The enactment of the MMA in December 2003 added a voluntary outpatient prescription drug benefit to the Medicare program, known as Medicare Part D. Prior to this, the Medicare program did not generally pay for outpatient drugs. The new Medicare Part D drug benefit, which became available in January 2006, enables Medicare beneficiaries to select among private drug plans sponsored by private companies. Beneficiaries who elect to enroll in a Part D plan are responsible for a monthly premium, which varies by the individual plan selected. A key element of the prescription drug benefit is the low-income subsidy, or “extra help,” available to low-income elderly and disabled individuals to assist them in paying their premiums, deductibles, and co-payments. Without the subsidy, individuals enrolled in Part D would have to pay greater out-of- pocket costs for their prescription medications. While the Department of Health and Human Services’ CMS has responsibility for implementing the Part D prescription drug benefit, SSA is responsible for administering the subsidy. The MMA requires that SSA solicit and process subsidy applications to determine applicants’ eligibility, resolve appeals for applicants dissatisfied with their subsidy determinations, and periodically redetermine individuals’ continued eligibility. SSA transmits information on its approved subsidy determinations and individuals’ subsidy levels to CMS, which in turn transmits the information to the appropriate drug plan. CMS provides information to SSA and to prescription drug plans for individuals who automatically qualify for the subsidy and the Part D prescription drug benefit, based on information it receives from state Medicaid agencies on individuals’ eligibility for Medicaid and from SSA on individuals who receive Supplemental Security Income (SSI). SSA also withholds premium payments from the monthly Social Security checks of individuals who elect this payment option; otherwise, individuals make direct payments to their selected prescription drug plan. Figure 1 shows the flow of information among SSA, CMS, state Medicaid agencies, prescription drug plans, pharmacies, and beneficiaries. To implement the new responsibilities under the MMA, SSA established a Medicare Planning and Implementation Task Force in December 2003. The objectives of the task force included determining the affected population; the number of staff, locations, and material resources needed; and agreeing on specific responsibilities with other federal government agencies. Under the MMA, the Congress provided SSA with a $500 million appropriation from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund to pay for the initiation of SSA’s Part D responsibilities for fiscal years 2004 and 2005, but later extended the appropriation to fiscal year 2006. The appropriation was exhausted in fiscal year 2006, and MMA spending is now subject to SSA’s overall spending ceiling under the Limitation on Administrative Expenses appropriation. All Medicare beneficiaries entitled to benefits under Medicare Part A or enrolled in Part B are eligible to enroll in Medicare Part D. Some Medicare beneficiaries automatically qualify for the low-income subsidy, while others are required to apply for it and must meet the eligibility requirements established under the MMA. Those eligible for the subsidy generally fall into three broad categories (table 1 describes the Part D low- income subsidy associated with each category, as well as the costs for Medicare beneficiaries who do not qualify for the subsidy). Full-benefit dual eligibles: These are low-income Medicare beneficiaries who qualify for full coverage under their state’s Medicaid program, which, prior to the effective date of Part D, provided coverage for their outpatient prescription drug costs. These individuals are automatically enrolled by CMS in the Part D prescription drug program. They automatically qualify for the full subsidy and do not need to file an application. These beneficiaries are referred to as “deemed.” Partial-benefit dual eligibles: These are Medicare beneficiaries who qualify for more limited Medicaid coverage, SSI, or state Medicare Savings Programs. Similar to full-benefit dual eligibles, they are automatically enrolled in a Part D prescription drug plan by CMS. They also automatically qualify for the full subsidy and do not need to file an application. They are also referred to as “deemed.” Other Medicare beneficiaries: Medicare beneficiaries who are not deemed eligible must apply and meet the income and resource requirements to receive the subsidy. These beneficiaries generally qualify if they have incomes below 150 percent of the federal poverty level and have limited resources. In addition to applying for the subsidy, these individuals must also apply to enroll in the Part D prescription drug plan. Low-income subsidy benefits are provided to these individuals on a sliding scale, depending on their income and resources. Medicare beneficiaries who do not automatically qualify for the Part D low-income subsidy can apply for the benefit directly through SSA or through their state Medicaid office. Individuals who apply through SSA may submit their subsidy application using SSA’s paper application or an Internet application form. Applicants may also have their information entered electronically by visiting an SSA field office or by calling SSA’s toll-free phone line. On the basis of applicant’s income and resource