator, we have had the opportunity on the local 

level, with the Regional Commissioners, to work with various 

States, to help identify these people and to have them file. We are 

also personally now going to start calling these people. 

Many of them will not qualify, because they have too much resources, but we are really attempting to reach out on a one-on-one 

basis, and all of our offices are aware that if anyone comes in and 

says that they just realized that they don’t have the low-income 

subsidy, that they are to take the application, and we actually have 

a special procedure between Social Security and CMS to really 

track that individual. 

The CHAIRMAN. Last year, some seniors opted to have their Medicare Part D plan premiums automatically withheld from their Social Security checks. As a result of confusion between drug plans, 

CMS and SSA, some seniors had too much money withheld and 

will be receiving refunds next month, while others had too little 

withheld and are being asked to pay more. 

What has been done to ensure that this confusion will not happen again this year? 

Ms. DISMAN. Well, Senator, I am pleased to report that, looking 

at the data exchange between CMS and SSA this year, there has 

been much improvement. We are looking at new enrollments. It 

has been more timely and more accurate. We actually have our 

staffs working very closely together, looking at how we hand off 

data between each other, looking at all of the various exchanges. 

We are all focusing on what the issues are and ways that we can 

make improvements. 

We are as concerned with the individuals not having the correct 

premiums, the impact on their Social Security benefits, and we are 

very concerned that it be done in a timely and accurate manner. 

We have had a process of us getting the data back to CMS after 

they transmit something to us within 2 days, so that we tell them 

whether or not it has been successful or there has been a problem 

with the data. 

So our staffs are extremely focused on that, and it is our commitment to try to really deal with the issue. 

The CHAIRMAN. Senator Smith. 

Senator SMITH. Thanks, Senator Kohl. 

Beatrice, I have heard a number of reports that some beneficiaries have difficulty accurately reporting in-kind contributions 

34

for the asset test that goes with this benefit. Obviously, given that 

misrepresenting assets is a Federal offense, I can understand why 

some might be dissuaded from applying. 

I wonder if you have any thoughts about how we can make it 

easier to report in-kind contributions so this is not an unnecessary 

deterrent. 

Ms. DISMAN. Well, Senator, I think as you know, when the legislation was enacted, it really had reference to the Supplemental Security Income (SSI) program and the various income levels and inkind support and maintenance is certainly one of the areas. Anything that can be done to simplify the categories certainly simplifies the application and simplifies the understanding and the administrative aspects of it. 

We actually try to approach this area of in-kind support and 

maintenance by having just one question on the application, by 

having the person estimate, by us not verifying the information 

and by us setting up a flat amount if it was over a certain amount. 

But we did that within the structure of what the statute is at this 

point in time. 

Senator SMITH. I doubt that beneficiaries are—maybe some, but 

many are deliberately trying to misrepresent their assets. But, for 

example, for anyone who may be interested in what I am talking 

about, for example, if a senior is getting Meals on Wheels, is that 

an asset for purposes of the asset test? If so, what kind of value 

do you put on it in terms of meeting the qualifications? 

Ms. DISMAN. Well, Meals on Wheels, Senator, is not an asset. 

Senator SMITH. OK. 

Ms. DISMAN. But I think what you are talking about with the inkind support and maintenance is if a relative provides for the telephone bill. Let’s say they elect to pay a telephone bill. 

Senator SMITH. What I was referring to is in-kind contributions 

come in under the asset test, as I understand it. 

Ms. DISMAN. They come in under the income test. 

Senator SMITH. OK, so for purposes of the income test, even that, 

people don’t want to misrepresent it. But what would Meals on 

Wheels be for purposes of the income test? 

Ms. DISMAN. It wouldn’t. Meals on Wheels do not count as income. 

Senator SMITH. OK. 

Ms. DISMAN. There is a whole list of income that doesn’t count. 

Senator SMITH. I appreciate the clarification. 

Larry, current law waives the cost share requirement for certain 

low-income beneficiaries who receive long-term care services in 

nursing homes. But, as I stated in my opening statement, those 

who receive services in community-based settings, like assisted living facilities, don’t get that. 

My question is, what steps can CMS take to help these beneficiaries with their drug costs until Congress enacts a more permanent solution to the problem? 

Mr. KOCOT. Well, as you know, Senator, this is kind of a statutory problem for us in the interpretation of institutionalized beneficiaries. It does not include those facilities that you had talked 

about. 

35

We are doing everything we can to try to facilitate, as you know, 

people into the community. For all the right reasons, the reasons 

that you had stated, we want to actually incentivize people to use 

the assisted living facilities and so forth rather than having to resort to go to long-term care facilities. 

Senator SMITH. It doesn’t make much sense, does it, that there 

is this inherent bias toward one versus the other, when the other 

may actually save a lot of money. 

Mr. KOCOT. We certainly agree with you that the incentives 

should be aligned for people to have choices that give them alternatives that are other than a long-term care institutionalized setting. 

Senator SMITH. But, to be clear, you don’t really have a lot of administrative elbow room under the current statute? 

Mr. KOCOT. I don’t think we do, Senator. 

Senator SMITH. So Congress needs to act. 

Mr. KOCOT. We can certainly investigate and report back to you 

on what administrative relief we think that we can provide. 

We understand your concerns regarding the imposition of cost 

sharing on the full benefit dual eligible population enrolled in home 

and community-based settings. However, we do not believe we have 

latitude to treat home and community-based recipients as institutionalized for the purpose of the cost sharing exemption. 

Senator SMITH. I would appreciate it if you would do that, because obviously the sooner Congress acts, the better, but the sooner 

the Government acts in a general sense, better still. 

If you do have any administrative flexibility to get rid of this distinction, this bias, that is really counterproductive to our own bottom line, I would appreciate knowing what you——

Mr. KOCOT. I am not aware of any, but we will get back to you, 

Senator. 

Senator SMITH. Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Craig. 

Senator CRAIG. Mr. Chairman, again, I haven’t had yet the opportunity to publicly say congratulations on becoming the Chairman of this Committee. I, sometime back, was Chairman and enjoyed it a great deal. It can be an extremely valuable tool to do exactly what you are doing today, and I appreciate that. 

Let me ask for unanimous consent that my full opening statement be a part of the record. 

The CHAIRMAN. It will be done. 

[The prepared statement of Senator Craig follows:] 

PREPARED STATEMENT OF SENATOR LARRY CRAIG

Mr. Chairman, I know that others have made their statements and we have several witnesses who we want to hear from, so I will be brief in my comments. First 

of all, Senator Kohl I want to thank you for calling your first hearing as Chairman 

about this important issue. There is no question that Medicare Part D has had an 

enormous impact on the everyday lives of our seniors. 

However, I think it is worthwhile to note that this program has had an incredibly 

positive impact on the lives of our seniors. I have to admit that initially I was skeptical about the prescription drug program. I ultimately supported it because access 

to affordable prescription drugs is vital for our seniors. Since then, I have been 

pleasantly surprised at the level of success Medicare Part D has achieved—both in 

terms of beneficiary satisfaction and in decreased cost to the federal government. 

Recent reports indicate that Medicare Part D enjoys an 80 percent approval rating 

36

among beneficiaries is saving over $1100 per year in out of pocket costs for medications. 

As for the focus of this hearing—low-income beneficiaries—I think Medicare Part 

D has performed well in this respect as well. In May 2006, the Centers for Medicare 

and Medicaid Services (CMS) estimated that 3.2 million of 13.2 million persons eligible for low-income subsidies did not have prescription drug coverage through 

Medicare Part D or another source. This means that approximately 75 percent of 

low-income beneficiaries are receiving prescription drug coverage. When considering 

that this population is much more difficult to reach than the general Medicare population, it is impressive that the efforts to enroll these individuals in the program 

were this successful. CMS and the Social Security Administration (SSA) have taken 

steps to further encourage enrollment by these individuals. 

I wanted to take a moment to recognize the successes of Medicare Part D, but 

I am not under the illusion that the program is perfect. As our witnesses have discussed in their testimony, there have been problems with implementation, particularly for ‘‘dual-eligible’’ individuals who previously received prescription drugs 

through Medicaid. Our witnesses have also highlighted that one source of these 

problems are delays in sharing data among CMS, SSA, and private prescription 

drug plans. 

Unfortunately, these kinds of problems are not unique to CMS and SSA. As 

Chairman, and now as Ranking Member, of the Veterans Affairs Committee I have 

examined the issues of data sharing between the Department of Defense (DoD) and 

the Department of Veterans Affairs (VA). DoD and VA have come a long way in 

terms of sharing data in order to better serve our veterans but there is still work 

to be done. This is also true of CMS and SSA. Improved data sharing will go a long 

way towards resolving many of the difficulties that beneficiaries are currently experiencing. I am hopeful that both agencies recognize the importance of this issue and 

are working to improve data sharing. 

With that said Mr. Chairman, I want to again thank you for holding this important hearing. I want to welcome our witnesses and I look forward to hearing from 

them.

Senator CRAIG. But I think in that statement I would be remiss 

if I didn’t say that Part D is a roaring success. That is coming from 

the skeptic that I was thinking, that we could not make it as successful as it has become, and today it has nearly an 80-plus percent 

favorable rating amongst beneficiaries. For a new Federal stand-up 

program, in the short time that it has been in existence, that is a 

pretty darn good record. 

I know we struggle with trying to be as inclusive as possible, Mr. 

Chairman, but there is also a reality, at some point it becomes the 

personal responsibility of the individual involved here, because enrollment is voluntary. While we can push as much information at 

them as possible, sometimes you can’t force them to do something 

that is voluntarily their responsibility. 

Having said that, let me move in this line of questioning. Some 

individuals, including both members on the next panel of witnesses, have suggested that SSA be given access to IRS data to target outreach to low-income beneficiaries. 

First of all, how helpful would this be in your attempt to reach 

these low-income individuals? Secondarily, if we are going to start 

deciding that IRS can now distribute information for purposes of 

marketing a voluntary program, isn’t that a little bit of big brother 

and a step too far? 

Beatrice, do you want to tackle that one? 

Ms. DISMAN. I will tackle part of it, Senator. 

Certainly, I think when we talk about the ‘‘extra help’’ and the 

low-income subsidy, I think you know we went to great lengths to 

identify the population that might be eligible for the ‘‘extra help’’. 

We cast a very wide net to be able to do that. 

37

Our approach really would be the same, using multiple ways, a 

variety of ways of contacting people, whether it be the mailings, 

the personal phone calls, the community events, the telephone, the 

Internet. 

However, having information as to what people’s tax information 

or pensions and things that we don’t have available, would have allowed us to more efficiently target this population. 

So, for example, our initial launch was 19 million people that we 

sent low-income subsidy applications to. We knew that this was a 

very wide net, but because we did not have access to information 

that could have given us resource information on individuals or 

other kinds of income, we cast such a wide net, not to exclude anyone. 

So it certainly would help to have a more efficient targeting, but 

there is sensitivity on using——

Senator CRAIG. So you are suggesting that big brother it might 

be, but it will be at least an efficient big brother? 

Ms. DISMAN. Well, I am also suggesting the sensitivity on using 

tax information for non-tax purposes. 

Senator CRAIG. I would hope so. 

Ms. DISMAN. I really do think that both the Administration and 

Congress have to look at it and see what it is. But, certainly from 

a programmatic point of view and where I am as operationally administrating the program, it would have helped us to be more efficient. 

Senator CRAIG. OK. Maybe to both of you, a common problem 

that I hear from my constituents about Medicare Part D, and one 

that our second panel has cited, is a delay in data sharing amongst 

CMS and SSA and private plans. We know that CMS and SSA are 

both Federal agencies. 

Questions would be, what is being done to make it easier for 

these two entities to share information, and what can be done to 

improve data sharing between the public and the private? 

Mr. KOCOT. Well, Senator, we have come to know quite a bit 

about data sharing due to some of the problems that we encountered last year, and we have done everything that we can to work 

with plans to streamline that data sharing. In addition, we have 

worked with SSA to streamline data sharing. 

