If these Medicare  beneficiaries did not sign up for a Part D plan on their own, they have no  drug coverage until they are enrolled in a PDP by CMS. Another way individuals become dually eligible is when Medicaid  beneficiaries subsequently become eligible for Medicare by reaching   65 years of age or by completing the 24-month disability waiting period. CMS’s Enrollment Process Takes Time and Can Create Difficulties for Some Dual-Eligible Beneficiaries

Given the number of entities, information systems, and administrative  steps involved, it takes a minimum of 5 weeks for CMS to identify and  enroll a new dual-eligible beneficiary in a PDP. As a result, two out of  three new dual-eligible beneficiaries—generally those who are Medicare  eligible and then become Medicaid eligible—may experience difficulties  obtaining their prescription drugs under Part D during this interval. For  other new dual-eligible beneficiaries—those switching from Medicaid to  Medicare drug coverage—CMS instituted a prospective enrollment  process in late 2006 that enrolls these individuals before their date of  Medicare eligibility and offers a seamless transition to Part D coverage. During this interval, pharmacies may not have up-to- date PDP enrollment information on new dual-eligible individuals. This  may result in beneficiaries having difficulty obtaining Part D-covered  drugs at their pharmacies. CMS has developed some contingency measures to help individuals like  Mr. Smith during the processing interval. However, we found that these  measures have not always worked effectively. CMS Made Drug Coverage Retroactive, but Did Not Inform Beneficiaries of Their Right to Reimbursement

For the majority of new dual-eligible beneficiaries, CMS requires PDPs to  provide drug coverage retroactively, typically by several months. However, we found that CMS did not fully  implement or monitor the impact of this policy. CMS made the effective date of Part D drug coverage for Medicare  beneficiaries who become Medicaid eligible coincide with the effective  date of their Medicaid eligibility. Under this policy, Part D coverage for  these beneficiaries is effective the first day of the month that Medicaid  eligibility is effective, which generally occurs 3 months prior to the date an  individual’s Medicaid application was submitted to the state, if the  individual was eligible for Medicaid during this time. Medicare makes payments to the PDPs for providing drug coverage  retroactively. While dual-eligible beneficiaries were entitled to  reimbursement by their PDPs in 2006, neither CMS nor PDPs notified dual- eligible beneficiaries of this right. Given the vulnerability of this population, it seems unlikely that many  dual-eligible beneficiaries would have contacted their PDPs for  reimbursement if they were not clearly informed of their right to do so and  given information about how to file for reimbursement, neither would they  likely have retained proof of their drug expenditures. In  addition, CMS’s incomplete implementation of its retroactive coverage  policy in 2006 means that CMS paid PDPs millions of dollars for coverage  during periods for which dual-eligible beneficiaries may not have sought  reimbursement for their drug costs. As of March 2007, CMS has modified its letters to dual- eligible beneficiaries to include language informing them of their right to  reimbursement for drug costs incurred during retroactive coverage  periods and required PDP sponsors to do the same.
Why GAO Did This Study

Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), dual-eligible beneficiaries--individuals with both Medicare and Medicaid coverage--have their drug costs covered under Medicare Part D rather than under state Medicaid programs. The MMA requires the Centers for Medicare & Medicaid Services (CMS) to enroll these beneficiaries in a Medicare prescription drug plan (PDP) if they do not select a plan on their own. CMS enrolled about 5.5 million dual-eligible beneficiaries in late 2005 and about 634,000 beneficiaries who became dually eligible during 2006. GAO was asked to testify on (1) CMS's process for enrolling new dual-eligible beneficiaries into PDPs and its effect on access to drugs and (2) how CMS set the effective coverage date for certain dual-eligible beneficiaries and its implementation of this policy. This testimony is based on a GAO report that is being released today, Medicare Part D: Challenges in Enrolling New Dual-Eligible Beneficiaries (GAO-07-272).

What GAO Found

CMS's process for enrolling new dual-eligible beneficiaries who have not yet signed up for a PDP involves many parties, information systems and administrative steps, and takes a minimum of 5 weeks to complete. For about two-thirds of these individuals--generally Medicare beneficiaries who subsequently qualify for Medicaid--pharmacies may not have up-to-date PDP enrollment information needed to bill PDPs appropriately until the beneficiaries' data are completely processed. As a result, these beneficiaries may have difficulty obtaining their Part D-covered prescription drugs during this interval. CMS has created contingency measures to help individuals obtain their new Medicare benefit, but these measures have not always worked effectively. For the other one-third of new dual-eligible beneficiaries--Medicaid enrollees who become Medicare-eligible because of age or disability--CMS eliminated the impact of processing time by enrolling them in PDPs just prior to their attaining Medicare eligibility. This prospective enrollment, implemented in late 2006, offers these dual-eligible beneficiaries a seamless transition to Medicare Part D coverage. CMS set the effective Part D coverage date for Medicare-eligible beneficiaries who subsequently become eligible for Medicaid to coincide with the date their Medicaid coverage becomes effective. Under this policy, which was designed to provide drug coverage for dual-eligible beneficiaries as soon as they attain dual-eligible status, the start of their Part D coverage can extend retroactively for several months before the date beneficiaries are notified of their PDP enrollment. GAO found that CMS did not fully implement or monitor the impact of this policy. Although beneficiaries are entitled to reimbursement for covered drug costs incurred during this retroactive period, CMS did not begin informing them of this right until March 2007. Given their vulnerability, it is unlikely that these beneficiaries would have sought reimbursement or retained proof of their drug purchases if they were not informed of their right to do so. Also, CMS made monthly payments to PDPs for providing drug coverage during retroactive periods, but did not monitor PDPs' reimbursements to beneficiaries during that time period. GAO estimated that in 2006, Medicare paid PDPs millions of dollars for coverage during periods for which dual-eligible beneficiaries may not have sought reimbursement for their drug costs.