United States Government Accountability Office

Washington, DC 20548 

June 30, 2006 

The Honorable Pete Stark 

Ranking Minority Member 

Subcommittee on Health 

Committee on Ways and Means 

House of Representatives 

The Honorable Benjamin L. Cardin 

House of Representatives 

Subject: TRICARE: Enrollment of the Department of Defense’s TRICARE 

Beneficiaries in Medicare Part B

TRICARE is the Department of Defense’s (DOD) health care system for active duty 

and retired uniformed service members and their families. TRICARE consists of four 

separate programs. Three of these programs—TRICARE Prime, a managed care 

option; TRICARE Extra, a preferred provider option; and TRICARE Standard, a fee 

for service option—cover active duty personnel, their dependents, and retirees under 

age 65. Prior to 2001, TRICARE beneficiaries would lose their TRICARE coverage 

when they reached age 65, and Medicare—the federal health insurance program that 

provides medical benefits to over 42 million elderly and disabled Americans—would 

become their primary health insurer. However, in 2001, the Congress expanded 

TRICARE by establishing a fourth program, known as TRICARE for Life (TFL). TFL 

provides supplementary health care coverage for TRICARE beneficiaries1

 who are 

entitled to Medicare Part A,2

 and enrolled in Part B. It pays for many services that 

Medicare only partially covers. While TRICARE beneficiaries do not have to pay for 

their TFL coverage, they are required to pay premiums for Medicare Part B. 

DOD generally encourages TRICARE beneficiaries to enroll in Medicare Part B when 

they reach age 65 or when the Social Security Administration (SSA) determines that 

they are disabled and they have been receiving disability benefits for 24 months. 

Those who do not enroll in Part B when first eligible must wait, like other 

beneficiaries, for Medicare’s general enrollment period, which is held annually, from 

January 1 to March 31, with coverage beginning on July 1 of that same year. In 

 1

Hereafter, we use the term TRICARE beneficiaries to include military retirees and their dependents 

and survivors who are entitled to Medicare Part A. 

2

Medicare Part A covers inpatient hospital, skilled nursing facility, hospice, and certain home health 

services. Part B covers certain physician, outpatient hospital, laboratory, and other services. Another

component of the Medicare program is Part D, which provides prescription drug coverage for

Medicare beneficiaries. 

GAO-06-489R TRICARE and Medicare Part B 
addition, those who enroll during the general enrollment period are assessed a 

surcharge for each 12-month period that enrollment was delayed after their initial 

eligibility. Not all TRICARE beneficiaries enrolled in Medicare Part B when they first 

became eligible to do so and, as a result, were assessed premium surcharges when 

they eventually signed up for it. 

Section 625 of the Medicare Prescription Drug, Improvement, and Modernization Act 

of 2003 (MMA) provided enrollment incentives to TRICARE beneficiaries who were 

entitled to Medicare Part A, but were not enrolled in Medicare Part B during their 

initial eligibility period.

3

 In particular, Section 625 waived premium surcharges for 

TRICARE beneficiaries who enrolled in Medicare Part B from 2001 through 2004. The 

law also required that the Secretary of Health and Human Services establish a method 

for providing rebates for Part B premium surcharges that this group had paid since 

2004. Further, the law directed the Secretary to provide a Part B special enrollment 

period for TRICARE beneficiaries who had not enrolled in Part B as of the date of 

MMA’s enactment—December 8, 2003. The law mandated that this special enrollment 

period begin as soon as possible after MMA’s enactment and end on December 31, 

2004. 

Four federal organizations had a role in implementing Section 625 of MMA. DOD’s 

TRICARE Management Activity (TMA), which oversees the TFL program, and DOD’s 

Defense Manpower Data Center (DMDC), which maintains the military’s personnel 

database in its Defense Enrollment Eligibility Reporting System (DEERS), both had 

key roles in implementing the new law.4

 In addition, the Centers for Medicare & 

Medicaid Services (CMS)—the Department of Health and Human Services agency 

that oversees the Medicare program—and SSA, which enrolls Medicare beneficiaries 

and assists with the collection of Medicare premiums on CMS’s behalf, had significant 

responsibilities. TMA, DMDC, and CMS had to identify which TRICARE beneficiaries 

were targeted for the Section 625 enrollment incentives. SSA had to enroll the 

TRICARE beneficiaries in Medicare Part B, waive the late enrollment premium 

surcharges, and repay the surcharges paid for their premiums since 2004. 

Although the four organizations worked together to implement the new law, there 

were problems with the data that were used to initially identify which TRICARE 

beneficiaries were targeted by Section 625. As a result, some of the TRICARE 

beneficiaries who should have been identified were inadvertently excluded. 

Interested in determining the extent to which TRICARE beneficiaries benefited from 

the provisions of Section 625 of MMA, you asked us to report on the implementation 

of this law. This report describes (1) the steps that TMA, DMDC, CMS, and SSA took 

in response to Section 625 of MMA, including their efforts to correct problems 

 3

Pub. L. No. 108-173, § 625, 117 Stat. 2066, 2317-18 (2003). 

4

The DEERS database contains the service-related and demographic data that are used to determine 

eligibility for military benefits, including health care, for all active duty servicemembers, military

retirees, and the dependents and survivors of activity duty servicemembers and military retirees. As 

individuals join the military, the various services enter information on them into DEERS and update 

the information as their military status changes. The individual servicemember is responsible for 

providing information to DEERS on dependents and for reporting changes concerning dependents. 