But one of the things that is a reality that we face, and not only 

with SSA, but also with plans, is that people are real time, but, unfortunately, benefits administration is not. 

It does take time for data to be collected, for example, from a 

plan, and to be transferred to CMS, as in the case of the withholding from Social Security. It then has to go to Social Security. 

It has to be checked, it has to be verified. If there are problems, 

it is sent back and then it is sent back again and then it goes into 

a Social Security check, done by the Treasury Department. 

So, in that process, not only do you have to have every piece of 

data correct and amounts that are correct, but also you have to 

have enough lead time so that you can get it into, for example, taking it out of a Social Security check. You have to have lead time 

to get it all confirmed and verified, so there is a time frame built 

into any process for benefits administration. 

38

We are doing everything we can. We have been working handin-hand with Social Security to look at all of their processes, and 

all of our processes, to try to streamline and cut out steps along 

the way. We have been successful in doing that, and we will continue to do that. 

We have done the same thing between plans and pharmacies, 

and we have cut down a lot of that time and we have cut down 

a lot of the margin of error that can happen in those processes. 

This is a new program. We are learning and we will continue to 

learn, streamline and improve. 

Senator CRAIG. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Whitehouse. 

Senator WHITEHOUSE. Thank you, Mr. Chairman. 

I have just come off a very energetic campaign season that lasted 

about 2 years. I am from Rhode Island. As you may know, Rhode 

Island has the third-highest population of seniors in the Country, 

and the only two that are ahead of us are Arizona and Florida, 

which are destination States for well-off seniors. 

So I would submit that we have the highest population of people 

who are likely to be needing the Part D services of any State in 

the Country, and I have to tell you that our experience is very different than Senator Craig’s in Idaho. 

I could not go into a senior center and mention Part D without 

hearing hisses and boos spontaneously from the crowd. Over and 

over again, I was approached by people telling me stories that were 

heartbreaking. A fellow came to one of my community dinners and 

his 93-year-old grandmother was going to lose her apartment—she 

had been independent her entire life—because she had fallen into 

the donut hole and could not afford her medication and her apartment any longer. 

Every week we had another heartbreaking story come through 

the door. I know that there are people for whom life is better as 

a result of Part D. But, at least in Rhode Island, where many seniors gather together at senior centers, live in senior high rises, 

there is a lot of concern and sense for those whom the system has 

failed, who couldn’t fight their way through the extraordinary confusion and profusion of options and gave up, who fell into the donut 

hole. 

The seniors talk to each other about that, and we have a very, 

very contrary experience in Rhode Island. I think ‘‘Part D stands 

for disaster’’ was a phrase we heard all the time, and ‘‘Part D, they 

gave it the right grade,’’ is a phrase that I heard all the time. So 

I come at this from a different perspective than, I guess, Idaho 

projects. 

There are a number of issues that concern me about this, but I 

think I really want to hear from you on two. 

One is, in terms of outreach, to help seniors who may or may not 

have their full faculties with them, fight their way through the 

complexity, fight their way through the forms, fight their way 

through the asset tests, fight their way though the multiple burdensome, confusing, often conflicting mail they are getting from the 

Government and the different programs. 

39

What is the best way you think that we can streamline this so 

people can make a simple up-down decision, or at least maybe two 

or three simple up-down decisions to escalate this? That is question 

one. 

Question two is that, in Rhode Island and I think in many other 

States, we had a pharmaceutical assistance program for the elderly 

that was State-supported. It is called RIPAE in Rhode Island, R–

I–P–A–E. What happened was that, as soon as Part D went into 

effect, the Administration proposed cutting that benefit in half, because they were being told by the folks involved that the benefit 

was going to be far less utilized. The reason it was going to be far 

less utilized was that it was an add-on benefit. 

When you have got 17 different programs and 17 different 

formularies and, at the time, the companies were free to change 

the formulary midstream and dump people off medications that 

they had taken the program just to get access to, when you had 

that fluid an environment in Part D, there was nothing secure 

enough for RIPAE to attach itself to fill the gap. Consequently, the 

proposed reduction. 

Are you seeing that in other places, where the State additional 

benefit is being reduced, or its application has been made a lot 

more difficult, as a result of all the complexity of Part D? Is there 

a way to recapture the funds from the States and coordinate them 

better with the Part D benefit? 

So, simplicity and better coordination with existing State programs would be the two questions I would have for you. 

Mr. KOCOT. Would you like me to start? 

I think, Senator, it is important to note that there are two parts 

to your question, and one is application for the benefit, or enrollment in the benefit, and then application for the low-income subsidy. We will probably want to answer them separately, because I 

think you are asking two separate questions. 

With regard to enrollment in the benefit, which I will take first, 

we have relied on the outreach, the one-on-one partnership and the 

help of many in the community to assist people through the application process, understanding their plans and so forth. As a matter 

of fact, one of our most active partners, and one of the most successful partners, has been one of your constituents, CVS. 

They were, early on, an active participant with us in educating 

seniors and reaching out to them, holding events at senior centers. 

They actually developed a tool to help beneficiaries understand 

their choices and define what choice is best for them. They also 

were with us early in 2005 as one of the primary organizations that 

sponsored low-income subsidy application fairs and reaching out to 

all of their applicants, and all of their customers, even prior to the 

drug benefit even taking place. 

So we have a lot of partners in the community who are working 

with us, many very successfully, touching people like no other people can, for example, like pharmacists do. People rely and trust 

their pharmacists, and we have been utilizing that asset. 

You asked a question about better utilizing and better coordinating with State programs, and I want to answer that, but I wanted to correct one thing you said. You said that people were switching formularies midstream. I can tell you that we have a policy and 

40

no plan can switch a formulary that will have a negative impact 

on a beneficiary. 

So any plan that is switching formularies midstream and a beneficiary is hurt by that, they have to grandfather those people if 

they are in that plan and relied on that plan’s information for that 

formulary, so we want to hear about it. I don’t think that any exist, 

but I would like to hear about them, if they do. 

Senator WHITEHOUSE. OK, I will follow up. 

Mr. KOCOT. In terms of better coordination with the States, certainly, we can always coordinate better with the States. I haven’t 

heard, and I don’t know the specifics about Rhode Island, but I 

haven’t heard of any benefit coming less from a State. 

Indeed, the whole point of the program was to allow the States 

to add on to the benefit that Part D offers so that they could enhance their seniors’ benefits with qualified SPAPs and other programs. 

So, again, I don’t know the specifics of Rhode Island. I would like 

to hear more about that, because they should be able to augment 

what seniors are getting in Rhode Island, not take away from it. 

Senator WHITEHOUSE. Although you can understand how it 

might be hard for a State program to provide a supplement to, in 

our case, 17 different formularies or even more formularies in other 

States, and to those that change on an annual basis. 

Mr. KOCOT. Well, actually, Senator, we have a process for States 

to work within so that they can utilize the most and get the most 

out of the benefit, and we would be happy to work with the folks 

in Rhode Island to get them to the same place where I believe it 

is 22 other States are with qualified SPAPs. 

Senator WHITEHOUSE. We would love that, because obviously we 

have got a significant population and a very unhappy one. 

Ms. DISMAN. Senator, let me address the question about the 

‘‘extra help’’ application and how we can work together to simplify. 

But, before I do, let me comment that certainly Social Security has 

worked very closely with Rhode Island. Rhode Island itself has 

mandatory filing for the ‘‘extra help’’ application, because of their 

pharmaceutical assistance program. 

So, as a result, our colleagues on the ground in Rhode Island 

have been really instrumental in being in the community, and certainly in being at CVS and we have actually participated in much 

of this on-the-ground pharmaceutical and outreach kind of effort. 

Senator WHITEHOUSE. Yes, there clearly has been an enormous 

effort to try to overcome the hurdles. 

Ms. DISMAN. I think when you look at a program that is very 

complex and that really has income and resource requirements that 

are tied to the SSI program, that of its very nature becomes a program that is more difficult for a beneficiary to understand, as well 

as for administration. No matter how we have tried to simplify the 

program, certainly there are some difficult concepts in a meanstested program. 

I would say to you that there are many proposals that are on the 

table. We certainly have not had an opportunity to look at it or to 

look at the cost of the proposals. But, certainly, we would be willing 

to work with CMS, as well as with the Committee, to take a look 

at what a number of approaches could be. 

41

Senator WHITEHOUSE. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Whitehouse, and we thank 

you very much. You have been very informative and helpful, and 

we look forward to working with you. 

Senator WHITEHOUSE. Thank you. 

The CHAIRMAN. We call now our second panel. 

Our first witness on this panel will be Howard Bedlin, who is 

vice president for public policy and advocacy for the National Council on the Aging. National Council on the Aging chairs the Access 

to Benefits Coalition, which is comprised of National and community-based organizations who are dedicated to ensuring that low-income Medicare beneficiaries have access to needed prescription 

drugs at the most affordable cost. 

The Access to Benefits Coalition has developed a report on lowincome beneficiaries and the obstacles they are facing in Medicare 

Part D. That report is being released today, and Mr. Bedlin is here 

to discuss it with us. 

The second witness will be Ellen Leitzer. Ms. Leitzer is the executive director of the Health Assistance Partnership. HAP is an advocate for the Nation’s State health insurance assistance program 

and the beneficiaries that they serve. Ms. Leitzer is here to discuss 

the challenges HAP has seen in assisting Medicare beneficiaries to 

negotiate Medicare’s Part D low-income subsidy benefit. She will 

also have recommendations on how we can make the benefit run 

more smoothly, so we welcome you both here today. 

We will begin with you, Mr. Bedlin. 

STATEMENT OF HOWARD BEDLIN, VICE PRESIDENT FOR PUBLIC POLICY AND ADVOCACY, ACCESS TO BENEFITS COALITION, WASHINGTON, DC 

Mr. BEDLIN. Good morning. I appreciate the opportunity to be 

here before you. I am Howard Bedlin, vice president for public policy and advocacy with the National Council on Aging, the nation’s 

first organization formed to represent America’s seniors and those 

who serve them. 

NCOA also chairs the Access to Benefits Coalition, comprised of 

104 National members and hundreds of community-based nonprofits and up to 55 coalitions in 34 States. We appreciate the opportunity to testify before you today on improving the Medicare 

prescription drug low-income subsidy, or LIS. 

Many aspects of the Part D program implementation have been 

quite successful, due to the hard work of CMS and SSA and the 

Administration on Aging and their private-sector and nonprofit 

partners. However, there is still much work to be done on behalf 

of those in greatest need of help. 

The LIS makes it possible for those who qualify to receive the 

most generous prescription drug coverage, with no donut hole, no 

deductible and low or no premiums and copayments. However, an 

estimated 75 percent of the Medicare beneficiaries still without any 

prescription drug coverage are eligible for the LIS. We estimate 

that between 35 and 42 percent of those who needed to initially file 

an LIS application successfully did so, and also that 3.4 to 4.4 million beneficiaries eligible for the LIS are still not receiving it. 

42

As you mentioned, an immediate concern is the approximately 

400,000 beneficiaries who lost their automatic LIS eligibility and 

still need to apply. Because this problem will reoccur every year, 

it is important to minimize potential harm for this population. 

As Congress considers improvements in the Medicare Modernization Act and drug program this year, priority should be given to 

helping those vulnerable beneficiaries in greatest need. We would 

appreciate this Committee’s support and recognition that it will require a robust and sustained effort to assist those remaining lowincome beneficiaries. 

The promise of MMA will not be fully realized until we invest in 

cost-effective strategies to find and enroll all of those people who 

are eligible for, and not receiving, the extra help available. 

We have tested and analyzed various approaches for increasing 

enrollment in the LIS and other needs-based benefits, and four 

cost-effective strategies have emerged. 

First, use comprehensive, person-centered approaches, rather 

than focusing on a single benefit. 

