1.) Option 3: Developing a New Identifier for Beneficiary and  Provider Use: Under this option, the SSN would be replaced by a  new identifier not based on the SSN, which would be displayed on the  card. Under this  option, the SSN would no longer be used by beneficiaries or providers  when interacting with CMS, which could eliminate the need for  providers to collect or keep the SSN on file. DOD, VA, and Private Health Insurers Have Taken Steps to Remove SSNs from Cards’ Display

DOD has taken steps to remove the SSN from display on the  approximately 9.6 million military identification cards that are used by  active-duty and retired military personnel and their dependents to access  health care services. Replacing SSN with a New Identifier for Beneficiary and Provider Use Offers Greatest Protection Against Identity Theft and Minimizes Burdens

		CMS’s Option to Replace the SSN with a New Identifier for Use by Beneficiaries and Providers Offers the Greatest Protection Against Identity Theft

Replacing the SSN with a new identifier for use by beneficiaries and  providers offers beneficiaries the greatest protection against identity theft  relative to the other options CMS presented in its report. 2.) Under  both of these remaining options, providers would need to perform  additional tasks, such as querying a CMS database or calling CMS, to  obtain the full SSN to verify eligibility and submit claims. CMS would also likely see increased call volume to its  1-800-Medicare line with questions about the changes. Because of this, both DOD and VA have plans to remove SSNs  that are stored in these technologies on their cards. CMS Reported Significant Costs Associated with Removing SSNs from Medicare Cards, but These Estimates May Not Be Reliable

		CMS Reported that Removing SSNs from Medicare Cards would Cost Over $800 Million

In its 2011 report to Congress, CMS, in conjunction with SSA and RRB,  developed cost estimates for the three options to alter the display of the  SSN on Medicare cards or replace the SSN with a different unique  identifier. While modifications to existing state Medicaid IT  systems and related costs are projected to cost the same across all three  options, the estimated costs for CMS’s IT system conversions vary. However, CMS officials  acknowledged that the agency did not rely on any specific cost-estimating  guidance, such as GAO’s cost-estimating guidance, during the  development of the cost estimates presented in the agency’s report to  Congress. For example, CMS and SSA  used different assumptions regarding the number of Medicare  beneficiaries that would require new Medicare cards. While CMS reported that this option is  somewhat more costly than the other options, the methods and  assumptions CMS used to develop its estimates do not provide enough  certainty that those estimates are credible. Recommendations for Executive Action

In order for CMS to implement an option for removing SSNs from  Medicare cards, we recommend that the Administrator of CMS  select an approach for removing the SSN from the Medicare card that  best protects beneficiaries from identity theft and minimizes burdens  for providers, beneficiaries, and CMS, and develop an accurate, well-documented cost estimate for such an  option using standard cost-estimating procedures. SSA provided only one technical  comment, which we incorporated as appropriate, but did not comment on  the report’s recommendations. Appendix I: Burdens of CMS’s Proposed Options for Removal of SSN from Medicare Card (Accessible Text)

Appendix I: Burdens of CMS’s Proposed  Options for Removal of SSN from Medicare  Card (Accessible Text) provider use) (beneficiary use only)
Social Security  number (SSN)
While any change to the beneficiary identifier could cause initial confusion for beneficiaries, this  option creates no additional burden for the beneficiary because the number on the card would be  used to receive services and interact with CMS.
Why GAO Did This Study

More than 48 million Medicare cards display the SSN, which increases Medicare beneficiaries vulnerability to identity theft. GAO was asked to review the options and associated costs for removing SSNs from the Medicare card. This report (1) describes the various options for removing the SSN from Medicare cards; (2) examines the potential benefits and burdens associated with different options; and (3) examines CMSs cost estimates for removing SSNs from Medicare cards.
To do this work, GAO reviewed CMSs report, cost estimates, and relevant supporting documentation. GAO also interviewed officials from CMS and other agencies that perform Medicare related activities (the Social Security Administration and Railroad Retirement Board), as well as officials from DOD and VA, which have undertaken SSN removal efforts. GAO also interviewed private health insurance companies and relevant stakeholder groups.

What GAO Found

The Centers for Medicare & Medicaid Services (CMS) 2011 report to Congress proposed three options for removing Social Security numbers (SSN) from Medicare cards. One option would truncate the SSN displayed on the card, but beneficiaries and providers would continue to rely on the SSN. The other two options would replace the SSN with a new identifier that would be displayed on the card and either be used only by beneficiaries, or by both beneficiaries and those who provide Medicare services. CMS, however, has not selected or committed to implementing any of these options. The Departments of Defense (DOD) and Veterans Affairs (VA), and private insurers have already removed or taken steps to remove SSNs from display on their identification or health insurance cards.
CMSs option to replace the SSN with a new identifier for use by both beneficiaries and providers offers the greatest protection against identity theft. Beneficiaries vulnerability to identity theft would be reduced because the card would no longer display the SSN and providers would not need the SSN to provide services or submit claims (negating the need for providers to store the SSN). This option would also pose fewer burdens than the other two options because beneficiaries would not have to remember an SSN to receive services or to interact with CMS. Providers also would not need to conduct additional activities, such as querying a CMS database, to obtain the SSN. The burdens for CMS would generally be similar across all the options, but CMS reported that this option would require more information technology (IT) system modifications.
CMS reported that each of the three options would cost over $800 million to implement, and that the option to replace the SSN with a new identifier for use by both beneficiaries and providers would be somewhat more expensive, largely because of the IT modifications. However, the methodology and assumptions CMS used to develop its estimates raise questions about their reliability. For example, CMS did not use appropriate guidance, such as GAOs cost-estimating guidance, when preparing the estimates to ensure their reliability. Additionally, CMS could provide only limited documentation related to how it developed the estimates for the two largest cost areas, both of which involve modifications to IT systems.

What GAO Recommends

GAO recommends that CMS (1) select an approach for removing SSNs from Medicare cards that best protects beneficiaries from identity theft and minimizes burdens for providers, beneficiaries, and CMS and (2) develop an accurate, well-documented cost estimate for such an option. CMS concurred with our recommendations. VA, DOD, and RRB had no substantive comments. SSA had a technical comment.