2 GAO-06-489R TRICARE and Medicare Part B
encountered during the law’s implementation, and (2) the extent to which TRICARE 

beneficiaries were served. 

To describe the steps that TMA, DMDC, CMS, and SSA took in response to 

Section 625 of MMA, including their efforts to correct problems encountered, we 

reviewed the TMA, DMDC, and CMS agreements to share enrollment and eligibility 

data. We also interviewed CMS and SSA officials, as well as DOD representatives 

from TMA and DMDC. We focused our work on those organizations’ efforts to 

identify, enroll, waive, and repay premium surcharges to eligible TRICARE 

beneficiaries. 

To describe the extent to which TRICARE beneficiaries were served, we obtained 

data from the involved agencies on the number of TRICARE beneficiaries who were 

enrolled in Part B or whose premium surcharges were repaid. We assessed the 

reliability of the DOD, CMS, and SSA data by corroborating them with available 

documentation from TMA, DMDC, CMS, and SSA. While we previously reported on 

weaknesses in DEERS, we determined that those weaknesses were not germane for 

the purposes of this report.5

 We reviewed the Part B enrollment and premium 

surcharge data for consistency and discussed the discrepancies with CMS and SSA 

officials and determined that these data were reliable for purposes of this report. In 

addition, we examined the notices and other correspondence that the organizations 

sent to TRICARE beneficiaries to determine when and how they were given the 

opportunity to enroll in Medicare Part B. We also determined whether the notices 

included information on their right to appeal the amount of the premium surcharges 

that were repaid, if they disagreed with SSA’s calculation. Our scope was limited to 

the actions taken by TMA, DMDC, CMS, and SSA to implement Section 625 of MMA.6

We performed our work from July 2005 through May 2006 in accordance with 

generally accepted government auditing standards. 

RESULTS IN BRIEF 

All four organizations—TMA, DMDC, CMS, and SSA—collaborated to implement 

Section 625 of MMA. The organizations took a series of steps, including reaching 

agreement to share necessary data. To identify the targeted TRICARE beneficiaries, 

the organizations worked together, from May through July of 2004, to perform a data 

match—a process during which they compared and matched Social Security numbers 

and dates of birth of TRICARE beneficiaries in their respective databases. DMDC 

mailed information to TRICARE beneficiaries in September 2004, alerting them that 

they would receive important information from SSA concerning their Medicare Part B 

enrollment. Also in September 2004, after the data match was finalized, SSA sent 

 5

See GAO, Defense Health Care: TRICARE Claims Processing Has Improved but Inefficiencies

Remain, GAO-04-69 (Washington, D.C.: Oct. 15, 2003), and Defense Health Care: Most Reservists Have 

Civilian Health Coverage but More Assistance Is Needed When TRICARE Is Used, GAO-02-829 

(Washington, D.C.: Sept. 6, 2002).

6

The Railroad Retirement Board (RRB) also enrolls Medicare beneficiaries and collects Part B

premiums on behalf of CMS. Less than 0.2 percent of the TRICARE beneficiaries targeted by Section 

625 of MMA were RRB annuitants; as a result, we did not include this agency in the scope of our 

review. 

3 GAO-06-489R TRICARE and Medicare Part B
notices to about 49,000 TRICARE beneficiaries advising them that they had been 

automatically enrolled in Part B or that they were eligible for a repayment of their 

premium surcharges. However, the data used for this match were incomplete. As a 

result, TRICARE beneficiaries who should have been identified were inadvertently 

excluded. Some of those who did not receive a notice from SSA alerted federal 

officials to the error, within days of the SSA mailing. Over the next several months, 

DOD and CMS worked unsuccessfully to resolve the error. They decided, in 

December 2004, that it would be more expeditious to conduct a second data match 

than to pinpoint and correct the problems associated with the first data match. The 

organizations completed the second data match by mid-February 2005. CMS extended 

the Part B special enrollment period mandated by Section 625 of MMA from 

December 2004 through June 2005. Beneficiaries identified by the second data match 

had the option of enrolling in any month of 2004 or in one of the first 6 months of 

2005. In addition, SSA developed processes to enroll individuals who presented 

themselves, but had not received letters.

Information on the total number of TRICARE beneficiaries served under Section 625 

of MMA is not known. Available SSA and CMS data show that over 44,000 TRICARE 

beneficiaries were either enrolled in Medicare Part B or repaid for their 2004 

premium surcharges, under the provisions of Section 625 of MMA. About 26,000 

TRICARE beneficiaries enrolled during the special enrollment period, and about 

18,700 additional TRICARE beneficiaries were either credited or repaid for premium 

surcharges. Although SSA determined that it had received nearly 15,000 TFL-related 

inquiries since January 2004, it did not separately track how many of these inquiries 

resulted in enrollments in Part B, premium adjustments, or repayments. Further, SSA 

did not separately track how many TFL-related appeals it received or the disposition 

of such appeals, so such information is unavailable. 

We provided a draft of this report to CMS, DOD, and SSA. We received written 

comments from CMS and DOD. SSA also provided us with comments by e-mail. All 

three agencies generally concurred with our findings. 