Second, invest in the aging network and trusted communitybased organizations that can create broad-based coalitions. 

Third, promote the use of online tools that can screen for multiple benefits and directly file applications. 

Fourth, encourage States to use cross-matched lists people already enrolled in other public benefits to identify eligible individuals. 

We are pleased to issue a new report today titled, ‘‘The Next 

Steps: Strategies to Improve the Medicare Part D Low-Income Subsidy.’’ Copies of the report have been provided to the Committee 

and can be found on our Web site. We request that the full report 

be included in the hearing record. 

I want to highlight briefly eight specific, largely non-controversial, in my view, relatively inexpensive legislative recommendations 

from the report that we urge Congress to consider and take action 

on this year to help our Nation’s most vulnerable low-income seniors in greatest need. 

I want to thank you, Mr. Chairman and Senator Smith, for the 

interest and support that you expressed in your opening statements on several of these recommendations. We really look forward 

to working with you on them. 

First, we believe we should eliminate the low-income subsidy 

asset eligibility test. It is the single most significant barrier to the 

LIS, as it penalizes retirees who did the right thing, by saving to 

create a modest nest egg to provide security in their old age. This 

is also a cost-effective way to fill the donut hole for many of those 

in greatest need. 

Second, Congress should appropriate funds to support the most 

efficient and effective ways to find and enroll LIS eligibles. Firstyear funding of $4 million, we believe, is needed to begin the work 

of a new National Center on Senior Benefits Outreach and Enrollment that was recently reauthorized under the Older Americans 

Act. The center would apply lessons learned and use cost-effective 

strategies, create and support State and local benefits enrollment 

centers, maintain and update Web-based decision support tools, deVerDate 0ct 09 2002 08:30 Jun 15, 2007 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 H:\DOCS\34647.TXT SAGING1 PsN: JOYCE
43

velop an information clearinghouse on best practices and provide 

training and technical assistance. 

Third, permit beneficiaries to apply for LIS at any time, without 

penalty. More time is needed to find and enroll those still eligible 

for the extra help. Under Medicare Part B, low-income beneficiaries 

can enroll any time and are exempt from premium penalties. Medicare Part D rules should be consistent with Part B rules. 

Fourth, improve the LIS application form by eliminating questions on the cash surrender value of life insurance and in-kind support and maintenance, which Senator Smith mentioned. 

Fifth, index all LIS cost sharing by the Consumer Price Index, 

not prescription drug costs, so the contributions will not be increasingly unaffordable for those least able to pay. 

Sixth, permit SSA to access IRS tax filing data to better target 

outreach efforts while recognizing privacy concerns. I am sorry 

Senator Craig is no longer here, because there are some good precedents for this in the Medicare law now. 

Seventh, do not count the value of the LIS when determining 

benefit levels for other needs-based programs. 

Finally, do not count savings in 401(k) plans when determining 

LIS asset eligibility. 

In conclusion, now that the first year of the Medicare Part D prescription drug program has ended, we can look back and see what 

worked and where improvements are needed for low-income beneficiaries. We are grateful for the hard work of CMS and SSA in implementing Part D and their continued dedication to the low-income subsidy. 

But to fulfill the promise of the prescription drug benefit for 

those in greatest need, the public and private sectors should invest 

in evidence-based, cost-effective outreach and enrollment efforts 

and Congress should enact legislation this year that includes the 

recommended changes to the program that we have outlined. 

Thank you. I am happy to provide more detail on these recommendations or answer any questions. 

[The prepared statement of Mr. Bedlin follows:]

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The CHAIRMAN. Thank you, Mr. Bedlin. 

Ms. Leitzer. 

STATEMENT OF ELLEN LEITZER, J.D., EXECUTIVE DIRECTOR, 

HEALTH ASSISTANCE PARTNERSHIP, WASHINGTON, DC 

Ms. LEITZER. (OFF–MIKE) Sorry. Prior to joining the Health Assistance Partnership, or HAP, in June 2005, I provided legal services to senior citizens in Bernalillo County, NM. So on a daily basis 

for 22 years, my staff and I provided legal services and SHIP services, because we also had the SHIP service contract for the largest 

county in New Mexico, and, as you know, New Mexico is one of the 

poorest States in the Country. 

In addition to supporting SHIP services, HAP also is supporting 

the increased funding for the SHIP network. As you all know, in 

the past few years, with the enactment of Medicare Part D, State 

and local SHIP’s programs have been an extraordinarily valuable 

resource, but a woefully under-funded resource, to this Nation’s 

Medicare population. 

SHIPs were originally created in OBRA of 1990, and there are 

now 1,400 community-based SHIP programs, with 12,000 staff 

members and volunteers who counsel Medicare beneficiaries about 

their Medicare, their Medicaid, private insurance and other coverage options. 

Each year, SHIPs provide individual assistance to more than 4 

million Medicare beneficiaries. Of this Nation’s 43 million Medicare 

beneficiaries, approximately 27 percent have cognitive impairments. Thirty-one percent have limitations of activities of daily living. Almost one-third have not graduated from high school and 12 

percent are over the age of 85. 

SHIPs are unique in that they offer one-on-one, in-person counseling to one of the Nation’s most vulnerable populations. The Federal Government has depended on this Nationwide SHIP network 

and their staff of volunteers and paid staff to educate beneficiaries 

about Medicare drug plan benefits and costs and to assist with enrollment decisions that involve mind-boggling choices between dozens of plans. 

Many SHIPs have come to rely on HAP for technical assistance 

about complex Medicare issues and help with resolving difficult 

cases. Consequently, my organization is in constant communication 

with State and local SHIP programs Nationwide. Most of the requests for assistance in the past year involve Medicare Part D and 

the program’s impact on the 14.2 million beneficiaries who are eligible for low-income subsidy, or the LIS program. 

Many of these beneficiaries accessed their medications prior to 

2006 through State Medicaid programs. As a result, the SHIP network has brought many concerns and problems to HAP’s attention. 

The specific concerns are identified and described in detail in my 

written testimony. 

But, essentially, Medicare Part D is so complex and so arcane 

that it has overwhelmed the systems that CMS, SSA and hundreds 

of drugs plans created to implement the program. Those systems 

cannot, and do not, properly function. Consequently, Medicare 

beneficiaries are leaving pharmacies empty handed and without 

their medically necessary medications. 

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The system failures impact all Medicare beneficiaries, but the 

impact falls disproportionately on the LIS population, because they 

are the frailest, the most vulnerable, the least empowered to seek 

help and the least likely to be able to pay for their system errors. 

Now, let’s look at some of these failures. First, the system for 

real-time data sharing among CMS, SSA, plans and pharmacies 

does not work properly, with data being shared untimely, inefficiently or incorrectly. This flawed system results in beneficiaries 

being charged the wrong cost-sharing amounts at the pharmacy. 

This problem weighs most heavily on LIS beneficiaries who cannot afford to pay standard deductibles and copayments. Another result is that when data is not shared in real time, some beneficiaries 

find themselves in different plans, or in more than one plan. Usually, they are unaware of this shift. 

Two, all of the drug plans, particularly Medicare Advantage 

Plans, are using aggressive marketing tactics to enroll Medicare 

beneficiaries, with the LIS population being most vulnerable. These 

tactics include enroll and migrate, in which plans first enroll beneficiaries in stand alone prescription drug plans and then target the 

same beneficiaries to later enroll in Medicare Advantage Plan with 

Part D. 

The dually eligible are particularly vulnerable to this tactic because they have ongoing special enrollment periods. SHIPs report 

that sales representatives are blurring the important difference between original Medicare and private fee-for-service plans by using 

misleading catchphrases such as, ‘‘see any doctor you want,’’ ‘‘no 

network.’’ These sales representatives are failing to explain how 

PFFS require providers to agree to plans’ payment terms for each 

office visit or hospital stay. 

Moreover, many doctors are now deciding not to participate in 

these PFFS plans, so beneficiaries are all of a sudden having to 

find new providers. 

Three, confusing plan structure leads to problems accessing appropriate medications at the pharmacy counter. Because dozens of 

plans are available in most parts of the Country, each with different formularies and coverage rules, health-care professionals 

face a tangled web of prior authorization and formulary exception 

procedures that lack uniformity. 

Rather than take the time to untangle the web and work through 

the process, busy pharmacists and physicians simply substitute a 

drug, with few or no procedural restrictions. The result is that 

beneficiaries not only lose access to the drugs they really need, 

they also are losing access to their appeal rights. 

Fourth, the CMS regional and central offices require specific information about client problems on an individual basis and are inconsistent in addressing State and local SHIP needs. From the first 

day of the Part D drug program’s implementation, CMS has insisted on trying to resolve systemic problems on an individual 

basis. 

This is hugely inefficient and ineffective. Additionally, HAP has 

received numerous reports about some regional offices of CMS 

being unable or unwilling to provide technical assistance to State 

and local SHIP staff, who need help that only CMS can provide to 

resolve the problems. 

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Fifth, CMS produces misleading media campaigns and correspondence. This past fall, CMS issued an ad that advised beneficiaries to take no action if they were satisfied with their plans. 

The ad failed to inform enrollees that plans can make significant 

changes from year to year. 

Furthermore, CMS informational materials are often vague, are 

not available in languages other than English and do not address 

the needs of the visually impaired, the socially isolated and homebound and those with low literacy rates. 

Finally, customer service representatives, or CSRs, at 1–800–

MEDICARE and the Part D plans refer beneficiaries directly to 

SHIPs in situations that they should be handling themselves. 

Funding for the SHIP network was $31 million in 2006, and we understand that funding is going to be level in 2007. 

In contrast, the Medicare contractor Pearson Government Solutions received $440 million in 2006 for a 2.5-year contract. However, the SHIPs have reported that 1–800–MEDICARE CSRs and 

the plans refer beneficiaries directly to SHIPs for assistance, even 

with general and programmatic and enrollment issues. 

HAP supports legislation which will address and remedy the 

above-identified ongoing problems experienced by many beneficiaries, including those with low-income subsidy. We specifically 

endorse all of the recommendations that Mr. Bedlin talked about, 

on behalf of the National Council on Aging. 

We would also like to emphasize once again the value of the 

SHIP network to Medicare beneficiaries and, in addition, therefore, 

to supporting the remedies to existing LIS legislation, we urge this 

Committee to advocate for increased funding for the SHIP network 

of at least $1 per beneficiary in 2007 and for all future years. 

Again, thank you very much for asking me to testify. 

[The prepared statement of Ms. Leitzer follows:]

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The CHAIRMAN. Thank you very much. 

Do I take it that both of you would recommend that we do away 

with the asset test? 

Ms. LEITZER. Absolutely, Mr. Kohl. 

The CHAIRMAN. Mr. Bedlin. 

Mr. BEDLIN. Yes, absolutely. 

The CHAIRMAN. That is good to hear from both of you. 

In your experience, would more seniors apply for the low-income 

subsidy if the application process were streamlined, and can it be 

without doing any damage to that application process? 

Mr. BEDLIN. Very much so, and we do have some specific ideas. 

Take, for example, the question on the cash surrender value of a 

person’s life insurance program, something that I personally would 

have a real hard time finding somewhere in my house. It is complex, and typically seniors will use that for their burial expenses, 

to help their kids when they pass. So we don’t think that that 

should be counted against them. 

Senator Smith earlier asked about the question regarding in-kind 

support and maintenance, which penalizes someone if their family 

is helping them to pay for their grocery bills or their heating bills 

or for their trash collection bills. We don’t think that makes any 

sense. It changes from month to month. We think that question 

should be eliminated. 

We also have concerns about the application form in that it 

threatens someone with jail time if they fill it out wrong, which is 

not the case with a lot of similar application forms. Those mention 

perjury, but they don’t mention jail time. We think that should be 

eliminated. 

