Medicare Savings Programs: Implementation of Requirements Aimed at Increasing Enrollment
Released: 2012-09-14T00:00:00

Letter

Background

Medicare covers almost 49 million beneficiaries. Individuals who are eligible for Medicare automatically receive Part A benefits, which help pay for inpatient hospital, skilled nursing facility, hospice, and certain home health services. A beneficiary generally pays no premium for this coverage unless the beneficiary or spouse has worked fewer than 40 quarters in his or her lifetime, but the beneficiary is responsible for required deductibles, coinsurance, and copayment amounts. Medicare- eligible beneficiaries may elect to purchase Part B, which helps pay for certain physician, outpatient hospital, laboratory, and other services. Beneficiaries must pay a premium for Part B coverage, which generally Beneficiaries are also responsible for was $99.90 per month in 2012.Part B deductibles, coinsurance, and copayments. Beneficiaries electing to obtain coverage for Medicare services from private health plans under Part C are responsible for paying monthly Part B premiums and, depending on their chosen plan, may be responsible for a monthly premium to the Medicare plan, copayments, coinsurance, and deductibles. Finally, under Medicare Part D, beneficiaries may elect to purchase coverage of outpatient prescription drugs from private companies. Beneficiaries who enroll in a Part D plan are responsible for a monthly premium, which varies by the individual plan selected, as well as copayments or coinsurance. Table 1 summarizes the benefits covered and cost-sharing requirements for Medicare Part A and Part B, referred to together as Medicare fee-for-service.

Many low-income Medicare beneficiaries receive assistance from Medicaid to pay Medicare’s cost-sharing requirements. For Medicare beneficiaries qualifying for full Medicaid benefits, state Medicaid programs pay for Medicare’s Part A (if applicable) and Part B premiums and cost- sharing requirements up to the Medicaid payment rate as well as for services that are not generally covered by Medicare. To qualify for full Medicaid benefits, beneficiaries must meet their state’s eligibility criteria, which include income and asset requirements that vary by state. In most states, beneficiaries that qualify for Supplemental Security Income (SSI) automatically qualify for full Medicaid benefits. Other beneficiaries may qualify for full Medicaid benefits through one of several eligibility categories that states have the option but are not required to cover, such as the medically needy category, which includes individuals with high medical costs.

Congress created several MSPs—QMB, SLMB, QI, and QDWI—and, more recently, the LIS program to further assist low-income Medicare beneficiaries with their premium and cost-sharing obligations. Each program has different benefits, and beneficiaries qualify for different levels of benefits depending on their income. (See table 2.) Beneficiaries must also have limited assets to qualify for MSPs or LIS. MIPPA amended the asset limits for the QMB, SLMB, and QI programs to more closely align with the LIS limits beginning January 1, 2010. This raised the MSP asset limits for the first time since 1989 and ensured that those limits would be adjusted for inflation in the future. As with other Medicaid benefits, states have the flexibility to extend eligibility for MSP benefits to a larger population than federal law requires to be covered by implementing less restrictive income and asset requirements, for example by eliminating asset limits or not counting certain types of income. Therefore, eligibility requirements for MSPs vary across states, while requirements for LIS, which is administered by SSA, are uniform nationwide.

MIPPA included several new requirements aimed at eliminating barriers to MSP enrollment. Specifically, MIPPA required SSA to, beginning January 1, 2010, transfer data from LIS applications, at the option of applicants, to state Medicaid agencies, and it required state Medicaid agencies to use the transferred information to initiate an MSP application. SSA was also required to make information on MSPs available to those potentially eligible for LIS, coordinate outreach for LIS and MSPs, and train staff on MSPs.included a number of other provisions related to MSPs. As mentioned earlier, MIPPA amended the asset limits for QMB, SLMB, and QI to more closely align with the limits for LIS. It also required CMS to translate a previously developed model MSP application into 10 languages other In addition to the above requirements, MIPPA than English. In addition, MIPPA included funding for states and other organizations to perform outreach for LIS and MSPs. Beginning January 2010, MIPPA also exempted certain types of income and assets from being counted when SSA makes a determination of LIS eligibility. For example, the law required that SSA not count the value of a life insurance policy as an asset. The law did not extend these changes to MSPs, but states have the option to make comparable changes to their programs. The treatment of the value of life insurance is one example of a potential difference in how LIS and MSPs count income and assets in determining program eligibility.