information, SSA issues a letter to inform the applicant of whether or not he or she has been approved for the subsidy. SSA sends a predecisional notice to applicants who appear to be ineligible for the subsidy based on the income and resource information they provided, and allows them 20 days to provide other information for the agency to consider. If applicants do not provide such information within the required time frame, SSA sends a final letter to inform them that they do not qualify for the subsidy. If an individual applies for the subsidy through SSA, SSA is responsible for resolving any subsequent appeals, and for redetermining the applicant’s continued subsidy eligibility. As required by the MMA, beneficiaries may also apply for the subsidy through their state Medicaid office. However, according to state Medicaid officials we spoke with, they have encouraged beneficiaries to apply for the subsidy through SSA whenever possible. To prepare for those beneficiaries that request to have their subsidy applications processed by a state office, state Medicaid officials we spoke to said that they modified their Medicare Savings Program or Medicaid applications, when appropriate, to collect the necessary information for subsidy determinations. As of March 2007, only the Colorado and Kansas state Medicaid agencies have made Part D subsidy determinations. When state Medicaid agencies make subsidy determinations for individuals, they are also responsible for subsequent appeals and redetermination decisions. SSA approved 2.2 million subsidy applicants as of March 2007, despite factors that limited its efforts to identify the eligible population and solicit applications; however, measuring the success of its efforts is difficult because there are no reliable data on the size of the eligible population. To compensate for the lack of reliable data on the eligible population, SSA used data from a variety of federal sources to initially target its outreach effort to approximately 18.6 million potentially eligible Medicare beneficiaries, which it believed to be an overestimate of the potentially eligible population. To solicit applications from the approximately 18.6 million Medicare beneficiaries, SSA launched an outreach effort that included mass mailings and a public campaign of over 76,000 events held nationwide. Though individuals’ reluctance to share personal financial information and other factors that initially hindered SSA’s solicitation efforts have lessened, various advocacy groups are concerned that eligibility requirements and a complicated application may discourage potential applicants. While advocacy group and state Medicaid agency officials we interviewed believe that SSA has made some contact with all Medicare beneficiaries eligible for the subsidy, they say that more personalized assistance, such as door to door contact, is needed. While SSA provides various personalized services to assist individuals in completing their subsidy applications, agency officials told us that SSA does not have the resources to go door to door to make contacts. We found that the subsidy program’s participation rate compares favorably to those of other low-income programs at similar stages of implementation. However, because no reliable data exist on the population of potential eligibles, it is unclear how effective SSA’s outreach efforts have been. Although SSA faced barriers in identifying the population eligible for the subsidy and soliciting applications from individuals, it had approved 2.2 million subsidy applicants as of March 2007. SSA conducted its initial outreach campaign from May 2005 to August 2006 to educate individuals about the subsidy and to help them apply for it. SSA officials told us that their outreach goals were to (1) ensure that as many individuals potentially eligible for the subsidy were informed of the benefit, (2) ensure that all potentially eligible Medicare beneficiaries had an opportunity to apply for the benefit, and (3) solicit 5 million subsidy applications over fiscal years 2005 and 2006 (SSA actually received 5.5 million applications during this time period). To accomplish these goals, SSA launched an outreach campaign that included over 76,000 events conducted in collaboration with various federal, state, and local partners, such as state Medicaid agencies, state health insurance programs, and various advocacy groups for Medicare beneficiaries. SSA carried out the campaign by requiring each of its field offices to conduct a certain number of outreach events. These events were held at senior citizen centers, public housing authorities, churches, pharmacies, and other venues. As figure 2 shows, the number of outreach events has declined significantly, from a high of 12,150 in July 2005 to 230 at the completion of the campaign in August 2006. Although SSA’s initial outreach campaign has ended, SSA is continuing to conduct outreach efforts to solicit applications from individuals potentially eligible for the subsidy. For example, SSA has conducted various activities to increase subsidy applications from individuals in rural and homeless communities. SSA also recently launched a new strategy during the week of Mother’s Day to inform relatives and caregivers about the subsidy, and is planning a similar effort during Father’s Day. Additionally, SSA is targeting approximately 630,000 dual eligibles who lost their automatic eligibility for the subsidy to help them apply for the subsidy.