Fundamentally, though, we need to move from 20th century applications to 21st century, and that means really providing application forms online that can be submitted online. We file our taxes 

online. There is no reason why one should not be able to fill out 

a form for a whole host of benefits that they are eligible for, because there is a lot of correlation. 

I am not expecting that most of their seniors are going to do it 

themselves. They will probably ask their kids, or they will ask a 

counselor. Fill it out online, submit it online, it reduces the cost, 

it makes it a lot easier, that is the direction that we really need 

to go. 

The CHAIRMAN. Ms. Leitzer. 

Ms. LEITZER. Senator Kohl, I agree with everything that Howard 

has said. 

I would add that I have, in the past, tried to help clients for 

other Government programs figure out the value of their life insurance. Many of these policies were 20, 30, 40 years old; the companies were no longer in existence. It took advocacy on the part of 

me and my staff to try and figure out who now owned the company 

that was issuing this policy. 

So it is a time consuming and difficult process, and that includes 

also the process for figuring out in-kind contribution. It is very, 

very hard to do that. 

I would also like to address the issue that you raised earlier of 

the IRS data sharing. It is interesting to note that the Medicare 

Modernization Act already authorizes that for the Medicare Part B 

126

premium, so there is precedent for allowing data sharing by the 

IRS with SSA. 

The CHAIRMAN. That is good. 

One more question: In addition to the more than 3 million lowincome seniors who may be eligible for the subsidy but haven’t applied, more than 600,000 seniors, as you know, lost their automatic 

eligibility and need to reapply this year. Are our poorest seniors 

falling through the cracks? What can we do to reach this most vulnerable population? 

Mr. BEDLIN. That is a very good question, because, as we understand it, 400,000 of the 630,000 that still have not applied and are 

remaining out there. These are people who had the LIS last year, 

but now, when they go to the pharmacy, for example, they may be 

having to pay a deductible for the first time. So they are going to 

be in for a real surprise when they go to the pharmacy. 

Now, many of the plans have provided for, we understand, a 60- 

or 90-day transition period, so they may not get hit with this higher cost until March or April and they will be, again, in for a big 

surprise. There are things that we need to do, because this is going 

to happen every year. Next year at this time, we are going to be 

facing the same problem. 

A number of things can be done. I think we need to screen them, 

and before we tell them that they are no longer eligible, to make 

sure since they may well be eligible. I think we do need to, within 

the concerns of confidentiality and privacy, try to find these people 

and screen them for whatever LIS category they may be in. 

Second, I think we need to require some kind of a transition period. We shouldn’t be cutting them off on January 1. There should 

be some requirement that we use the months of January, March, 

and April to find these people after the open enrollment period is 

over. 

Finally, maybe there should be a presumption of some kind, that 

these people will continue to be eligible unless it can be rebutted 

that they are not. Why continue to put the burden on them? I think 

it is an area that we really need to take a close look at. 

The CHAIRMAN. That is good. 

Ms. Leitzer. 

Ms. LEITZER. Senator Kohl, I would just add to that that other 

benefit programs have a recertification process, so before somebody, 

a beneficiary, is dropped from a program, they are sent a letter to 

come in and be recertified, and I would suggest that that system 

should be followed for this population, as well. 

The CHAIRMAN. Thank you very much. 

Senator Carper. 

Senator CARPER. Thanks, Mr. Chairman. 

My thanks to both of you for joining us today, for your testimony 

and for responding to our questions. 

You may have spoken to the question that was raised while I 

was outside of the room. I think you have already spoken to it in 

part while I was in the room. 

We are going to have a debate, they have already had it in the 

House of Representatives, about changes in the Medicare Part D 

program with respect to what role should the Secretary of Health 

127

and Human Services play with respect to negotiating drug prices 

or not. 

The House has taken a position, and they have sent their legislation over to us for our consideration. I want to set aside the question of whether or not the Congress would mandate that the Secretary play a role like the House has suggested, or there would be 

an option for the Secretary to play that kind of role. 

Whether we end up agreeing or not on doing something on that 

score, what else should we do? I think there are a number of areas 

where you agree. You have mentioned a couple of them, and one 

of them was with respect to assets. 

Just run through for me again, just to re-emphasize the areas, 

as we take up legislation this, sort of a to-do list of things that you 

agree on steps that we should take. 

Mr. BEDLIN. Sure, thank you. 

I think we really need to prioritize where we want to spend limited resources. We all recognize that we are under PAYGO rules, 

and when we go to staffers, the first question we get is, how much 

does it cost, and how are we going to pay for it? So we need to 

prioritize. 

That is very important as we look at improving Part D, and we 

would argue that we need to start by looking at those who are most 

vulnerable, lowest income and in greatest need of help. 

I would ask that you think about a typical American grandmother; widow in her 80’s, living alone, relying on her Social Security check for income, multiple chronic conditions, taking a dozen 

or so medications. There are millions of women who fit this category. My grandmother was one of them. 

Let’s look at how current law would affect her eligibility for the 

low-income subsidy. If she saved during her life, to put away a little nest egg, generally around $30,000 to $40,000, current law 

counts it against her, to deny her the extra help she needs. 

Similarly, if she did the right thing, and during her working 

years invested in a 401(k) plan, current law counts it against her, 

to deny her the extra help she needs. If she has a life insurance 

policy, which, again, might help pay her burial expenses when she 

passes, current law counts it against her, to deny her the extra 

help she needs. 

If her kids help her with her expenses, be they grocery expenses 

or her heating expenses or trash collection, current law counts it 

against her, to deny her the extra help she needs. 

Let’s say she is getting the extra help and overcomes some of 

these obstacles, but her income is just above the poverty line. Let’s 

say it is $11,000 a year, which is less than $1,000 a month. That 

is over the poverty line. Under current law, her drug copayments 

will increase each year by more than two times her Social Security 

COLA, making her medications less and less affordable over time. 

Finally, again, if she is receiving this extra help, it is going to 

count against her in terms of how much help she is getting from 

other programs, so that current law would cut her food stamp benefits and cut her low-income housing subsidy. 

These are areas that we think need to be priorities. We think 

they are relatively non-controversial, relatively inexpensive, and we 

urge the Congress to take action on them this year. 

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Senator CARPER. I am going to come back and explain to us what 

you mean by relatively inexpensive——

Mr. BEDLIN. That is a good question. 

Senator CARPER. But, Ms. Leitzer? 

Ms. LEITZER. My organization has endorsed and we share the 

same recommendations with the National Council on Aging. 

Senator CARPER. Every one of them? 

Ms. LEITZER. I am with the Health Assistance Partnership. 

Senator CARPER. I said every one of their recommendations? 

Ms. LEITZER. Every one of their—in fact, our organizations 

worked on the recommendations jointly. 

In addition, my organization supports the SHIP network, the 

State health insurance assistance programs, that have been providing one-on-one counseling to the Medicare population. They are 

an extremely valuable network, they are woefully under-funded, 

and we would also urge that Congress allocate $1 per beneficiary 

for this network in 2007 and in future years, as well. 

Mr. BEDLIN. We agree with that. SHIPs definitely need more 

money, and we also think a wise investment is in the new National 

Center on Senior Benefits Outreach and Enrollment that was recently authorized under the Older Americans Act. We are trying to 

get a $4 million appropriation, because that new center would be 

utilizing all the lessons learned and cost-effective strategies that 

we think can make a real difference. 

Senator CARPER. In the pay-as-you-go world, where we are going 

to try live once again under the rules that existed about 4 or 5 

years ago, what is relatively inexpensive? Any thoughts on how we 

pay for what is relatively inexpensive? 

Mr. BEDLIN. Well, it is really a question of priorities. 

Senator CARPER. It always is. 

Mr. BEDLIN. There are a lot of things that we are spending a 

heck of a lot of money on, and this is a population who made America as great as it is, fought in World War II and worked all their 

lives to help their children. Now many of them are on fixed incomes and have a lot of chronic conditions and need help. So, certainly, they need to be a priority for us, in my view. 

We will see how CBO scores a lot of these proposals. We think, 

for example, back-of-the-envelope estimate on eliminating the asset 

test, would cost about $1.5 billion per year. That is probably by far 

the most expensive recommendation that we have from the list. We 

think the others are far less expensive. 

There are a lot of ideas that are being floated about with regard 

to how to pay for them. People are looking at the stabilization fund 

dollars that remains and so-called overpayments for Medicare Advantage Plans, so I think those could be potentially part of a package. 

Senator CARPER. Thanks very much. 

The CHAIRMAN. Thank you very much, Senator Carper. 

Senator Casey. 

Senator CASEY. Mr. Chairman, thank you very much for convening this hearing. 

I want to thank you for focusing our attention on issues of concern not just to families across the Nation, but in particular those 

families that are struggling with all of the challenges that I have 

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seen on the campaign trail over the course of 20 months when I 

was campaigning, all of the problems with Medicare Part D. 

As much as people appreciate that benefit, there have been tremendous problems in terms of confusion, in terms of access, but 

also in terms of whether or not we are going to focus on I think 

the urgent priority to have a negotiation for lower prices. But I 

think that this hearing today highlights some of the other problems 

that maybe don’t get as much attention as a negotiation question. 

One of the questions I had, I wanted to go first to Ms. Leitzer, 

about one of your recommendations. The third recommendation you 

made, and I am looking at your testimony on page five, which was 

this: enact a monthly copay cap, allowing some reprieve for those 

who take multiple medications per month. 

I wanted to have you elaborate on that. I know you have gone 

through it once, but some of these issues bear repeating and further emphasis. 

I know, for people in Pennsylvania, we have—depending on how 

it is counted, but I think we are still second in terms of the number 

of senior citizens, in terms of population—we have just over 1.9 

million people over the age of 65. We have got a huge Medicare and 

Medicaid population, of course, that includes those over 65 and a 

lot of people under 65 who benefit from those programs. 

But you cite in particular the hardship, and I wanted to have you 

elaborate on the question of that hardship. 

Ms. LEITZER. Senator Casey, the hardship is that many clients 

that are certified SHIPs—and, again, we are a National organization that are assisting SHIPs, but also in my own practice at the 

Senior Citizens Law Office in New Mexico, I had clients whose incomes were SSI or just above SSI level and they were taking 20 

medications. That is not unusual. 

The fact that they have to pay these copays for each medication 

they take, that adds up monthly. When you are talking about a 

really poor population that have other expenses—housing, heating, 

food—those expenses really make a difference to them, that added. 

So to cap what somebody’s monthly copays could be would be 

very, very helpful to this poorest population. 

Senator CASEY. Of the people that you are working with every 

day and that you see, you said it is not necessarily unusual to see 

individuals that have to take 20 or more medications per day. 

What percent, if you can estimate? I realize it is probably an estimate, but give it a good educated guess. We won’t hold you to it 

in specificity, but what percent of that population that you work 

with in your experience is in that category of 20 or more medications per day? 

Ms. LEITZER. I would say that it is more typical to be eight to 

10 to 12 medications, but it is not unusual to have people on 20 

medications. 

In fact, relating this to the 1–800–MEDICARE, when people 

would call 1–800–MEDICARE and they did have 20 medications, 

1–800–MEDICARE would say, ‘‘We can only handle people who are 

on nine medications or 10 medications or less.’’ So the SHIPs were 

handling a disproportionate number of Medicare beneficiaries who 

had large numbers of medications. 

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So, to answer your question, I would say that maybe 5 percent 

of the population are on 20 or more, but I would say maybe as high 

as 50, 60 percent who are on eight to 10 medications. 

Senator CASEY. Eight to 10 medications, a significant number. 

Mr. BEDLIN. Senator Casey, just a quick follow-up? 

Senator CASEY. Yes, sure. 

Mr. BEDLIN. Three things that can be done. 

One is Senator Smith will shortly be reintroducing a bill that 

treats dual eligibles getting home- and community-based care similarly to those in nursing homes. We support that bill. 

Second, I mentioned earlier how those copayments are indexed. 

