MMA enacted and affected a number of activities that SSA identified as related to its responsibilities. Listed are six provisions enumerated in MMA affecting SSA, and the Medicare-related functions and activities undertaken by SSA as a result. Prescription Drug Program (Part D) and Low Income Subsidy (LIS)–In addition to establishing a beneficiary outreach demonstration project for this provision, SSA is responsible for developing forms and procedures for LIS including a simplified application, conducting education and outreach activities, and processing LIS appeals. In addition, SSA will use computer matching data for verification of attestations, process subsidy-changing events, periodically redetermine LIS eligibility, and deduct Part D premiums when the beneficiary chooses to have their premium withheld from their Title II benefit payment and the Centers for Medicare and Medicaid Services (CMS) notifies SSA of this. SSA was also responsible for transferring premiums withheld from Title II benefit payments to CMS. Medicare Prescription Drug Discount Card Program–SSA will support CMS administration of this program by providing data from SSA’s records and data obtained from other federal agencies on potentially eligible Medicare beneficiaries for transitional assistance. TRICARE–SSA will be responsible for enrolling TRICARE beneficiaries into Medicare Part B, calculating their premiums, and refunding excess premiums paid. Medicare Part B Premium–SSA is tasked with implementing Medicare Part B income-based premium subsidy reductions for beneficiaries with income above a stipulated level. SSA will also collect the income- related monthly amount from the Title II benefit payment and transfer the premiums withheld from Title II benefit payments to CMS, and process appeals of the initial determination. Medicare Advantage (MA) Part C–SSA will compute and collect Part C premiums when the beneficiary chooses to have premiums deducted from his or her Title II benefit payment and transfer premiums withheld from Title II benefit payments to CMS. Health Savings Accounts–SSA will obtain information from employer reports, record the information on SSA’s records, and pass the information to the Internal Revenue Service. As a result of the enactment of MMA, SSA conducts outreach efforts to identify individuals entitled to benefits or enrolled under the Medicare program under Title 18 of the Social Security Act, who may be eligible for transitional assistance under the Medicare Prescription Drug Discount Card Program and premium and cost-sharing subsidies under the Prescription Drug Card Part D Program. SSA continues to have a role in the outreach to low-income Medicare beneficiaries for payment of Medicare cost-sharing under the Medicaid program. SSA is also required to verify the eligibility of applicants for the subsidy under MMA who self- certify their income, resources, and family size. To determine whether a Medicare beneficiary is eligible for a subsidy, SSA collects information on whether the individual has income up to 150 percent of the federal poverty guidelines. SSA has established a database to maintain the information it collects and shares information on those eligible and ineligible for subsidies with CMS. To implement the new responsibilities under MMA, SSA established a Medicare Prescription Drug Planning and Implementation Task Force in December 2003. The objectives of the task force included identifying the potentially eligible population, the number and locations of potential workloads and staff and material resource needs, and agreeing on specific responsibilities with other federal government agencies. SSA also identified the specific tasks to carry out the implementation of the activities for each of the provisions under MMA, including designing and managing the planning and implementation processes; issuing regulations; and developing and implementing communication strategies, budget, appeals process, subsidy-changing event process, redetermination process, and strategies for service delivery. Under MMA, the Congress provided SSA with a $500 million appropriation to fund SSA’s start-up administrative costs to implement MMA, during fiscal years 2004 and 2005, but later extended this budget authority to fiscal year 2006. SSA reported that the $500 million for these administrative costs was exhausted in January 2006, and MMA costs are now funded using the LAE. LAE is SSA’s basic administrative account and is an annual appropriation financed from the Social Security and Medicare trust funds. The total amount of SSA administrative costs covered by the Medicare Trust Funds to fund SSA’s Medicare responsibilities has increased with the enactment of MMA. Prior to the establishment of Part D under MMA, Medicare did not generally pay for outpatient prescription drugs, but it did provide health insurance to individuals who are either 65 or older or disabled. Table 1 reflects SSA’s reported administrative cost outlays covered by the Medicare Trust Funds for implementing MMA activities and other Medicare activities. SSA reported spending the $500 million MMA funds from December 2003 through January 2006 on activities to implement the provisions specified in MMA. SSA’s financial reports showed that almost all of the funding reported was used for personnel-related expenses, contractors, and indirect costs (see table 2). More than half of the funds were