In addition to the application transfers required under MIPPA, there are a number of other pathways to enrollment in MSPs. First, when a person applies for Medicaid, states may screen them for eligibility for MSPs. Second, some states offer a streamlined application to apply specifically for enrollment in MSPs. Finally, more than half of states automatically enroll beneficiaries whom SSA has determined to be eligible to receive SSI benefits. Once enrolled in MSPs, states periodically determine whether beneficiaries remain eligible for the program and either renew or cancel enrollment. States have different processes for doing this, some of which require more steps by the enrollee than others.

SSA Transferred Applications, Conducted Outreach and Training, and Reported That These Efforts Did Not Significantly Affect Workload

In implementing the MIPPA requirements, SSA reported transferring over 1.9 million applications to states, made information available on MSPs to potentially eligible individuals, conducted outreach, and provided training to staff on MSPs. SSA spent about $12 million in the first 3 years in implementing the MIPPA requirements, and officials reported that these efforts did not significantly affect its workload.

SSA Transferred over 1.9 Million Applications to States, Made Information on MSPs Available to Potentially Eligible Individuals, and Trained Staff

As required by MIPPA, SSA began transferring applications in January 2010, and SSA reported transferring over 1.9 million applications to states between January 4, 2010, and May 31, 2012. SSA officials told us that all states were able to receive LIS data when the transfers began in January 2010 and that applications are transferred to states each business day. Through the application transfer, SSA provides states with the following information: (1) all of the information reported by the applicant or modified by SSA, including information on household composition, income, and assets; (2) whether SSA approved or denied LIS enrollment and the reasons for denials; and (3) the date that the LIS application was submitted, as eligibility for SLMB, QI, and QWDI is retroactive to that date. SSA decided that transfers would occur after SSA determined eligibility for LIS, which generally occurs within 30 days. As a result, a number of elements of the application information transferred to states have been verified by SSA.affect benefits for certain applicants. Specifically, for those individuals enrolling in the QMB program, where benefits do not begin until the month after the state’s determination of eligibility, waiting for the SSA data transfer may result in the loss of a month or more of benefits.

However, the timing of the transfer can SSA coordinated with CMS officials and state Medicaid agency officials about how to structure the exchange of application data. For example, SSA developed a standard data transfer agreement and signed an agreement with each state. In the months prior to implementation, SSA tested the data exchange with states in order to identify and resolve any concerns states had in receiving and using the transferred data. Finally, SSA programmed its data systems to transfer the applications as agreed with the states. SSA officials also told us that the agency designed the process to eliminate duplicate applications, applications with insufficient address data, and applications where the individual has opted out of the data transfer. In response to concerns raised by states once the transfers began, SSA also decided to delay the transfer of applications from individuals not yet eligible for Medicare until the applicant is within 1 month of eligibility. For 2011, SSA reported transferring 66 percent of all LIS applications where SSA determined eligibility to states to initiate an application for MSPs; and 13 percent of applications had applicants who opted out of the transfer and thus were not transferred. SSA officials told us the remaining 21 percent were not transferred for various other reasons beyond the applicant opting out of the transfer, such as the applicant was not yet eligible for Medicare or the applicant submitted a duplicate application.

To implement the requirements to make information available to potentially eligible individuals and coordinate outreach, SSA took several steps. SSA made information, such as the model MSP application developed by CMS, available through its website and in local offices. SSA conducted an outreach campaign in 2009 to provide information on LIS and MSPs, including the changes that MIPPA made to the eligibility requirements for both programs. As part of the campaign, SSA held events and issued new promotional materials, which the agency provided to local Social Security offices, community organizations, and health providers’ offices. SSA also sent about 2 million outreach letters in 2009 to individuals previously denied LIS benefits alerting them that eligibility requirements for LIS and MSP would be changing in January 2010 and they could now be eligible for LIS as well as MSPs. Since January 2010, SSA has sent letters describing LIS and MSPs to several categories of potentially eligible individuals. (See table 3.)