For folks below 100 percent of poverty on LIS, they are indexed by 

the Consumer Price Index. For those between 100 and 150 percent 

of poverty, they are indexed by Part D costs, which are twice as 

high, generally, at least, than the Social Security COLA. There is 

no reason to treat them differently. They should all be indexed by 

CPI. 

Finally, again for dual eligibles, Medicare and Medicaid eligible, if a State should decide to help pay for that $3 or $5, or $1 or $3 

copay, they will not get a Medicaid match. That is 100 percent 

State dollars. We believe that the Federal Government should 

match that State contribution to help pay for dual-eligible copays. 

Senator CASEY. I know I have limited time, but let me get to one 

more. 

I wanted to focus, Mr. Bedlin, on your testimony, and one of the 

points that you made, if I can find it here on the right page, was 

on the question of outreach. On page 10 of your testimony, you talk 

about—and this, of course, is a list of recommended legislative 

changes. 

This, I guess, is the third on the list: Appropriate funds to support organizations that use a person-centered approach to outreach, 

which has been shown to be one of the most efficient and effective 

ways to find and enroll LIS eligibles. 

I point to this for a couple of reasons. One is, I know in the State 

of Pennsylvania, for example, with regard to programs that help 

very vulnerable populations—I am thinking in particular the Children’s Health Insurance Program, which I think has to be one of 

the priorities of this new Congress in terms of reauthorization—one 

of the biggest problems is, unless you have a sustained and massive television advertising campaign, no one knows about the program, at least with regard, in my experience, with the Children’s 

Health Insurance Program. 

So you flood the airwaves with television and the enrollments go 

way up. You take the T.V. or the other advertising off the air, eligibility goes down. 

Of course, there are some people in Washington and State capitals who say, ‘‘Well, if no one is calling to be enrolled, we must 

be doing a great job.’’ It is a myth and it is really misleading, in 

some cases intentionally misleading, because they don’t want to 

cover those people. They don’t want to have to pay for it, or maybe 

give up a tax cut to pay for it. 

But this question of outreach and the question of how you connect with people to give them the opportunity to access programs 

which will help them is of central concern to me, because too often 

131

it is overlooked. You can have a great program, great benefits, people can be helped by it, but unless those who don’t know about 

these programs have the opportunity, we are making a big mistake. 

But I just wanted to have you reiterate or elaborate or amplify 

what you said about outreach. 

Mr. BEDLIN. Thank you. You are absolutely right. Seniors don’t 

know about the benefits that they are eligible for. It is shocking to 

me that after 40 years, only 30 percent of seniors eligible for food 

stamps are receiving it. 

Under one of the so-called Medicare Savings Programs, which is 

pretty confusing, but there is one called the SLMB program that 

pays premiums for beneficiaries with incomes between 100 and 120 

percent of poverty. According to our statistics, only 13 percent of 

the people that are eligible for that are actually receiving it. There 

is a great deal that could be done. 

You mentioned patient-centered outreach. Part of the problem is 

that historically what we have done is SSA will do outreach for 

SSI. CMS will do outreach for the Medicare Savings Program. 

USDA will do outreach for food stamps. A lot of these people are 

the same individuals. There is a great deal of correlation. 

For example, we have found that 70 percent of the people who 

are eligible for the Part D low-income subsidy are also eligible for 

the Medicare Savings Program. The problem is we have been 

searching for needles in a haystack. 

Independently, we need to pull together all the different piles of 

needles that have already been found. Fifty-five percent of the cost 

is taken up by just finding these people. Once they have been 

found, we need to actually use a lot of the technology that is available online to get them enrolled in a whole host of benefits that 

they are eligible for. 

Pennsylvania is actually leading the way. They are doing some 

very innovative things at the State level with the PACE program. 

Actually, in our testimony, page 24 is all about the great things 

that Pennsylvania is doing, and we would love to be able to replicate what Pennsylvania is doing in the rest of the Country. 

Senator CASEY. Well, I wish I could take full credit for that, but 

I can’t. But I didn’t want to use my time to brag about the State. 

They do a great job. 

I think the problem that we face and the challenge that we face 

in this Congress is making sure—one of the challenges, I should 

say—is that someday people will say the same about the Federal 

Government on a whole host of issues that they perform at that 

level. 

So I don’t want to dwell on the negative and the challenges, but 

I think it is very important to emphasize what you have also 

brought to this hearing. 

I know my time is limited, but maybe we will come back. Senator 

Whitehouse, I wanted to make sure that he had time, because I 

like to listen to his questions. 

The CHAIRMAN. Thank you, Senator Casey. 

Senator Lincoln. 

Senator LINCOLN. Thank you so much, Mr. Chairman. I really 

appreciate your dedication to this Committee and to issues that 

132

come before us. It is one of my most favorite of all. I appreciate 

you, because I really feel like you, to bring up these issues and to 

provide us an opportunity—and we appreciate the panel that is 

here. 

I have several questions for the first panel, as well, and I apologize that I wasn’t here for that. But I would like to submit them 

to the Committee for answers in writing, if I might. 

The CHAIRMAN. Do it. 

Senator LINCOLN. Great, thank you so much. 

Mr. Bedlin, I just wanted to say, I have come from the Ag Committee, where we were having a meeting on food stamps and nutrition programs. It is quite interesting that our panelists there expressed the same concern about making sure that those who were 

signing up for food stamps could also sign up for the Part D. 

It seems kind of crazy that, with marketing as it is today and 

the technology that exists, that the technology exists to recognize 

my household as one that likes pets, eats ice cream, all these other 

kind of things that people know about us in order to market us, 

that we can’t figure out that when people are in a certain income 

level that they qualify for multiple programs that they should be 

getting that would improve their quality of life. 

So I very much appreciate your point on that. 

I hope, Mr. Chairman, that we will work with Chairman Harkin 

and others as we move forward with both the farm bill and some 

of our other issues—Senator Baucus, Chairman Baucus—in the 

Medicare arena, that we really encourage on behalf of seniors and 

the aging population in this Country, that we make it a more 

seamless process and one that is easier. 

It is unfortunate that those seniors that are eligible for food assistance programs don’t access it and could do so when they access 

many other programs. So I encourage us to really look at the opportunity and push the Federal programs and the Federal agencies 

into the 21st century and get them to where they can actually—

the other is veterans. 

We tried that out of my office a couple of years ago, encouraging 

the Veterans Association to couple with the Social Security Administration, to kind of show that same group of individuals what opportunities and what programs were available to them from both 

of those agencies. It does make a difference, when people do that, 

because it simplifies their lives. Certainly, as we know in our seniors, that that is an issue. 

I just want to make a couple of points from the questions I didn’t 

ask the first panel, and that is just mentioning these issues that 

are related to the Part D that are big problems in our State of Arkansas. Beneficiaries, especially the low income, they need to receive accurate and available assistance. They need better customer 

service. 

They are calling an 800 number. They wait sometimes a couple 

of hours, oftentimes finally get a Medicare staff person who can’t 

even resolve the problem. It sometimes give them inaccurate information, or it transfers the caller to someone else so they can wait 

another hour or couple of hours. Better customer service is going 

to be critical. 

133

Curbing the aggressive marketing that exists out there is also 

something in think that is going to be important. I know the CMS 

folks probably could address that. Then more support for counseling, and I would like to go to that so that I can direct to Ms. 

Leitzer—is that correct? 

Ms. LEITZER. That is correct. 

Senator LINCOLN. I just want to publicly thank the Health Assistance Partnerships that exist for us in Arkansas. They were absolutely tremendous. There are thousands of Medicare beneficiaries 

in our State, and certainly around the Country, that turn to their 

area agencies on aging, their State health insurance assistance programs—you mentioned SHIPs earlier—the Native American aging 

programs, for their enrollment assistance and counseling. 

I want to publicly thank those in Arkansas. The AAAS deserves 

such a big thanks for working and helping our seniors sign up. 

They were lifesavers in our State. We would not have had the success we did without them and the Social Security office, who went 

at a time which was incredible, because we got 65,000 evacuees 

from Katrina that came to Arkansas. The Social Security Administration regional office and their dedicated office in Arkansas, we 

could not have asked for more dedicated workers, worked through 

holiday weekends. They worked through weekends, both assisting 

the evacuees and then, in the next go-around, helping with our 

signup for Medicare Part D. 

CareLink is a good example, and I attended several of their counseling sessions. CareLink in central Arkansas, which is an AAAbased in Little Rock, it provided one-on-one Medicare Part D assistance to 5,574 older adults, spending an average of 63 minutes per 

counseling session. 

One-on-one counseling, it provides such an important means for 

these seniors to get the available information they need and understand it. It is one of the best ways to find people that are eligible 

for LIS, as we mentioned earlier, and help them fill out that difficult application form. 

That was the other thing we talked about with the food stamp 

and nutrition programs was simplifying applications and making it 

easier. But without those dedicated resources for outreach and assistance through the AAAs, such as CareLink, we just would have 

been unable to sustain the Medicare Part D efforts on an ongoing 

basis. 

I guess you probably talked about it here, and one of the questions I had for CMS was do they intend to help in terms of resources and funding for the partnerships that exist out there that 

have done them a tremendous service in making the Medicare Part 

D program accessible? I know you have mentioned how important 

those resources are, and, however, I think we can be helpful in directing that. 

I want you to know that I am sold. I am a believer and am enormously grateful for the efforts that were put into that. 

Maybe you all could even shed some light to the extent of the 

number of greater low-income citizens we could serve if we had 

more resources. I don’t know if you have got numbers, or maybe 

you have already talked about that when I ran over to the Energy 

Committee. I don’t know. 

134

Ms. LEITZER. Well, I would just like to say in response, and 

thank you so much for your expression of appreciation. The SHIPs 

and other partners have worked extraordinarily, and they worked 

through Christmas last year. 

Senator LINCOLN. They did. 

Ms. LEITZER. Some worked through Christmas this year. They 

just went above and beyond. 

I don’t know if you were here for the part of my testimony in 

which I talked about how the 1–800–MEDICARE contractor, Pearson Government Solutions, received $440 million for 2.5 years to 

provide services at 1–800–MEDICARE. They routinely refer callers 

for even the simplest questions to the SHIP programs——

Senator LINCOLN. Absolutely. 

Ms. LEITZER. SHIPs only got $31 million last year, and we understand it is going to be something like that, just not sure exactly 

how much. When you look at that discrepancy or disparity, it is 

huge. 

The SHIPs do one-on-one personal counseling that is invaluable 

when you look at the demographics of the Medicare population. I 

don’t know if you were here for that, but 27 percent are cognitively 

impaired. These are people who have a very difficult time dealing 

with information over the telephone or even with waiting or understanding messages. 

This is my experience from working with this population. If you 

give them voicemail, they start talking because they think they are 

talking to a human being and they don’t understand that this is 

a voicemail system. 

So one-third have not graduated from high school. That is a huge 

number. Thirty one percent have difficulties with activities of daily 

living. We are talking about a population that needs lots of help, 

and relatively few have Internet accessibility. 

CMS is all about everything is on the Internet. Well, frankly, 

this population doesn’t access the Internet. 

Senator LINCOLN. We complained heavily about that, because, for 

the seniors in Arkansas, as you said, in terms of the low-income 

nature, the educational levels, they would call 1–800–MEDICARE 

and then they would just get referred to go to the Web site. They 

did not have that kind of access, nor did they have the ability to 

discern from that what they needed to do. 

Because we were so involved with our partnerships and with the 

different groups, the SHIPs, particularly, we were able to really 

work with them and get them out there. They actually trained 

some of our local folks. We had people from the Rotary group or 

for the Sunday school classes that would kind of take a lesson from 

the SHIPs and from the Area Agency on Aging, and then they 

would go back to their Sunday school or their Rotary group and 

make a presentation from what they had learned. 

So they were great not just in doing what they did, but sharing 

their knowledge, because their ultimate purpose was really to get 

the information to seniors as best they could. So I am definitely 

sold, and I do want to publicly thank so much of all of those people 

that really made this happen. 