BACKGROUND 

The Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 

authorized the creation of the DOD Medicare-Eligible Retiree Health Care Fund, 

which covers the full cost of TFL coverage for military retirees, certain dependents, 

and survivors who are entitled to Medicare Part A, and enrolled in Part B.7

 TFL 

alleviates the need to purchase supplemental health insurance because it covers 

Medicare’s co-payment and deductible medical expenses. TFL also alleviates the need 

for TRICARE beneficiaries to enroll in Medicare Part D because, under TFL, they can 

obtain prescription drugs at no cost from military treatment facilities, at low cost 

through DOD’s National Mail Order Pharmacy, or, at higher costs from retail network 

or non-network pharmacies. In addition, TFL pays for certain skilled nursing and 

inpatient hospitalization services that Medicare does not cover. 

 7

Pub. L. No. 106-398, § 713, 114 Stat. 1654, 1654A-179. 

4 GAO-06-489R TRICARE and Medicare Part B
Individuals who are entitled to Social Security retirement or disability benefits are 

automatically enrolled in Medicare Parts A and B. CMS sends these individuals an 

initial enrollment period package that includes information about the Medicare 

program, a Medicare card, and a form that can be used to decline Part B enrollment. 

The package does not include a similar form to decline Part A coverage because 

beneficiaries cannot decline Part A. All other individuals who file an application for 

either Social Security benefits or Medicare are automatically enrolled in Medicare 

Part A. If these individuals choose to elect Part B coverage, they must do so at the 

time the application is filed. Most people do not pay a premium for Part A;8

 however, 

all beneficiaries who elect Part B coverage must pay the Part B premium. People who 

do not receive Social Security benefits are billed for 3 months of Part B coverage at a 

time, with the first payment due 1 month before their 65th birthday. If individuals 

who accept Part B enrollment also receive Social Security benefits, SSA will deduct 

the Part B monthly premium from their Social Security benefit payments, beginning 

with the month before they are entitled to Part B. However, those who do not enroll 

in Part B when first eligible must wait for Medicare’s annual general enrollment 

period, from January 1 to March 31, to sign up for coverage. 

The surcharges that people pay for delayed Part B enrollment can be substantial 

because they are assessed 10 percent of the cost of the premium, for each full 

12-month period that they delay enrolling. Moreover, these surcharges are added to 

the cost of the premium for the life of the coverage.9

 For example, figure 1 shows four 

hypothetical Medicare beneficiaries who enrolled in Part B at different ages and the 

impact of their enrollment dates on the premium surcharges they incurred. As shown, 

by the end of 2004, the Medicare beneficiary who delayed enrollment until age 68 

would have paid nearly $500 in premium surcharges, or twice the amount of the 

Medicare beneficiary who enrolled at age 67, while those enrolling at ages 66 or 65 

would pay no surcharge at all. 

 8

Most people are entitled to Part A without paying a premium because they or their spouses already 

paid for this coverage through employer payroll deductions, including deductions paid while in 

military service. However, some people may not qualify for premium-free Part A because they or their 

spouses did not work or did not pay enough in Medicare taxes while employed. Most persons age 65 or 

older must have worked 10 years, or 40 quarters, to receive coverage for premium-free Part A. The Part

A premium for people who are not eligible for premium-free Part A with less than 30 quarters of

coverage was $343 per month in 2004 and $375 per month in 2005. The Part A premium for people not 

entitled to premium-free Part A but with 30 or more quarters of coverage was $189 per month in 2004 

and $206 per month in 2005. 

9

The Medicare Part B premium is adjusted annually, based on the program’s projected costs for the 

coming year. The premium for 2005 was $78.20 per person, per month. The premiums for 2001 through

2004 were $50.00, $54.00, $58.70, and $66.60, respectively. 

5 GAO-06-489R TRICARE and Medicare Part B
Figure 1: Example of Medicare Part B Premium Surcharges Paid for Late Enrollment by the 

End of 2004 

Source: GAO. 

F irs t

S econd

T h ird

Fo u rth

F ifth

Medicare 

Beneficiary 1: 

Born on 3/10/33, this beneficiary 

was 68 during the 2001 

general enrollment period, 

and this beneficiary’s initial 

enrollment period was 

12/1/97 – 6/30/98. This 

beneficiary had 33 months 

of delayed enrollment and 

2 full 12-month periods of delayed 

enrollment. 

There was a 20% 

premium surcharge. 

Four hypothetical Medicare beneficiaries enrolled in Part B in March 2001. 

They all share a March 10 birthday, but were born in different years, consecutively from 1933 to 1936. 

Medicare

Beneficiary 2:

Born on 3/10/34, this beneficiary 

was 67 during the 2001 

general enrollment period, 

and this beneficiary’s initial 

enrollment period was 

12/1/98 – 6/30/99. This 

beneficiary had 21 months 

of delayed enrollment and 1

full 12-month period of delayed 

enrollment. 

There was a 10%

premium surcharge.

Medicare 

Beneficiary 3: 

Born on 3/10/35, this beneficiary 

was 66 during the 2001 

general enrollment period, 

and this beneficiary’s initial 

enrollment period was 

12/1/99 – 6/30/00. This 

beneficiary had 9 months 

of delayed enrollment and no 

full 12-month period of delayed 

enrollment. 

There was a 0% 

premium surcharge. 

Medicare

Beneficiary 4:

Born on 3/10/36, this beneficiary 

was 65 with an initial enrollment 

period of 12/1/00 – 6/30/01. 

This beneficiary automatically 

enrolled and so had no months 

of delayed enrollment and no

full 12-month period of delayed 

enrollment. 

There was a 0%

premium surcharge.