To train staff, SSA developed two video trainings for its employees on the MIPPA changes to LIS and MSPs and made the video trainings available on-line. SSA required those staff that would be interacting with individuals potentially eligible for LIS or MSPs to view the video trainings prior to January 2010. SSA also updated its policies and procedures manual to include instructions for employees in handling individuals’ questions about MSPs during routine contacts. For example, SSA’s policies and procedures manual instructs employees to tell individuals about the availability of MSPs and that in applying for LIS the individuals can initiate an MSP application with their state Medicaid agency unless they opt out. SSA’s manual also instructs employees not to help complete MSP applications but to refer individuals with MSP questions to either their local Medicaid office or to State Health Insurance Assistance Programs, which help individuals complete applications for Medicare and Medicaid benefits.

SSA Spent about $12 Million in the First 3 Years and Reported That Implementing the Requirements Did Not Significantly Affect SSA’s Workload

In fiscal years 2009 through 2011, SSA spent about $12 million to implement the MIPPA requirements. Of the $24.1 million appropriated by MIPPA for the initial costs of implementing the requirements, SSA spent $9.2 million combined for fiscal years 2009 and 2010 ($4.5 million and $4.7 million respectively). The remaining $14.9 million in unspent funds remains available to SSA for future costs in meeting the requirements. In fiscal year 2011, SSA spent about $2.5 million of the $3 million appropriated under MIPPA for the ongoing administrative costs of carrying out the requirements. These costs were financed through its first annual agreement with CMS. For fiscal year 2012, CMS agreed to fund $2.8 million. SSA officials told us that, based on data available as of July 2012, they expected SSA’s workload, and therefore costs, to remain constant for fiscal year 2012.

SSA officials told us that implementing the MIPPA requirements has not affected SSA’s overall workload significantly as measured by the staff time committed to implementation and to handling inquiries and calls about MSPs. For example, SSA officials reported that implementation required 17 full time equivalents (FTE) in 2009, 32 in 2010, and 8 in 2011 and indicated that the ongoing cost in staff time of meeting the requirements is relatively small. SSA officials told us that a larger amount of staff time was used in 2009 and 2010 because that was when SSA conducted its outreach campaign and designed and launched the application transfers, the latter of which required programming data systems, developing new procedures, and training staff. According to officials, some of the ongoing staff time will be dedicated to responding to inquiries and calls about MSPs. While SSA data indicated that the volume of field office inquiries and calls to its toll-free line related to MSPs increased since the requirements took effect, the volume was relatively small compared to the overall volume of inquires and calls SSA received. For example, in fiscal year 2011, SSA received about 53,000 calls related to MSPs out of a total of 76.8 million fielded through the toll-free line.

SSA officials also reported that, for fiscal year 2011, SSA was under a hiring freeze. As a result, SSA officials noted that FTEs that had been devoted to MSP work have been diverted from some of SSA’s more traditional workloads, such as processing claims for Social Security benefits or issuing Social Security numbers. However, the funding appropriated under MIPPA supported the relatively small number of FTEs used to implement the requirements and will continue to do so through the funding agreements with CMS. MIPPA prohibits SSA from using its own administrative funding to carry out the MSP requirements, and, therefore, SSA intends to continue to rely on funding provided under the CMS funding agreements for these activities.

Estimated MSP Enrollment Increased from 2007 through 2011 with the Largest Increases Occurring after the Requirements Took Effect

Using CMS data, we estimated that MSP enrollment increased each year from 2007 through 2011. The largest increases in MSP enrollment occurred in 2010 and 2011 (5.2 percent and 5.1 percent respectively), the first 2 years that the MIPPA requirements were in effect. (See table 4.) During this period, Medicare enrollment also grew by approximately 2 to 3 percent each year, from about 44.4 million people in 2007 to about 48.7 million people in 2011.

A number of factors may have contributed to the higher levels of growth in MSP enrollment in 2010 and 2011, including SSA application transfers and outreach, other MIPPA provisions and related changes to state policies, and the economic downturn.