135

I would just like to add to Mr. Bedlin, your comments earlier, I 

tried to get the QMBs and the SLMBs automatically enrolled like 

we did the dual eligibles, but I lost that fight. 

Mr. BEDLIN. Well, you won a few, though. I mean, the reason the 

LIS is as generous as it is is in large part due to your leadership. 

We appreciate it. 

I did want to mention that we estimate that there are 3.5 to 4.5 

million beneficiaries that are eligible for the low-income subsidy 

and are still not receiving it, and we need to make that a priority 

and invest in finding and enrolling those folks. We need foundations. We need the private sector, who have stepped up a lot. 

The My Medicare Matters campaign has provided some resources 

to try to find them, and the Congress needs to step up by, as we 

mentioned, funding the SHIP programs at a higher level, maybe 

targeting some of those resources that SHIPs get to the low-income 

subsidy. We have found that it costs approximately $100 per enrollee, so it is not inexpensive, but there are a lot of ways that you 

could make that more cost effective. 

We have done some pretty sophisticated benchmarking analysis, 

looking back at benefits programs over the last several years, and 

there is wide variation based on what kind of methods you used. 

It can be $50, it can be $250. What we really need to do is take 

those lessons learned and take the best practices and find them in 

the most cost-effective strategies. As I mentioned in our testimony, 

we have a benefits—checkup Web site that we think can reduce 

costs. 

Many of those online applications are going to SSA and reducing 

their per-enrollee costs. We have helped to form this National center under the Older Americans Act that would also utilize a lot of 

these lessons to find these people in the most cost-effective way 

possible. So we are hoping the Congress will join in investing to try 

to help those people who need it the most. 

Senator LINCOLN. Mr. Chairman, one of the other topics that 

came up in our hearing in ag too was the asset tests and how complicated they were and difficult they were for seniors, particularly. 

That was something that we might think about in terms of the low 

income that are being denied the LIS because their assets are over 

the limit, sometimes just over that limit of $11,710 for individuals, 

which is phenomenal. 

But, anyway, those might be some areas we look at, and I just 

appreciate your patience with me, because I really love being on 

this Committee and I talk too much sometimes. 

The CHAIRMAN. Very good. 

Senator LINCOLN. Thank you. 

The CHAIRMAN. You are really informative. Just for your information, when you weren’t here, both our witnesses said they would 

favor disposing of the asset test. Thank you so much. 

Senator WHITEHOUSE.

Senator WHITEHOUSE. Thank you. I will be very brief, because I 

am running extremely late for my next meeting at this point, but 

I did want to let you know, first of all, from my point of view, it 

should not be this way and it does not have to be this way. So anything that I can do to be helpful, call on me. 

136

Second, in the context of all of the confusion, all of the delay, all 

of the multiple forms, all the people who never get onto programs 

that they are eligible for, what is the value that you have seen as 

you have worked in this system? 

What is the value of adding multiple providers into this equation, 

rather than having their be a CMS-run benefit for folks who are 

in this LIS category? What does it add to have that extra element 

of multiplicity, at a minimum, and confusion, perhaps. 

Ms. LEITZER. I would think the obvious. It adds a profusion of 

confusion. It is unnecessary. It is overwhelming individuals. It is 

overwhelming the system and it should not be this way. 

Senator WHITEHOUSE. We deal obviously in cost-benefit balances 

a lot in Government, and while those are clearly the costs, can you 

even think of a benefit to having that profusion? 

Ms. LEITZER. Speaking individually, because I am not authorized 

to speak on behalf of Families USA, which is my parent agency, individually, I do not see a benefit. 

Senator WHITEHOUSE. Just for the record——

Mr. BEDLIN. The process certainly could be simplified. I think 

there are far more plans that are participating than most people 

had ever anticipated. For us, one of the questions is does it pass 

the kitchen table test, when someone wants to really figure out 

which plan they want to select, which is very confusing, quite 

often? Probably the only way to do it in an informed way is using 

the Internet, and a lot of seniors don’t have that kind of access. 

One of the ideas that some have discussed is looking at the 

model of Medigap, when back in 1990 there were a whole variety 

of different Medigap plans that were very confusing. Congress, in 

its wisdom, decided to standardize some of those plans so that now 

there are 10 Medigap plans. 

I know this is an issue that Finance Committee Chairman Baucus has talked about it. He was very involved in that 1990 Medigap 

standardization process. 

My guess is that if you look at all the prescription drug plans out 

there, it would not be difficult for the National Association of Insurance Commissioners, for example, to try to figure out what the 

most common ones are and even get the industry to agree that 

there are some standard plans that if we were to say, you can offer 

this range, that it really would simplify things a lot for folks. We 

would be supportive of looking into that. 

Senator WHITEHOUSE. It would help deal with the call shifting 

issue that we get right now, where competitive plans have every 

interest to cost shift out to SHIPs, to senior centers and to everybody else to explain the confusion that they have wrought, rather 

than tarry the costs themselves and make sure that they are really 

doing an adequate job of explaining and outreaching. I think it is 

a giant cost shift you are seeing, when people get driven to the 

SHIPs to answer their questions, or to senior centers, or to State 

agencies. 

Mr. BEDLIN. It is certainly taxing their resources. They have got 

a lot of other work they do as well, and this past year has not been 

easy in terms of trying to provide the help people need and still 

doing a lot of the other work, such as helping people learn about 

preventive benefits under Medicare, which are also underutilized. 

137

Senator WHITEHOUSE. Thank you both very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator Whitehouse. 

We thank you so much for being here today. 

This is a very important issue. We need to do everything we can 

to see to it that our poorest seniors have access to the Medicare 

Part D benefit program, and we need to do everything we can to 

make the whole program more efficient and more effective. 

This hearing has shed a lot of light on the problems, as well as 

having come up with a lot of good, common sense, practical suggestions to improve the program. So your presence here has been very 

valuable, very helpful, and we thank you for taking the time. 

This hearing is closed. 

[Whereupon, at 12:25 p.m., the Committee was adjourned.] 

(139)

A P P E N D I X 

QUESTIONS FROM SENATOR LINCOLN FOR BEATRICE DISMAN

Question. There have been far too many problems in getting the right premium 

amount deducted from people’s Social Security checks and sent to the right Part D 

plan. In Arkansas, we are still getting calls about withholding issues—many of 

these problems go back to January 2006. 

Why is this such a big problem, how many total cases have there been, how many 

remain to be resolved, and how do you intend to prevent these problems from recurring. 

Answer. These premium withholding problems have been of great concern to SSA 

as well, and we are committed to working closely with CMS to resolve all outstanding withholding issues. 

Premium withholding originates with the beneficiary enrolling with the Prescription Drug Plan (PDP). The PDP inputs the information to CMS who in turn transmits it to SSA for premium withholding where appropriate. 

This means that in every case where a Medicare beneficiary has elected to have 

plan premiums withheld from a monthly Social Security benefit, SSA must rely on 

the successful transmission of correct withholding information across two separate 

entities. If there is a problem anywhere along this chain, the withholding request 

is either 1) never received by SSA, or 2) contains inaccurate information. 

By ‘‘containing inacurrate information,’’ we mean that the transaction does not 

tell SSA enough to verify the amount of required withholding, the effective dates 

of withholding, or in some cases, even the correct record to adjust. Historically, a 

significant number of CMS’ transactions have ‘‘rejected’’ because of errors in the 

transmitted data. SSA cannot correct the errors independently. 

However, the quality of transmissions we are receiving from CMS in 2007 has improved. Fewer CMS transactions contain data errors, and the occurrence of some of 

the more common errors has been reduced. SSA analysts have worked with CMS 

on an ongoing basis to reconcile data files, ensuring that the transactions flowing 

from CMS will make accurate premium and enrollment adjustments, per the beneficiary’s request. In effect, SSA performs a ‘‘trial run’’ of much of the CMS data, to 

verify that the final, accepted transaction will reflect the intent of the beneficiary 

(as relayed through the PDP and CMS). 

SSA defers to CMS regarding the total number of premium withholding cases 

there have been and the number of unresolved cases. 

We continue to work with CMS to analyze and simplify the data exchange between our two agencies, recently holding a 2-day process improvement workshop to 

help address unresolved issues. A primary goal of this effort is to reduce the occurrence of data edits without compromising the quality standards that are a hallmark 

of SSA’s business practice. We also continue to assist CMS in the resolution of outstanding premium issues. 

Question. The biggest complaint in Arkansas is that applying for the low-income 

subsidy is too challenging for seniors. I have been informed that the Social Security 

Managers in Arkansas have contacted many of the LIS folks from last year who 

didn’t return their redetermination forms. When contacted to inquire why they had 

not returned the forms, some said that they didn’t want to go through the process 

again, it just wasn’t worth it. 

The LIS application form is several pages (about 8) and, despite your best efforts 

to simplify it, is very complicated. 

Wouldn’t eliminating the asset test make the enrollment process much simpler? 

Short of that, aren’t there some questions that could be removed, like those about 

the cash value of life insurance and help from family and friends with groceries and 

other household expenses? 

Answer. SSA does not have the authority to make such changes administratively, 

as the requirements to consider assets and in-kind contributions are statutory in naVerDate 0ct 09 2002 08:30 Jun 15, 2007 Jkt 000000 PO 00000 Frm 00143 Fmt 6601 Sfmt 6601 H:\DOCS\34647.TXT SAGING1 PsN: JOYCE
140

ture. However, removal of either the asset test or the specific application questions 

you mention would clearly make the process simpler, but would also increase the 

costs of the program. 

The Medicare Modernization Act (MMA) directed SSA to follow Supplemental Security Income (SSI) methodology for counting resources. The SSI resource standards 

are in Section 1613 of the Social Security Act. MMA established the resource level 

significantly higher than the SSI level, which is $2,000 for an individual and $3,000 

for a couple. There is a sliding resource level for MMA, which combined with certain 

income levels determines if a full or partial subsidy is received. In 2007, for MMA 

purposes, an individual’s resource level could be $10,210 and a couple $20,410. As 

an extension of these MMA-liberalized resource limits, SSA does not consider nonliquid resources for purposes of the LIS program. However, the exclusion of liquid 

resources (such as cash-surrender value of life insurance and other resources that 

could be quickly converted into cash) would not be consistent with the SSI methodology intended by MMA. 

Likewise, MMA directed SSA to follow SSI methodology regarding income consideration (Section 1612 of the Social Security Act). Under these rules, considered income includes earned income, unearned income, and in-kind support and maintenance (ISM). Assistance from family and friends with groceries and household expenses meets the definition of ISM for SSI purposes, thus its consideration for the 

LIS is consistent with the intent of MMA. 

QUESTIONS FROM SENATOR THOMAS CARPER FOR BEATRICE DISMAN

Question. It is my understanding that over 600,000 low-income beneficiaries lost 

their ‘‘deemed’’ status, making them no longer dual eligible. Now, this group who 

were automatically enrolled in the benefit at first will have to proactively sign up. 

What are CMS and SSA doing to ensure this group does not fall through the cracks? 

Answer. We share your concern. To address this situation, SSA and CMS arranged for the SSA low-income subsidy application to be included with the notice 

that CMS mailed to all affected beneficiaries in September 2006. This means that 

every beneficiary who lost his or her deemed status received a letter explaining the 

need to proactively apply for the subsidy and also received the form needed to apply 

for ‘‘extra help.’’

SSA continues to receive applications based on this mailing. To date, about 

230,000 of these beneficiaries have reapplied. This is in addition to a number of individuals who have regained automatic (deemed) eligibility through reentitlement to 

certain State programs. 

In an additional effort to reach out to these beneficiaries, SSA is doing a study 

to make personal phone calls to 10,000 individuals who have lost deemed status 

and, to date, have not reapplied. By conducting this study we hope to encourage 

these individuals to apply, but just as important, we hope to learn about the reasons 

why some individuals have not returned the application. As we proceed with this 

study, our next steps will be guided by what we learn from these phone calls. 