 Premium Premium Premium Premium 

 surcharge for surcharge for surcharge for surcharge for 

 Standard Months of Medicare Medicare Medicare Medicare 

 Year premium coverage Beneficiary 1: Beneficiary 2: Beneficiary 3: Beneficiary 4: 

Amount 2001 ($50.00 x (Percentage of premium surcharge) x 6) = $60.00 $30.00 $0 $0 

of yearly 2002 ($54.00 x (Percentage of premium surcharge) x 12) = 129.60 64.80 0 0 

surcharge 2003 ($58.70 x (Percentage of premium surcharge) x 12) = 140.90 70.40 0 0 

 2004 ($66.60 x (Percentage of premium surcharge) x 12) = 159.80 79.90 0 0 

Total premium surchage, by the end of 2004 $490.30 $245.10 $0 $0 

Note: According to CMS policy, premiums that are not multiples of 10 cents are rounded to the nearest dime. 

ORGANIZATIONS COLLABORATED TO IMPLEMENT 

LAW AND TO CORRECT INITIAL ENROLLMENT ERRORS 

All four organizations—TMA, DMDC, CMS, and SSA—worked together to implement 

Section 625 of MMA. DOD and CMS signed a memorandum of understanding (MOU) 

in May 2004, which established the role of each organization and also recognized that 

the successful implementation of the law depended on their sharing accurate and 

complete sets of data. The organizations agreed to perform an analysis, known as a 

data match, to identify the TRICARE beneficiaries who were eligible under 

Section 625 to enroll in Part B during the special enrollment period or entitled to have 

their premium surcharges waived and the 2004 surcharges repaid. Despite their 

efforts, the data that were used in this data match were incomplete and some 

TRICARE beneficiaries were inadvertently excluded. The agencies conducted a 

second data match to develop a comprehensive list of TRICARE beneficiaries and 

also extended the special enrollment period. 

6 GAO-06-489R TRICARE and Medicare Part B
Initial Steps to 

Implement Section 625 

By March 2004, officials from all four organizations decided that rather than waiting 

for TRICARE beneficiaries to individually apply for Part B enrollment, it would be 

more efficient for SSA to automatically enroll them in Part B. To do this, the 

organizations opted to conduct a data match, which would require them to obtain and 

extract information from their respective databases to identify who was (1) eligible to 

enroll during the Section 625 special enrollment period, (2) entitled to have Part B 

premium surcharges waived, and (3) due a repayment for 2004 premium surcharges. 

TMA, CMS, and SSA officials told us that they posted information on their 

organizations’ Web sites prior to this data match. This information was intended to 

alert TRICARE beneficiaries that they would be contacted by SSA as soon as 

implementation procedures were finalized. SSA officials also trained their field office 

staff on how to handle inquiries, should they be contacted before the procedures 

were finalized. 

Each organization had different sets of information and had to take particular steps 

to identify the TRICARE beneficiaries. TMA had information on TRICARE 

beneficiaries receiving TFL coverage. DMDC, which maintains the DEERS database, 

had information on all active duty members of the uniformed services, military 

retirees, and the dependents and survivors of active duty servicemembers and 

military retirees. CMS, in its enrollment database, had enrollment and entitlement 

information on all of the people who were or have been enrolled in Medicare. CMS’s 

data also included information on the person’s age, gender, state and county of 

residence, and date of enrollment. SSA’s Master Beneficiary Record, which is its 

principal beneficiary file, had information on SSA’s current and previous retirement 

and disability beneficiaries and applicants. The Master Beneficiary Record also 

contained information on Medicare enrollment, premiums, and premium surcharges. 

TMA and DMDC provided the DOD information on TRICARE beneficiaries to CMS. 

CMS extracted data on those meeting the selection criteria and shared its results with 

SSA. SSA, in turn, eliminated duplicate entries and the names of deceased TRICARE 

beneficiaries, which finalized the results of the data match. Figure 2 illustrates the 

Section 625 data match and the information that TMA, DMDC, CMS, and SSA used to 

identify TRICARE beneficiaries. 

7 GAO-06-489R TRICARE and Medicare Part B
Figure 2: Initial Steps Federal Organizations Took to Identify Those Eligible for Medicare 

Part B 

Source: GAO.

F irs t

S econd

T h ird

Fo u rth

F ifth

TMA had information on TRICARE 

beneficiaries with TFL coverage. 

DMDC had information on active 

duty personnel, retirees, reservists, 

and dependents.

CMS’s enrollment database had 

enrollment and entitlement 

information on all of the people who 

were or have been enrolled in 

Medicare.

SSA’s Master Beneficiary Record 

had information on SSA’s current 

and previous retirement and 

disability beneficiaries and 

applicants.

CMS

SSA

DOD’S TMA and DMDC

DOD organizations provided Social Security

numbers and dates of birth of TRICARE

CMS identified those who met

Section 625 criteria SSA reviewed CMS data, eliminated

duplicates, and notified TRICARE beneficiaries

of agency actions taken on their behalf

beneficiaries to CMS

Organizations Completed Data Match 

and Discovered Errors 

TMA, DMDC, and CMS had difficulty identifying the TRICARE beneficiaries targeted 

by Section 625 of MMA. The MOU they signed specified the information that they 

would share. TMA and DMDC agreed to provide CMS with the Social Security 

numbers and dates of birth of TRICARE beneficiaries from the DEERS database. 

CMS agreed to match that information with data in its enrollment database and 

identify which TRICARE beneficiaries were entitled to premium-free Part A and were 

not enrolled in Medicare Part B. CMS also agreed to identify TRICARE beneficiaries 

who were eligible to have their Part B premiums surcharges waived and their 2004 

premium surcharges repaid. CMS would then share the results of the data match with 

SSA, which would take steps to enroll the TRICARE beneficiaries in Part B and 

arrange for the 2004 premium surcharges to be repaid. 