SSA application transfers. In response to our survey of state Medicaid officials about the effects of the application transfers on MSP enrollment, officials from 28 states reported that MSP enrollment has increased as a result of the application transfers. In contrast, officials from 12 states reported that the application transfers did not have an effect on MSP enrollment, and officials from the remaining 10 states reported they did not know the effect of the transfers. While there are no nationwide data that demonstrate the effects of the SSA application transfers on MSP enrollment, 3 of the 6 states we contacted to supplement our survey tracked some information on the outcomes of applications transferred by SSA.application transfers from SSA in 2011, Arizona reported enrolling about 800 of 16,000 applicants; Louisiana reported enrolling about As a result of the 3,300 of about 21,800 applicants; and Pennsylvania officials reported enrolling about 16,000 of 37,500 applicants. It is not clear, however, if these beneficiaries would have enrolled in MSPs through other means if the application transfers had not been in place. For example, these enrollees may have instead enrolled by applying directly through the state.

SSA outreach. As previously mentioned, SSA completed an outreach campaign in 2009 and has sent letters with information about MSPs to millions of potentially eligible individuals. Our prior work indicates that letters sent by SSA to potentially eligible individuals in 2002 resulted in more beneficiaries enrolling in MSPs than would have likely enrolled without receiving an SSA letter.

Other MIPPA provisions. The MIPPA provision that more closely aligned asset limits for MSPs with the limits for LIS expanded the number of beneficiaries eligible for MSPs in 2010. Specifically, the requirement effectively expanded eligibility in 41 states by increasing the asset limits. In addition, MIPPA-funded outreach conducted by states and other organizations that began in 2009 may have increased the likelihood that applications resulted in enrollment. According to data from the National Council on Aging (NCOA), the national resource center funded to track the outreach, grantees assisted about 200,000 individuals from January 2010 through December 2011 in submitting a complete MSP application. NCOA reported that grantees in most states are able to access the applications transferred by SSA to identify those beneficiaries who potentially need assistance completing the MSP application.

Economic downturn. It is unclear how the economy affects the population potentially eligible for MSPs. In 2011, we reported that during the economic downturn, from 2007 through 2010, unemployment among those aged 65 and older doubled and food insecurity increased. In addition, awards of SSA disability benefits to those ages 50 to 64 increased. However, our past work also found that the percentage of adults 65 and older with incomes below 200 percent of the federal poverty level did not increase.

States Reported That the Requirements Led to Various System Changes and Increased Workload

Officials from four of the six states we contacted to supplement our survey reported making changes to Medicaid eligibility systems, specifically, changes to both information systems and business processes, to receive and act upon the applications transferred by SSA. For example, officials from Arizona reported modifying the state’s information system to accept the data and automatically create records for the individuals in the eligibility system and generate notification letters asking the applicants for additional information in order to complete the application. Officials also said that the state established new business rules for processing applications received through the transfers. Officials from Colorado, one of the two states that did not report making changes, told us that the state plans to make changes to its system pending the availability of funding to implement the changes. Because the state did not have the funds to make the necessary system changes, officials said that they had to develop an interim process, under which transferred applicants receive an assessment of MSP eligibility only if the applicant completes the state’s request for additional information. Officials from the final state, Pennsylvania, told us that the state did not make changes to its information system as a result of the application transfers but did establish business processes for sorting the applications and forwarding them to county assistance offices for processing.

Officials from the final state said that they could not determine the effect of the application transfers on the state’s workload, including the effect on the volume of applications received. increased workload, said that it is difficult to determine the effect of the application transfers but that for some applications the transfers had reduced the time needed for processing.

States identified several reasons why processing the applications transferred from SSA had increased their workload, including that the transfers include applications for those who are clearly ineligible for MSPs, applications have inaccurate information, and applicants do not understand that their application for LIS is triggering an application for MSPs.