Question. I believe the automatic enrollment process for dual eligibles performs 

an important function by guaranteeing that low income beneficiaries get immediate 

coverage. However, I am concerned that because dual eligibles are randomly assigned to plans that do not necessarily fit their needs, we may be creating more 

work for ourselves in the long run. How can we more accurately enroll this group 

to reflect their needs, and cut down on the wasted cost and time exhausted trying 

to reassign these beneficiaries later? 

Answer. We defer to CMS, as SSA is not involved in the auto enrollment process. 

Question. We need to ensure that CMS has the proper structures in place to oversee participating health plans. CMS must ensure that plans are doing what they 

are supposed to be doing and that any lack of compliance is immediately identified 

and corrected. How has CMS improved their ability to monitor the compliance of 

these various plans? 

Answer. We defer to CMS regarding their plans to monitor health plan compliance. 

Question. While is is important to provide plans the flexibility to change their 

benefits package every year to adapt to changing drug demands, it seems problematic that plans that qualified for Low Income beneficiaries one year may no longer 

cover them in the next. 1.2 million dual eligibles had to be reassigned to other plans 

during the latest enrollment period because of terminated plans and fluctuating 

benefits costs. What can we do to curb this turnover year in and year out? 

Answer. We defer to CMS, as SSA has no role in either the structuring of individual prescription drug plans or in the auto-enrollment process. 

141

QUESTIONS FROM SENATOR KOHL FOR LARRY KOCOT

Question. Mr. Kocot, as you know, Congress remains committed to implementing 

a Medicare Part D program that serves the needs of all of America’s seniors, including low-income and minority beneficiaries. It was because of this commitment, in 

fact, that Congress included a provision in the Medicare Modernization Act that 

charges CMS with the responsibility of overseeing the Part D plans to ‘‘ensure that 

drug plans provide access to medically necessary treatments for all and do not discriminate against any particular types of beneficiary.’’ As you may know, the FDA 

recently approved a drug for the treatment of heart failure in self identified blacks, 

called BiDil. It has come to our committee’s attention that, to date, only about half 

of Part D plans are covering this medication. I am told that this is because plans 

believe or have been told that it is not necessary to cover this drug if they are covering what is being referred to as ‘‘its generic component parts,’’ Isordil and 

Apresoline, neither of which are approved for the treatment of heart failure. 

If you would, Mr. Kocot, could you please inform this committee about, what if 

anything, CMS has done to be sure that the decisions regarding coverage of this 

drug are being made based on the best available science and not as part of an effort 

by plans to discourage African American patients with heart failure from participating? 

Answer. Formularies and formulary management practices vary across plans, subject to CMS-published guidelines reflecting two overarching policy objectives. First, 

Part D plan sponsors must provide access to medically necessary Part D treatments 

and must not substantially discourage enrollment by particular types of beneficiaries.

Second, plan sponsors are expected to use approaches to drug benefit management 

that are proven and in widespread use in prescription drug plans today. 

As a condition of participation in Part D, sponsors must submit their plan 

formularies for CMS review and approval. CMS considers covered drugs as well as 

utilization management techniques. If CMS reviewers find that a plan’s formulary 

could substantially discourage enrollment by certain types of beneficiaries or otherwise violate Part D program requirements, that formulary will not be accepted and 

if unchanged, the plan is not eligible for a Part D contract. 

CMS is fully committed to ending healthcare disparities in the United States. 

Consistent with the most recent feedback we have received from the American College of Cardiology (ACC) and American Heart Association (AHA) regarding management of HF in African-Americans, CMS has ensured that all Part D formularies 

contain either BiDil or isosorbide dinitrate and hydralazine (the individual generic 

components which are the active ingredients found in BiDil). We will continue to 

evaluate the information on BiDil and other drug products and update our formulary processes as appropriate when new information becomes available. 

QUESTIONS FROM SENATOR BLANCHE LINCOLN FOR LARRY KOCOT

Question. There have been far too many problems in getting the right premium 

amount deducted from people’s Social Security checks and sent to the right Part D 

plan. In Arkansas, we are still getting calls about withholding issues—many of 

these problems go back to January 2006. 

Why is this such a big problem, how many total cases have there been, how many 

remains to be resolved, and how do you intend to prevent these problems from recurring? 

Answer. Premium withholding continues to work for the vast majority of the 4.7 

million beneficiaries who requested withholding in 2006. While many beneficiaries 

have experienced some issues with their withholding, CMS is committed to addressing and resolving these issues as soon as possible. The majority of issues were 

caused by CMS and Social Security Administration (SSA) systems having 

mismatching data on certain beneficiaries. 

CMS, working with the Social Security Administration and key stakeholders 

(plans, pharmacies, etc.), has made tremendous strides to resolve premium withhold 

issues encountered in the first year of the program and to lay the groundwork for 

continued improvements in 2007 and beyond. Those steps have clearly paid off, with 

a 97% acceptance rate for transactions between CMS and SSA in 2007. 

Question. I am being told by my constituents that no matter what the Medicare 

problem is that they are required to call the 800 number. The wait time can be a 

couple of hours and often the Medicare staff person can’t resolve the problem, gives 

inaccurate information, or transfers the caller to someone else for another wait. This 

is especially distressing considering many low-income persons are facing enrollment 

changes and may need assistance. 

142

What steps are being taken to provide quick and accurate information to callers 

who have problems with their checks or other issues? 

Answer. The Medicare Prescription Drug, Improvement, and Modernization Act of 

2003 (MMA) required CMS to establish a centralized, single toll-free number for 

beneficiary inquiries. Using 1–800–MEDICARE as the focal point for all beneficiary 

telephone inquiries relating to Part D provides beneficiaries with an opportunity to 

obtain answers to all types of Medicare questions, receive claims information, and 

order Medicare publications in a consistent manner. 

We do not have any documented reports of callers waiting several hours to reach 

a 1–800–MEDICARE Customer Service Representative (CSR). However, we would 

be happy to trace any specific call complaints if provided with the date of the call, 

the telephone number where the call was made from, and the name of the caller. 

Further, our 1–800–MEDICARE Contractor, Vangent (formerly Pearson Government Solutions), performs real-time monitoring and makes staffing adjustments 

based on wait times and call arrival patterns. 

Also, note that we implement a ‘‘call back’’ process when the average speed of answer (or wait time) for any 30 minute period reaches 15 minutes. This ensures that 

beneficiaries do not have exceptionally long wait times. We direct a certain percentage of calls to a dedicated automated voice message system where callers can leave 

their names and phone numbers and a CSR will call the individual back at a less 

busy time. 

In the event there is a complex issue that cannot be handled at our call center, 

we have a process in place to refer these issues to a specialized group of CSRs who 

will research the issue and provide a resolution for the beneficiary. These types of 

inquiries represent less than 1 percent of the total call volume. We do refer callers 

with non-related 1–800–MEDICARE issues to the appropriate agency for assistance 

(such as callers who have contacted 1–800–MEDICARE but their issue must be handled by the Social Security Administration or the Railroad Retirement Board.) 

1–800–MEDICARE CSRs receive weekly Refresher Training to update them on 

new procedures and initiatives. The materials covered for the week are conducted 

either in a classroom setting, or by individualized desktop training. Once the materials are presented, the CSRs are given a knowledge test which contains questions 

from the current and prior week’s training materials. This approach ensures that 

CSRs retain information that was covered earlier in the month. 

Finally, a minimum of four calls per customer service representative, per month, 

are monitored for quality using a national Quality Call Monitoring (QCM) scorecard. 

More calls are monitored for new customer service representatives and for those 

CSRs with performance concerns. During the review of the QCM scorecards, CSRs 

listen to their recorded calls with their supervisors and corrective actions are taken 

where applicable. 

Question. Does CMS plan to provide resources, funded under Medicare Part D administration, to the Areas Agencies on Aging and Native American aging programs 

to support their community-level outreach, assistance and counseling efforts? 

Answer. In FY 2007, CMS will provide more than $30 million to the State Health 

Insurance Assistance Programs (SHIPs) in every state. However, CMS does not 

have a breakout by state or nationally on the amount of Federal SHIP funding that 

flows to the Area Agencies on Aging (AAAs) through their contracts and relationships with SHIPs. CMS directs SHIPs to build networks of locally accessible counseling locations, and many States use Federal SHIP funding to contract or otherwise 

fund AAAs to achieve that goal. 

In addition to any SHIP funding provided to the AAAs, CMS has an interagency 

agreement with the U.S. Administration on Aging (AoA) to target resources to AAAs 

in geographic areas with high concentrations of beneficiaries who might be eligible 

for the low-income subsidy. In FY 2007, the total amount allocated under this agreement is $1.4 million. 

CMS has developed a collaborative partnership with the AoA to leverage the federal, state, tribal, and local partnerships called the National Aging Services Network. Through this collaborative effort, CMS is providing resources to the AoA and 

its National Aging Services Network to offer outreach and education, assistance, 

and counseling to people with Medicare at the local level. This partnership is designed to help beneficiaries make informed decisions about their healthcare and 

have greater access to affordable medications. 

The National Aging Services Network reaches more than 7 million older persons, 

Medicare beneficiaries, and their caregivers, includes 56 State Units on Aging 

(SUA), 655 Area Agencies on Aging (AAAs), 243 Tribal organizations, more than 

29,000 local community-service organizations, 500,000 volunteers, and a wide variety of national organizations. 

143

Question. In Arkansas, insurance companies are aggressively selling HMOs to 

seniors who only thought they were getting Part D plans. The seniors later found 

out their providers weren’t part of the plan they signed up for. There was a segment 

in the news in my state a couple of days ago (on Channel 7—On My Side) about 

this happening to an elderly woman and she was having trouble getting out of her 

plan. 

What, if anything, is being done to remedy this? 

Answer. Medicare Advantage (MA) organizations that directly employ or contract 

with a person to market a MA plan must ensure that a plan representative or agent 

complies with applicable MA and Part D laws, federal health care laws, and CMS 

policies (including CMS’ Marketing Guidelines). CMS will hold organizations utilizing agents that violate Medicare program marketing requirements responsible for 

the conduct of these agents. 

CMS has taken a proactive approach to ensure that the marketing activities and 

outreach of these plans is accurate and complies with all program requirements. For 

example, CMS has begun utilizing a program audit assistance contractor to conduct 

‘‘secret shopping’’ of sales events across the country. This information enables CMS 

to learn first hand what is happening in the sales marketplace, determine the accuracy of MA sales presentations, and identify organizations for compliance intervention that are not meeting CMS marketing and enrollment requirements. 

CMS also is strengthening its relationships with state regulators. Specifically, 

CMS worked with the National Association of Insurance Commissioners and States 

to develop a model Compliance and Enforcement Memorandum of Understanding 

(MOU). This MOU enables CMS and State Departments of Insurance to freely share 

compliance and enforcement information, to better oversee the operations and market conduct of companies we jointly regulate and enable the sharing of specific information about marketing agent conduct. 

Question. There were approximately 13 million beneficiaries eligible for the lowincome subsidy in 2006, but 9.9 million enrolled. 

How do you plan to reach the rest in 2007? Would it help if the IRS told you in 

advance which beneficiaries meet the income limits so you can target outreach directly to them? Are there other steps Congress could take to help? 

Answer. Since the enactment of the Medicare Prescription Drug, Improvement, 

and Modernization Act of 2003, CMS has made extensive efforts to implement the 

law and provide beneficiaries with access to prescription drugs. Because of the extraordinary importance of this new benefit, CMS outreach to Medicare beneficiaries 

has been unprecedented. We are pleased that over 90 percent of all people eligible 

for the Medicare prescription drug benefit are receiving prescription drug coverage 

through the Medicare prescription drug benefit or from another creditable source. 