However, DMDC and CMS officials did not agree on how many TRICARE 

beneficiaries were included in the files used for this initial data match. DMDC 

officials told us that they sent two files to CMS, from May 10 through 13, 2004, 

containing data on a combined total of 7.2 million TRICARE beneficiaries. However, 

CMS officials told us they received one file containing information on about 

6.9 million TRICARE beneficiaries—a difference of about 300,000 TRICARE 

beneficiaries. 

From mid-May to mid-June, CMS matched the data it received from DMDC with data 

in its enrollment database to identify the TRICARE beneficiaries targeted for 

Section 625 enrollment incentives. CMS identified three distinct groups of TRICARE 

beneficiaries who were entitled to premium-free Part A: (1) those who were not 

8 GAO-06-489R TRICARE and Medicare Part B
enrolled in Part B, (2) those who had enrolled in Part B and were paying premium 

surcharges and were potentially eligible for premium surcharge waivers and for 

surcharge repayments, and (3) those who enrolled during Medicare’s 2004 general 

enrollment period and to whom CMS offered the choice of making their coverage 

retroactive to an earlier month during 2004, in addition to waiving any premium 

surcharge.10 CMS electronically transmitted these three files to SSA in mid-June 2004. 

According to SSA officials, in July 2004, they eliminated duplicate entries and the 

names of deceased TRICARE beneficiaries from the information provided by CMS. 

From September 4, 2004, through September 10, 2004, SSA sent notices to the over 

49,000 remaining TRICARE beneficiaries concerning their eligibility under Section 

625 of MMA. SSA notified the first group of TRICARE beneficiaries—those that had 

not enrolled in Part B—that the agency had automatically enrolled them in Part B, 

with a September 1, 2004, effective date. SSA also informed them that it had deducted 

2 months worth of premiums from their Social Security benefit checks and that those 

who did not receive benefit checks would be billed separately by CMS. The notice 

also explained that because MMA mandated that a special enrollment period be 

offered to them, they could choose to make their Part B coverage effective in any 

month in 2004. SSA’s notice to this first group of TRICARE beneficiaries also 

explained how to decline Part B enrollment. 

SSA informed the second group of TRICARE beneficiaries—who were paying 

premium surcharges—that their premium surcharges would be waived and that the 

surcharges they paid for Part B in 2004 would either be included in their Social 

Security benefit checks or credited toward future premiums, if they were billed for 

Part B coverage. SSA notified the TRICARE beneficiaries in the third group—who 

had enrolled during Medicare’s 2004 general enrollment period—that they could 

make their coverage retroactive to as early as January 2004, instead of the customary 

July 1 effective date. TRICARE beneficiaries in this third group were also informed 

that their premium surcharges would be waived and that any surcharges they might 

have paid would be repaid or credited toward future premiums. Additionally, SSA’s 

notices advised them how to appeal, if they disagreed with the agency’s Part B 

enrollment determination or the repayment calculation. 

 10MMA called for the special enrollment period to begin as soon as possible following the law’s 

enactment. Because it took 5 months to finalize implementation procedures, CMS identified the third 

group of TRICARE beneficiaries—those who had enrolled during the 2004 general enrollment period—

and offered them the option of beginning Part B coverage sooner than the customary July 1 effective 

date. 

9 GAO-06-489R TRICARE and Medicare Part B
In September 2004, DMDC alerted TRICARE beneficiaries by mail that they would 

receive important information from SSA concerning their Medicare Part B 

enrollment. DMDC also categorized TRICARE beneficiaries into three groups; these 

groups were different from the three categories used by CMS and SSA.11 Beginning in 

September 2004, within days of the SSA mailing, TMA, CMS, and SSA received 

inquiries from concerned TRICARE beneficiaries who had received letters from

DMDC but had not received enrollment information from SSA. According to officials 

from TMA, CMS, and SSA, these calls were their first indication that some of the

targeted TRICARE beneficiaries had not been identified through their data match 

efforts. TMA’s and DMDC’s internal quality review estimated that DMDC had mailed 

notices to about 42,000 more TRICARE beneficiaries than SSA had notified. 

According to CMS, it determined that, in early December 2004, most of the 

beneficiaries who said they had not received a letter from SSA were not included on 

the initial file received from DMDC. As a result, CMS had not transmitted data on 

these beneficiaries to SSA in June 2004. 

Organizations Obtained Corrected Data and 

Extended the Enrollment Period 

On December 29, 2004, TMA, DMDC, CMS, and SSA officials agreed that it would be 

more expeditious to perform a second data match than to continue investigating why 

some TRICARE beneficiaries had not been identified by their initial efforts. The next 

day, December 30, 2004, CMS received the Social Security numbers and dates of birth 

of approximately 7.4 million TRICARE beneficiaries from DMDC, which included 

data on over 500,000 more TRICARE beneficiaries than used for the initial data 

match. This time, DMDC transmitted data on all the TRICARE beneficiaries 

potentially eligible for TFL benefits in its database in a single file, not in two separate 

files as organization officials said had been done for the initial data match. Matching 

these data with its enrollment database, from January 10 through January 12, 2005, 

CMS identified two groups of TRICARE beneficiaries who were entitled to premiumfree Part A: (1) those who were not enrolled in Part B and (2) those who were 

enrolled in Part B and potentially eligible for their premium surcharges to be waived 

and for the 2004 surcharges to be repaid.12 CMS transmitted information on these 

TRICARE beneficiaries to SSA on January 12, 2005. 