The increased workload may have resulted from SSA transferring applications for individuals who are ineligible for MSPs because their income or assets exceed the federal MSP eligibility limits or they are not yet eligible for Medicare. In response to our survey, officials from one state reported that over 70 percent of the applications received from SSA are ineligible for the state’s MSPs but that the state is still required to process the application. The officials noted that processing these applications is not a productive use of limited state resources. Officials from Pennsylvania, one of the six states we contacted to supplement our survey, reported that, of the approximately 37,500 applications transferred by SSA in 2011, about 14,600 had been denied LIS enrollment. Those rejected applicants represented a significant majority of the 21,600 rejected by the state for MSP enrollment. Officials told us that they have adjusted their process to automatically deny enrollment in MSPs for those individuals that were rejected by SSA for LIS because, for example, the person did not have Medicare or had income that exceeded the eligibility limits.

In response to our survey and during interviews, officials from several states reported inaccuracies in the SSA data that may have made the applications more difficult for states to process. For example, Louisiana officials told us that the city of an applicant is sometimes misspelled in the SSA data. This triggers an error in the state’s system, which must be reviewed and corrected by the state.

In response to our survey, officials from several states also indicated that the state spends time requesting information from applicants who do not provide it because they do not understand that they have applied for MSPs. For example, officials from Virginia commented that individuals do not realize that their application for LIS is triggering an application for MSP and do not end up providing the additional information needed for the state to make a determination of MSP eligibility. Arizona officials stated similar concerns and provided data indicating that 63 percent of all of the applications transferred by SSA and processed by the state in 2011 were denied because the applicant did not respond to the state’s request for additional information.

The extent to which the SSA application transfers required system changes or affected workload may have depended on whether the state treated the transferred information as verified. Though CMS policy allows states to treat the information in the transferred applications as verified, in response to our survey, officials from 35 states reported requiring applicants to reverify some or all of the information before the state would determine eligibility for MSPs. States most frequently reported requiring applicants to reverify income, both earned and unearned, and assets.(See table 5.) Nine states reported requiring applicants to reverify all of the data elements transferred by SSA, including household size and identity.

In the six states we contacted, we found some evidence to suggest that the application transfers had less of an effect on workload in states that treated the transferred information as verified. Specifically, of the three states that we contacted that accepted SSA’s verification of the application information, two states reported being able to enroll some of the transferred applicants with little to no work required of caseworkers. Louisiana officials said that the transfers have allowed the state to autoenroll some applicants (where the eligibility system enrolls the applicant using the data transferred by SSA with no need for a caseworker to enter data or contact the applicant). For example, from March 2010 through January 2012, Louisiana autoenrolled about 14 percent of applicants transferred by SSA (5,937 of 43,414). Officials said that the transfers have reduced the workload for these applications. Similarly, officials from Pennsylvania said that the number of applications received from SSA where caseworkers need to contact applicants for more information was small, because, in addition to treating the information as verified, the state has access to 12 different data sources that can be used to address any discrepancies in the SSA data and provide asset information that is not included in the SSA data. In contrast, in the three states we contacted that required applicants to reverify some of the information (Arizona, Colorado, and Florida), the verification process included applicants reporting and documenting income and reporting and attesting to the accuracy of other information, such as assets and citizenship. This verification process included multiple steps by states and applicants.

Differences in how SSA and states count income and assets for LIS versus MSPs may have driven states’ choices to require further verification of information in the transferred applications. For example, several states noted that the LIS application combines income for a couple, whereas the state needs to know the income for each spouse separately to determine eligibility for MSPs. Officials from Arizona, one of our selected states that requires applicants to reverify income, explained that the state needs to know the income of each spouse as well as any dependent children living in the household to determine eligibility for MSPs. In a February 2010 letter to state Medicaid directors with guidance on implementation of the MIPPA requirements, CMS noted that SSA has a more expansive definition of a household in determining eligibility for LIS than what most states use to determine MSP eligibility. The guidance reminded states that they have the option to align their definition with SSA’s, and noted that doing so would expand eligibility for MSPs to more people and reduce states’ administrative burden in processing the applications transferred by SSA. Some states also count certain types of income and assets that SSA does not. For example, SSA does not count the value of life insurance policies against the asset limit, but states count it unless the state has amended its Medicaid plan to disregard it. States must verify whether applicants have life insurance policies either by contacting the applicant or through another data source.

