Medicare Compliance & Reimbursement

Advocacy groups criticize drug plan's complexity and propose new protections for bewildered eligibles.

Confusion about the new Medicare prescription drug program could cost millions of non-Medicaid low-income seniors the very subsidies the program affords them.

The Congressional Budget Office projects that 5.7 million non-Medicaid low-income seniors and disabled persons are eligible for drug subsidies in 2006. Among these qualified individuals, 3.8 million people have applied as of Nov. 29, but only 660,000--fewer than 12 percent--have approval for subsidies, according to the Social Security Administration.

"The most important part of the new Medicare drug legislation was the special help that was supposed to be made available for low-income seniors. Unfortunately, these numbers are very discouraging, and it now appears likely that many millions of low-income seniors will be without the help they need to make drugs affordable," says Ron Pollack, Executive Director of Families USA.

Information Overload Leads To Uninformed Decisions And Failure To Act

Consumer advocacy groups cite plan complexity and lack of information as likely hurdles. "The general confusion and bewilderment experienced by seniors is considerably worse for low-income seniors and has no doubt contributed to low enrollment," Pollack points out.

To provide coverage that meets out-of-pocket expense limitations for low-income seniors, Medicare Part D legislation established three separate coverage and enrollment categories for non-Medicaid low-income beneficiaries, dual eligibles and Medicare Savings Program participants. Non-Medicaid low-income seniors and disabled persons qualify if they have incomes below 150 percent of the federal poverty level and less than $10,000 in assets ($20,000 for couples).

Automatic enrollment programs aim to prevent dual eligibles and Medicare Savings Program participants from experiencing coverage lapses. But qualified non-Medicaid low-income individuals cannot receive subsidies unless they proactively apply for and receive approval--a daunting task that demands foresight, research, decisiveness and action from a population that already faces significant challenges. "Low-income seniors not only have to navigate the maze of their Part D options, but they also have the added burden of having to apply to a separate government agency," Pollack adds. Many individuals must apply for drug coverage directly through the SSA.

Enrollment Protections Offer Insufficient Recourse

Low enrollment could suggest that many qualified non-Medicaid low-income individuals have made the incorrect assumption that the government will automatically enroll them in a plan. Failure to act will leave many such low-income seniors without the subsidies that will enable them to afford the drug plan.

Caveats like this faced criticism in a report from California Health Advocates and the Medicare Rights Center. "Enrollment mistakes are inevitable, and without adequate recourse, people will suffer great harm," notes Clare Smith, California Health Advocates president and CEO.

"With insurers aggressively marketing drug plans, older and disabled Americans are at risk of inadvertently signing up for a plan and permanently losing retiree health coverage or Medicaid," adds Robert M. Hayes, MRC president.

The Centers for Medicare & Medicaid Services does not have adequate protections in place for individuals who are "kept out of" or "dropped from" drug plans, the groups' report charges. "Giving private drug plans the authority to handle these complaints is like asking the fox to guard the hen house," Smith argues. Further, CMS' procedures for these individuals "do not comply with constitutional requirements and Supreme Court precedent regarding loss of access to government benefits," the advocacy groups allege.

To remedy these shortcomings, the groups recommended the following enrollment protections in their report:

• An appeals process for enrollment and disenrollment cases;

• Waivers for premium penalties due to gaps in coverage when the government causes an enrollment error; and

• Special enrollment periods when private plans and other entities give incorrect information that cause enrollment mistakes or consumers' inappropriate choices.

The full report is available at www.cahealthadvocates.org/advocacy/2005/1130.html.