 11The DMDC categories were for TRICARE beneficiaries who were entitled to premium-free Medicare 

Part A and were (1) under age 65 and not enrolled in Part B, (2) age 65 and over and not enrolled in 

Part B, or (3) enrolled in the Uniformed Services Family Health Plan—a TRICARE managed care

option that is only available in six areas of the country. The letters to the first and second groups

contained information on their upcoming automatic enrollment in Part B, the monthly or quarterly 

Part B premiums they would need to pay, and the consequences of declining Part B coverage. The 

letter to the third group explained that once they disenrolled from the Uniformed Services Family 

Health Plan, they would need to immediately enroll in Medicare Part B for continued TRICARE

coverage under TFL. 

12Because the 2005 general enrollment period had just begun, CMS did not separately identify 

TRICARE beneficiaries who enrolled during general enrollment, as it had done for the first data match. 

10 GAO-06-489R TRICARE and Medicare Part B
By mid-February, SSA reviewed the data it received from CMS—eliminating duplicate 

entries and the names of deceased persons. In March 2005, SSA sent the identified 

41,345 TRICARE beneficiaries instructions on how to enroll in Part B and an 

enrollment form, and offered those who chose to enroll the option of selecting any 

month in calendar year 2004 or the first 7 months of 2005 for their Part B coverage to 

begin.13 However, CMS, SSA, and TMA officials agreed that it would be preferable to 

offer information on Part B enrollment, rather than automatically enrolling TRICARE 

beneficiaries as had been done following the first data match. These officials 

expressed several concerns with automatic enrollment. First, CMS and SSA officials 

told us that an automatic enrollment would not save time. Instead, they told us that 

they were concerned that it would take as long to automatically enroll those 

identified by the second data match as it had taken them to enroll TRICARE 

beneficiaries after the initial data match. Second, SSA pointed out that some of the 

individuals identified by the second data match were already in the process of being 

enrolled. Third, TMA officials told us they were also concerned that some TRICARE 

beneficiaries might have declined coverage and would be irritated if SSA enrolled 

them a second time and deducted 2 months’ premiums from their Social Security 

benefit checks. 

In addition, on April 27, 2005, SSA provided written instructions to its field offices on 

how to enroll and process repayments for TRICARE beneficiaries who might not 

have received either its September 2004 or March 2005 notice, but who may 

subsequently have learned about their eligibility under Section 625 of MMA. These 

instructions also extended the special enrollment period through June 2005 because, 

according to CMS and SSA officials, not all of the eligible TRICARE beneficiaries had 

an ample opportunity to enroll during the special enrollment period specified in the 

law. The instructions also included provisions for enrolling eligible TRICARE 

beneficiaries after June 2005, on a case-by-case basis. The instructions also reminded 

SSA field staff that there is no time limit for waiving or repaying the Part B premium 

surcharges. Figure 3 illustrates the agencies’ efforts to implement Section 625 of 

MMA, including their efforts to correct the problems encountered after the initial data 

match. 

 13An SSA official told us that the agency generally gives people 3 months to respond to an agency 

notice, so that an enrollment notice sent in March 2005 would typically give an individual until June 

2005 to respond and elect Part B coverage. 

11 GAO-06-489R TRICARE and Medicare Part B
Figure 3: Timeline of Federal Actions to Implement Section 625 of MMA 

Source: GAO analysis of DOD, CMS, and SSA information. 

2003 

Dec. 

2004 

Jan. 

 

Feb. 

 

Mar. 

 

Apr. 

 

May 

 

Jun. 

 

Jul. 

 

Aug. 

 

Sep. 

 

Oct. 

 

Nov. 

 

Dec. 

2005 

Jan. 

 

Feb. 

 

Mar. 

 

Apr. 

 

Jun. 

 

May 

12/8/03 Section 625 MMA of 2003 enacted 

4/20–5/21/04 TMA, DMDC, and CMS negotiated and signed the 

memorandum of understanding to identify TRICARE beneficiaries 

5/10–5/13/04 DMDC sent information on 7.2 million TRICARE beneficiaries to CMS 

Early June 2004 CMS received information on 6.9 million TRICARE beneficiaries from DMDC 

6/15/04 CMS data match categorized TRICARE beneficiaries 

into three groups and sent data to SSA 

9/4–9/10/04 SSA notified TRICARE beneficiaries whom it had automatically 

enrolled in Medicare Part B and those who were eligible for a repayment 

9/7–9/10/04 DMDC sent letters to three groups of TRICARE 

beneficiaries who were entitled to premium-free Part A informing 

them that they would receive a letter from SSA 

Mid-September–Early December 2004 TMA, DMDC, and CMS 

conducted quality checks to identify the source of the problem 

12/29/04 TMA, DMDC, CMS, and SSA met to 

discuss steps for the second data match 

12/30/04 DMDC sent CMS information 

on about 7.4 million TRICARE beneficiaries 

1/10–1/12/05 CMS conducted second data match 

3/25/05 SSA sent TRICARE 

beneficiaries Part B enrollment forms 

4/27/05 SSA field offices 

were notified that the special 

enrollment period was extended 

through June 2005, with no time 

limit on repaying surcharges and 

premium adjustments 

May 2005 CMS began to 

repay premium surcharges 

DMDC sent 

letters to more 

people than 

SSA. 