Concluding Observations

Historically, MSPs have had low enrollment rates, with the Congressional Budget Office estimating in 2004 that only a third of eligible individuals were enrolled in the QMB program and an even smaller percentage in the SLMB program. Our estimates show that enrollment has grown each year for the last 5 years, with the largest increases occurring in 2010 and 2011 (5.2 percent and 5.1 percent), the first 2 years the MIPPA requirements were in effect. The differences between how income and assets are counted for LIS and MSPs make it difficult for some states to act on the applications transferred by SSA without requiring additional information from applicants, a step that requires additional work by the state and can present a hurdle to applicants. Aligning the methods for determining income and assets for MSPs with those of LIS is an option currently available to states, and some states have used that flexibility. More states may not have opted to do so because aligning these methods would likely expand the number of individuals who are eligible only for MSP, and not for other Medicaid, benefits. Because providing MSP benefits to such individuals is likely to increase costs to the state, states have no immediate financial incentive to provide MSP benefits to these individuals. Further, while aligning these methods may allow states to more easily act upon the applications transferred by SSA, it would create a method for counting income and assets for MSPs that may differ from how states assess eligibility for Medicaid, making it more complicated for states to assess MSP eligibility as part of assessing eligibility for Medicaid.

Agency Comments

We provided a draft of this report to HHS and SSA to review. HHS did not provide comments. SSA stated, in an e-mail, that the report accurately describes its implementation of the requirements. SSA also provided technical comments, which we incorporated as appropriate.

We are sending copies of this report to the Administrator of CMS, the Commissioner of SSA, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-7114 or kingk@gao.gov. Contact points for our Office of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix II.

Appendix I: GAO Methodology for Estimating Change in Medicare Savings Program Enrollment

To describe the change in Medicare Savings Program (MSP) enrollment from 2007 through 2011, we used data from the Centers for Medicare & Medicaid Services (CMS) to estimate annual enrollment and the change in annual enrollment over that period. The data, reported by states to CMS, included state-level information on the number of Medicare beneficiaries for whom states will pay the Medicare Part B premium. For our estimates we used data that represented the number of beneficiaries for whom states financed the Part B premium in December of each year. The data do not reflect enrollment for Qualified Disabled and Working Individuals, which CMS officials estimated numbered less than 300 people nationally as of March 2012. In addition, the data include some Medicare beneficiaries who are not eligible for MSPs but for whom states finance the Part B premium. We excluded some but not all of these beneficiaries from our analysis. Specifically, we excluded those beneficiaries categorized as “medical assistance only” as those beneficiaries are not eligible for MSPs per CMS’s policy manual. We were not able to exclude those categorized as “medically needy”—beneficiaries who may or may not also meet the eligibility requirements for an MSP— because CMS does not have data on this population for each of the years in our analysis. It is also likely that for a small percentage of beneficiaries, states did not specify the basis of eligibility, and therefore it is unclear whether they were eligible for MSPs or not. While CMS does not have data for each of the years in our analysis on the number of beneficiaries categorized as medically needy or with an unspecified eligibility category, 4 percent were medically needy and 4 percent did not have an eligibility category specified as of May 8, 2012. Though our estimates of enrollment may be overstated, we believe that our estimates of the change in enrollment over the 5-year period are valid.

To assess the reliability of CMS’s data on MSP enrollment, we interviewed CMS officials about their efforts to ensure the quality of the data and reviewed the CMS policy manual outlining the requirements states must follow in reporting the data. We also asked officials about the limitations of the data and reviewed any statements about data limitations in published reports. Finally, we reviewed data for each month of 2007 through 2011 to identify any anomalies in the data. We determined the data to be sufficiently reliable for the purposes of estimating the changes in MSP enrollment nationally over time; where relevant we stated the limitations of the data in the findings.

Appendix II: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Kristi Peterson, Assistant Director; Jeremy Cox, Assistant Director; Susan Barnidge; Krister Friday; Sandra George; Kristin Helfer Koester; Lisa Rogers; and Paul Wright made key contributions to this report.