We agree it is critical to ensure low-income beneficiaries are able to access, and 

take advantage of, the extra help available to them under the new Medicare prescription drug benefit. CMS, in partnership with the Social Security Administration 

(SSA), was extremely successful in enrolling low-income subsidy (LIS)-eligible individuals into Part D plans in the first year of the program. Of the approximately 13 

million beneficiaries CMS estimates were eligible for the LIS in 2006, nearly 10 million now have coverage for prescription drugs. Through ongoing outreach that continues today, CMS has added over 300,000 new LIS-beneficiaries who enrolled in 

Part D prior to January 1, 2007. With the recently extended Medicare demonstration that allows LIS-approved beneficiaries to enroll through the end of 2007 without any late enrollment penalty, these numbers should continue to grow. 

CMS is continuing outreach activities to the remaining individuals who might be 

eligible for the subsidy. Outreach efforts to this critical population have been datadriven, with our focus on identifying LIS-eligible populations at the State, county, 

community, and individual level. These individuals have been targeted with a multipronged education and outreach campaign that leverages existing information, 

intermediaries and resources. Initiatives include direct mailings and phone calls to 

beneficiaries, along with local outreach from community groups, intergovernmental 

partners, health care providers, and pharmacists. Given that many beneficiaries 

may be difficult to reach through traditional means, CMS has special initiatives targeting urban minority beneficiaries and beneficiaries in rural areas who may be isolated from general community outreach efforts. 

The Office of the Inspector General (OIG) of the Department of Health and 

Human Services recently issued a report entitled, ‘‘Identifying Beneficiaries Eligible 

for the Medicare Part D Low-Income Subsidy, OEI–03–06–00120.’’ In this report the 

OIG recommended, ‘‘. . .legislation is needed to allow CMS and SSA to more effectively identify beneficiaries who are potentially eligible for the subsidy.’’ OIG goes 

on to say ‘‘access to IRS data would help CMS and SSA identify the beneficiaries 

most likely to be eligible for the subsidy.’’ However, many of those eligible for the 

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low-income subsidy do not file federal income tax returns because of their limited 

incomes. As a result, the utility of using IRS data to target low-income beneficiaries 

would be minimal in comparison to the privacy concerns that would be inherent in 

making this data available. Given the extreme sensitivity and privacy concerns that 

revolve around any sharing of personal tax information, along with our existing outreach strategy, we do not believe we need additional legislative authority to appropriately target low-income beneficiaries. 

Question. Many people with very low incomes are being denied LIS because their 

assets are just over the limits ($11,710 for individuals and $23,410 for couples). 

That’s hardly enough of a nest egg to get someone through retirement. 

Wouldn’t eliminating the asset test get help to millions of additional beneficiaries 

who need it? Short of eliminating the asset test, shouldn’t we at least increase the 

limits? 

Answer. Congress established as asset test as a component of the low-income subsidy of the Medicare prescription drug benefit. Inherently, eliminating the asset test 

would increase the number of individuals who could qualify for the low-income subsidy. At this time, the Administration does not support eliminating the asset test. 

QUESTIONS FROM SENATOR CARPER FOR LARRY KOCOT

Question. It is my understanding that over 600,000 low-income beneficiaries lost 

their ‘‘deemed’’ status, making them no longer dual eligible. Now, this group who 

were automatically enrolled in the benefit at first will have to proactively sign up. 

What are CMS and SSA doing to ensure this group does not fall through the 

cracks? 

Answer. CMS took great strides to ensure that beneficiaries receiving the low-income subsidy (LIS) who were no longer automatically eligible for extra help in 2007 

had uninterrupted drug coverage and as seamless a transition as possible. 

Due to a loss of eligibility for Medicaid, including the Medicare Savings Program, 

or Supplemental Security Income (SSI) benefits, some Medicare beneficiaries no 

longer automatically qualified for LIS in 2007. In September 2006, CMS reached out 

to these beneficiaries by notifying them through the mail about this change, and 

providing information and guidance to help them get drug coverage that meets their 

needs. The letter advised that if a beneficiary has limited income and resources and 

thinks s/he may still qualify for extra help, s/he will need to apply and qualify 

through SSA, via the application that is included with the notice, or their State 

Medical Assistance (Medicaid) office. 

CMS also worked with the Social Security Administration (SSA), State Medical 

Assistance (Medicaid) Offices, the State Health Insurance and Assistance Programs 

(SHIPs), physicians and pharmacists, prescription drug plans, and hundreds of partner organizations across the country to reach beneficiaries with these messages and 

guidance. Our customer service representatives at 1–800–MEDICARE are prepared 

to answer questions and to guide beneficiaries through the process of losing their 

LIS status, and relevant information is posted on our consumer website, 

www.medicare.gov. 

As a result, as of January 2007, roughly 35 percent of people who had lost their 

deemed status had regained LIS eligibility—including those who regained their 

deemed status and those who reapplied and qualified for LIS with SSA. We expect 

these numbers to continue to grow throughout 2007. 

Question. I believe the automatic enrollment process for dual eligibles performs 

an important function by guaranteeing that low income beneficiaries get immediate 

coverage. However, I am concerned that because dual eligibles are randomly assigned to plans that do not necessarily fit their needs, we may be creating more 

work for ourselves in the long run. 

How can we more accurately enroll this group to reflect their needs, and cut down 

on the wasted cost and time exhausted trying to reassign these beneficiaries later? 

Answer. Section 1860D–1(b)(1)(C) requires that any full benefit dual eligible that 

fails to enroll in a PDP or an MA–PD be auto-enrolled on a random basis among 

all PDPs in a given PDP region that have premiums at or below the low-income 

benchmark. 

Question. We need to ensure that CMS has the proper structures in place to oversee participating health plans. CMS must ensure that plans are doing what they 

are supposed to be doing and that any lack of compliance is immediately identified 

and corrected. 

How has CMS improved their ability to monitor the compliance of these various 

plans? 

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Answer. CMS has strengthened its oversight of Part D plans by improving its 

method for identifying companies for compliance audits, making more efficient use 

of the resources devoted to ensuring compliance, and developing a closer relationship with state regulators. 

CMS has developed a contractor risk assessment methodology that identifies organizations and program areas that represent the greatest compliance risks to Medicare beneficiaries and the government. This approach enables the Agency to focus 

its compliance/enforcement resources on those program areas representing the 

greatest concern to CMS. Further, CMS uses a contractor to augment the Federal 

employees conducting Part D compliance audits. Among the steps the contractor is 

taking is to conduct ‘‘secret shopping’’ of sales events across the country; this information is enabling CMS to learn first-hand what is happening in the sales marketplace and to identify organizations for compliance intervention that are not meeting 

CMS marketing and enrollment requirements. 

CMS also has strengthened its relationships with state regulators that oversee 

market conduct of plans. Specifically, CMS worked cooperatively with the NAIC and 

State Departments of Insurance to develop a model Compliance and Enforcement 

memorandum of Understanding (MOU). This MOU enables CMS and State Departments of Insurance to freely share compliance and enforcement information, to better oversee the operations and market conduct of companies we jointly regulate and 

enable the sharing of specific information about marketing agent conduct. 

To gain entry into the program, Part D plans must submit an application for CMS 

approval. CMS performs a comprehensive review of a plan’s application to determine if the plan meets program requirements. Annually, plans also must submit formulary and benefit information for CMS review prior to being accepted for the following contract year. For each plan sponsor, CMS establishes a single point of contact (Account Manager) for all communications with the plan. The Account Managers work with plans to resolve any plan problems, including compliance issues. 

Finally, CMS continually collects and analyzes performance data collected from 

Part D plans, internal systems, and beneficiaries. CMS has established baseline 

measures for the performance data. Plans not meeting the baseline measures are 

contacted and compliance actions initiated. 

Question. While it is important to provide plans the flexibility to change their benefits package every year to adapt to changing drug demands, it seems problematic 

that plans that qualified for Low Income beneficiaries one year may no longer cover 

them in the next. 1.2 million dual eligibles had to be reassigned to other plans during the latest enrollment period because of terminated plans and fluctuating benefits cost. 

What can we do to curb this turnover year in and year out? 

Answer. CMS is committed to ensuring that beneficiaries receiving the low-income 

subsidy have uninterrupted drug coverage and a seamless transition as they move 

through plan years. Almost all 2006 Part D sponsors either continued their current 

plans in 2007 or streamlined and consolidated their 2006 plans. Additionally, in 

2007 beneficiaries with limited incomes who qualify for the extra help have a range 

of options available for comprehensive coverage. Nationally, over 95 percent of low 

income beneficiaries did not need to change plans to continue to receive this coverage for a zero premium. In 2007, CMS had to randomly reassign about 250,000 

beneficiaries outside their current organization and took steps to ensure that these 

beneficiaries were aware of the action and could review their options. 

QUESTIONS FROM SENATOR BLANCHE LINCOLN FOR ELLEN LEITZER

Question. Do AAAs/SHIPs have the financial resources needed to continue the 

task? 

Answer. The Health Assistance Partnership works closely with this country’s 

SHIP network and can only speak knowledgeably about SHIP funding. The short 

answer to Senator Lincoln’s question is no—SHIPs do not have adequate funding 

to meet the needs of the Medicare population that they serve. 

The most significant source of unbiased consumer education for the Medicare program has been the national network of State Health Insurance and Assistance Programs (SHIPs). In 1990, Congress established the SHIP network so that counseling 

assistance, referrals, and accurate information could be made available to Medicare 

beneficiaries nationwide. The SHIP network is the only entity that offers in-depth, 

one-on-one assistance to beneficiaries with an objective viewpoint, and an ability to 

handle complex cases that may require lengthy follow-up. The 1,400 local, community-based SHIP programs have an estimated 12,000 staff members and volunteers; 

their officers are often housed in area agencies on aging, senior centers, hospitals, 

146

and other organizations that serve the elderly. Due to limits in resources, most 

SHIP counselors are volunteers. 

Question. The SHIP network is under-funded. Funding should be increased from 

$30 million to $43 million—a total of one dollar per beneficiary—for the following 

reasons: 

Answer. Growing Complexity of Medicare: In addition to helping seniors navigate 

the confusing Medicare Part D program, SHIPs are needed to help beneficiaries understand a growing array of coverage options that create confusion, including: original fee-for-service Medicare; supplemental insurance; employer-based retiree coverage; regional PPOs; private fee-for-service (PFFS); and Special Needs Plans. The 

CMS plan comparison tools often lack key information needed to weigh benefits and 

risks, identify and evaluate variables, and counterbalance incomplete or misleading 

marketing claims. 

Improving Low Income Seniors’ Participation in Special Subsidy Programs: SHIPs 

are uniquely positioned to help low income beneficiaries. Fewer than 1 in 3 of those 

eligible for Medicare Savings Programs (MSPs) actually receive them. Applying for 

these programs can be daunting and an estimated two-thirds of enrollees need help 

completing the forms. SHIPs can help raise awareness of Medicaid and Medicare 

Savings Programs; help beneficiaries gather documentation; help beneficiaries understand program asset limits and estate recovery rules; help beneficiaries find providers who accept Medicare and Medicaid; and draw attention to Special Needs 

Plans for dual-eligibles. 

Evaluating Changing Benefits: Private plans can change benefit structures and 

cost-sharing annually and beneficiaries will need to evaluate their coverage every 

year. SHIPs will be needed to help beneficiaries make sense of annual plan changes 

and help to evaluate whether it makes sense to switch plans. 

Understanding Long-Term Care Options: Medicare does not cover many long-term 

care and personal care services. SHIPs are needed to help educate Medicare beneficiaries about Medicare’s home health benefits, Medicaid’s role in funding long-term 

care services, and provide one-on-one assistance for people denied longterm care 

benefits. In 2004, out-of-pocket spending for long-term care totaled $36.9 billion nationally. Only 10% of Americans 65 and older had long-term care insurance in 2002 

and for those who can afford long-term care insurance, the choices are bewildering.

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