spent on personnel-related expenses for staff hours used on MMA activities at SSA’s headquarters and field offices. Once the $500 million was spent, MMA costs were funded by SSA’s LAE appropriation. SSA used its financial accounting and reporting system, SSOARS, and its cost analysis system (CAS) to track overall costs related to the implementation of MMA legislation. SSA did not separately track the administrative costs incurred to implement the individual provisions under MMA legislation because the act did not specifically require SSA to do so and it was not cost effective to do so. SSA reported that it spent approximately $261 million on personnel-related expenses, which consisted of salaries and related benefits for both newly hired and existing SSA employees. As a result of MMA, SSA hired and trained more than 2,200 new employees at its field offices and 500 at headquarters to handle the additional workload created by SSA’s new responsibilities under MMA. Personnel-related expenses included salaries for current SSA employees who were also involved in activities related to implementing MMA, including the new Medicare Part D responsibilities. Many of these employees may have been engaged in work on other SSA programs during the same time. SSA used CAS to prorate these employees’ salaries and related expenses based on the amount of time employees charged to MMA and various other SSA responsibilities. SSA reported indirect costs of approximately $117 million for MMA implementation. During each year, SSA incurred administrative costs in support of the various programs. For example, SSA makes rental payments for most of the approximately 1,300 regional field offices it has located around the country and staff in these offices perform duties related to all of the programs administered by SSA, including MMA. In order to allocate these administrative costs to each of its programs, SSA used its cost analysis system, CAS, to charge certain types of costs either proportionally or in full against the MMA appropriation. SSA charges both direct and indirect costs to its programs either by directly charging specific program- related amounts to the affected program in SSOARS or using CAS to allocate personnel-related and general administrative costs that apply to more than one SSA program. CAS accounts for work-years and costs for each program administered by SSA by specific subfunctions within the SSA programs. It is a centralized, computer-based system that uses data from the financial reporting system to break out costs at SSA by program and major functions. The main objective of CAS is to distribute costs equitably across programs and among the various trust funds and general funds. However, SSA stated that systems modifications to enable tracking MMA administrative costs by each of the MMA provisions were not required by the legislation and that it would not have been cost effective to modify the system. SSA reported that $119.6 million in MMA funds went to contractors, vendors, and other government agencies that provided various goods and services necessary for SSA to meet its responsibilities under MMA. Some of the largest reported expenditures included $34.2 million paid to one contractor for software systems development $23 million paid to one contractor for telephone-based beneficiary outreach and information distribution; $18.6 million to the United States Postal Service for mass mailings and other paper-based information distribution; $11.4 million to one contractor for computer hardware and software $6.5 million to the Government Printing Office for the design and production of informational mailings, posters, and other printed materials. The remaining expenditures to other contractors, vendors, and government agencies for goods and services charged to the MMA implementation appropriation included additional computer hardware, software development, and information systems support, as well as installation and reconfiguration of MMA service centers workstations. As of February 2007, SSA reported it had completed 16 of the 22 tasks for implementing six provisions of MMA. SSA is continuing its implementation of the remaining six tasks using LAE funding. Table 3 provides a breakdown of the 22 tasks by major MMA provision. SSA had agencywide policies and procedures in place over its cost tracking and allocation, asset accountability, and invoice review and approval processes. SSA also established specific guidance to charge and allocate its costs to implement MMA. However, those policies and procedures were not always complied with consistently. We found that SSA did not effectively communicate the specific MMA-related guidance to all relevant staff. This ineffective communication resulted in millions of dollars of costs being misallocated to MMA. Some of these misallocations were subsequently detected by SSA and corrected during SSA’s review process. In the area of purchase card transactions, which represented 0.5 percent of the $500 million, we found some instances where credit card purchases had not yet been correctly allocated to MMA. In addition, we found that some purchases made with credit cards were not properly supported or reviewed and may not have been a proper use of MMA funds. Finally, noncompliance with SSA policies and procedures over asset accountability resulted in inadequately tracked accountable assets that were purchased with MMA funds.