7/05/04 SSA reviewed the data and eliminated duplicates and names of deceased TRICARE beneficiaries

1/20–2/15/05 SSA reviewed the CMS data 

Mid-September 2004 TMA, CMS, and SSA began to receive calls from concerned 

TRICARE beneficiaries who had not received SSA’s letter

June 2005 

SSA notified beneficiaries of their premium 

surcharge refunds 

Note: CMS extended the Section 625 special enrollment period through June 2005. In addition, SSA’s April 27, 2005, 

instruction to its field offices included provisions for enrolling TRICARE beneficiaries and repaying premium surcharges after 

June 2005, on a case-by-case basis. 

DATA ON TRICARE BENEFICIARIES SERVED UNDER 

SECTION 625 OF MMA ARE INCOMPLETE 

Although the total number of TRICARE beneficiaries served by the implementation of 

Section 625 is not fully known, we found that over 44,000 TRICARE beneficiaries 

benefited from this law, most as a result of the first data match. Data from SSA’s 

automated processing system showed that it enrolled or provided Part B premium 

surcharge repayments to 43,948 TRICARE beneficiaries, as a result of Section 625 of 

MMA. SSA also told us other TRICARE beneficiaries were served by Section 625 of 

MMA, but were not tracked by its automated systems. In addition, CMS officials 

reported that implementation of Section 625 of MMA resulted in premium surcharge 

repayments or credits toward future premiums for 462 TRICARE beneficiaries, who 

were billed for Part B coverage. 

12 GAO-06-489R TRICARE and Medicare Part B
Over 44,000 TRICARE Beneficiaries Enrolled in Part B 

or Were Repaid for Premium Surcharges 

By December 2005, SSA’s automated processing system showed that 43,948 TRICARE 

beneficiaries benefited from Section 625. SSA enrolled 25,697 TRICARE beneficiaries 

in Part B and repaid premium surcharges to an additional 18,251 TRICARE 

beneficiaries. However, according to SSA officials, this does not include data on an 

unspecified number of TRICARE beneficiaries associated with about 2,000 Social 

Security numbers, who were not enrolled, repaid, nor had their premium surcharges 

waived by the agency’s automated processing system.14 Most of the TRICARE 

beneficiaries who enrolled or received repayments for their premium surcharges 

were as a result of the first data match. 

In June 2004, CMS identified a total of 59,918 TRICARE beneficiaries who were 

entitled to premium-free Part A and potentially eligible for the Section 625 enrollment 

incentives, as a result of the first data match. CMS determined that these 59,918 

TRICARE beneficiaries could be categorized into three groups. The first group 

comprised 32,044 TRICARE beneficiaries who were not enrolled in Part B and the 

second group comprised 18,700 TRICARE beneficiaries who were enrolled in Part B 

and were paying premium surcharges for their late enrollment. The third group 

comprised 9,174 TRICARE beneficiaries who had enrolled in Part B during the 2004 

January-March general enrollment period. CMS offered this third group the option of 

making their Part B coverage retroactive to as early as January 2004, instead of the 

customary July 1 effective date for general enrollment.15 After SSA reviewed the CMS 

data, in July 2004, SSA determined that a total of 49,117 TRICARE beneficiaries were 

not enrolled in Part B or were enrolled and eligible for premium surcharge waivers 

and surcharge repayments. Although SSA processed most—47,803—of these cases16

through its automated processing system, 1,314 were rejected by this system and had 

to be processed manually.17 SSA officials explained that the data that they provided to 

us were from its automated systems and, as a result, did not include information on 

the Part B enrollments and repayments for the 1,314 TRICARE beneficiaries whose 

cases were manually processed. 

From the second data match, CMS identified a total of 57,480 TRICARE beneficiaries 

as potentially eligible for the Section 625 enrollment incentives, including an 

unknown number of TRICARE beneficiaries who were identified by both data 

 14An SSA official told us that in addition to the TRICARE beneficiary, a spouse and dependents may 

also be receiving benefits based on the TRICARE beneficiary’s Social Security number. Therefore, one 

Social Security number may have multiple TRICARE beneficiaries associated with it. 

15This group of TRICARE beneficiaries was also entitled to a repayment of the premium surcharges

they might have paid for 2004 Part B coverage. 

16SSA defines a case as a matter affecting a record associated with a specific Social Security number 

and possibly involving multiple Social Security beneficiaries. 

17An SSA official explained that the agency’s automated claims processing system can reject a case 

from being processed automatically for numerous reasons, including missing or conflicting 

information. 

13 GAO-06-489R TRICARE and Medicare Part B
matches. CMS officials explained that TRICARE beneficiaries who had either 

declined Part B or had allowed their coverage to lapse by the time the second match 

was conducted would have been identified by both data matches. According to 

information in CMS’s enrollment database, of those TRICARE beneficiaries who were 

entitled to premium-free Part A, (1) 55,102 TRICARE beneficiaries were not enrolled 

in Part B and (2) 2,378 TRICARE beneficiaries were enrolled in Part B and potentially 

due premium surcharge waivers and surcharge repayments. 

SSA reviewed the CMS data and determined that a total of 41,345 TRICARE 

beneficiaries were either not enrolled in Part B or eligible for premium surcharges to 

be waived and repayments of their 2004 surcharges. However, of these 41,345 

TRICARE beneficiaries, SSA was able to issue notices about enrolling in Part B and 

process premium surcharge waivers, and repayments for 40,703 through its 

automated systems. This number excludes 642 cases that were not processed by 

SSA’s automated processing system. According to SSA officials, some of the 

TRICARE beneficiaries associated with these cases could have enrolled or pursued 

repayment of their premium surcharges through their local SSA field offices. Because 

these cases were manually processed, they were also not included in the data that 

SSA provided to us. 

A total of 43,948 TRICARE beneficiaries had been served under Section 625 by 

December 2005, according to data from SSA’s automated processing system. As

shown in table 1, SSA enrolled 25,697 TRICARE beneficiaries in Part B and repaid 

premium surcharges to an additional 18,251 TRICARE beneficiaries. Initially, only 

TRICARE beneficiaries who received Social Security benefit checks received 

repayments for their premium surcharges. Those whom CMS billed for Part B 

coverage had their premium surcharges credited toward future premiums. 

Table 1: Section 625 of MMA Part B Enrollments and Premium Surcharges Repaid by SSA, as of

December 2, 2005 

First match

Second 

match Total

Number of TRICARE beneficiaries SSA enrolled in Part Ba21,956 3,741 25,697

Number of TRICARE beneficiaries who received repaymentsb 16,525 1,726 18,251

Average amount repaidb$309.96 $524.00 

Source: GAO analysis of SSA data. 

a

According to SSA, 9,322 of the 31,278 eligible TRICARE beneficiaries identified by the first match declined 

Part B coverage; many were already enrolled in a group health plan. 

b

The TRICARE beneficiaries who received repayments as a result of the first data match are not included among those who 

received repayments as a result of the second data match. 

CMS subsequently determined that it would repay, rather than credit, premium 

surcharges for qualifying TRICARE beneficiaries. In May 2005, CMS identified 462 

TRICARE beneficiaries who were billed for Part B and qualified for repayments

under Section 625 of MMA. According to CMS, by the time the agency identified these 

462 TRICARE beneficiaries, 195 of them had already had the money credited for their 

Part B premiums. By the end of June 2005, SSA had notified TRICARE beneficiaries 

of their premium surcharge refunds and Medicare repaid $112,300 to 267 of these 

14 GAO-06-489R TRICARE and Medicare Part B
beneficiaries whose credit balances had not been depleted. In addition, CMS 

determined that it would repay the premium surcharges for any additional TRICARE 

beneficiaries who qualified under Section 625 of MMA, but had not yet been identified 

as eligible. In total, SSA and CMS repaid or credited 18,713 TRICARE beneficiaries for 

the premium surcharges they had paid for 2004 Part B coverage. 

Not All Aspects of Section 625 

Implementation Are Known 

Despite the availability of much data, some details concerning the law’s 

implementation are unknown. SSA officials noted that the agency’s automated 

processing system did not track the number of TRICARE beneficiaries who changed 

the effective date of their Part B coverage, as a result of Section 625 of MMA. SSA 

also could not identify the number of appeals filed by TRICARE beneficiaries that 

were affected by Section 625. Although SSA tracked the number of TFL-related

inquiries that its field offices had received since January 2004, the agency had not 

determined whether those nearly 15,000 inquiries resulted in additional enrollments, 

waivers of premium surcharges, or repayments for premium surcharges. According to 

SSA, it determined that because of the relatively small size of the TRICARE workload, 

it would not be cost effective to change its reporting systems to capture this 

information. Finally, none of the involved organizations—DMDC, TMA, CMS, or 

SSA—tracked data on the disposition of cases involving undelivered mail. 

Consequently, the number of TRICARE beneficiaries who never received notices is 

unknown. 

AGENCY COMMENTS 

We provided a draft of this report to CMS, DOD, and SSA. We received written 

comments from CMS and DOD. We have reprinted CMS’s and DOD’s letters in 

enclosures I and II, respectively. SSA also provided us with comments by e-mail. All 

three agencies generally concurred with our findings and provided additional 

information clarifying their respective roles in the implementation of Section 625. We 

revised our report to reflect this information. All three agencies also offered technical 

comments, which we incorporated as appropriate. 

- - - - - 

As agreed with your offices, unless you publicly announce its contents earlier, we 

plan no further distribution of this report until 30 days after its date. At that time, we 

will send copies to the Secretary of Defense, the Secretary of Health and Human 

Services, the Administrator of CMS, the Commissioner of SSA, and other interested 

parties. We will also make copies available to others upon request. In addition, this 

report will be available at no charge on GAO’s Web site at http://www.gao.gov. 

15 GAO-06-489R TRICARE and Medicare Part B
If you or your staff have any questions about this report, please contact me at 

(312) 220-7600 or aronovitzl@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. Geraldine 

Redican-Bigott, Assistant Director; Enchelle Bolden; Chir-Jen Huang; Kevin Milne; 

and Jessica Cobert Smith made key contributions to this report. 

Leslie G. Aronovitz 

Director, Health Care 

Enclosures -- 2

 

16 GAO-06-489R TRICARE and Medicare Part B
Enclosure I Enclosure I

Comments from the Centers for Medicare & Medicaid Services 

17 GAO-06-489R TRICARE and Medicare Part B 
Enclosure I Enclosure I

18 GAO-06-489R TRICARE and Medicare Part B
Enclosure II Enclosure II

Comments from the Department of Defense 

19 GAO-06-489R TRICARE and Medicare Part B 
Enclosure II Enclosure II

(290475) 

20 GAO-06-489R TRICARE and Medicare Part B
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