Under Part D, both the beneficiary and the plan  pay a portion of the cost of covered prescription drugs. 1.) Applying for the LIS

Beneficiaries generally apply to SSA for the LIS. Applicants are approved for the LIS only if both their assets and  incomes are less than the thresholds established by law. Assets and Income Were Important Factors in LIS Denials

Both assets and income were important factors in LIS denials, but more  applicants were denied the subsidy because their income was too high  than were denied it because their assets were too high. However, because  some applicants were denied the LIS based solely on the initial assets  screening question, and were not required to answer questions about their  income, it is not possible to know how many of these applicants would  have also been denied the LIS because of their income. In both 2006 and  2007, of those beneficiaries who were denied the LIS and who answered  detailed questions about their assets, more than one in four exceeded the  assets threshold by less than $5,000. In 2006, 50.4 percent of all denials were due at least in part to  assets; by contrast, 66.2 percent were based at least in part on income. In 2006, 22.2 percent of LIS denials resulted from the answer to  the initial screening question, which asked about assets. Overall, more than half of the 4.5 million applicants  for the subsidy in 2006 were denied it in calendar year 2006 and about   56 percent were denied it in fiscal year 2007. Denials Often Exceeded Asset Threshold by Relatively Small Amount

In both 2006 and 2007, a number of applicants who were denied the LIS in  part because of their assets, and who reported the actual amount of their  assets, exceeded the threshold by a relatively small amount. Some State and Drug Manufacturer Programs Help Beneficiaries, but Provide Uneven Access to Prescription Drugs

Some state and drug manufacturer programs provide assistance to  Medicare beneficiaries with limited income in obtaining drugs, but they do  not provide uniform national access to prescription drugs. The eligibility requirements for these programs vary, as does the type and  extent of assistance provided. Pharmaceutical manufacturers sponsor  Patient Assistance Programs (PAP) that provide assistance to low-income  individuals, but not all are open to Medicare beneficiaries, and the drugs  they provide are limited to those produced by the sponsor. SPAPs Offer Assistance to Medicare Beneficiaries with Limited Incomes, but Access Is Uneven

SPAPs offer financial assistance to low-income Medicare beneficiaries— those who receive the LIS and those who do not—in obtaining  prescription drugs, but these programs are available in only a minority of  states. Under the MMA, SPAPs—which generally predate Part D—can  offer wrap-around benefits that fill in gaps in Part D and cover some or all  of the beneficiary’s out-of-pocket expenditures. Broadly defined SPAPs differ in the amount of assistance they provide for  Part D premiums, deductibles, and copayments. CMS concurred with our report and its concluding observations. SSA expressed appreciation that we used its analysis of applicants denied  the LIS in 2006 and 2007 as the foundation of our analysis of the impact of  the assets test on LIS applicants. We are sending copies of this report to the Acting Administrator of CMS  and the Commissioner of Social Security.
Why GAO Did This Study

To help defray the cost of prescription drugs for beneficiaries with limited means, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) included the low-income subsidy (LIS) in the Part D prescription drug insurance program. To qualify for the LIS, beneficiaries must be enrolled in a Part D plan and their assets and income must be less than the thresholds established by the law. Part D is administered by the Centers for Medicare & Medicaid Services (CMS), and the Social Security Administration (SSA) administers the eligibility determination for the LIS. The MMA directed GAO to compare the utilization of and access to Part D prescription drugs among beneficiaries who received the LIS with those who were denied it because of the amount of their assets. This report focuses on beneficiaries' access to prescription drugs by examining (1) the importance of assets and income in LIS denials in 2006 and 2007, and (2) state and manufacturer programs providing access to prescription drugs for Medicare beneficiaries. To do this, GAO analyzed data from SSA, reviewed information on state and drug manufacturer pharmaceutical programs, and interviewed officials from SSA, CMS, state programs, advocacy organizations, and pharmaceutical manufacturer programs.

What GAO Found

In 2006 and 2007, assets and income were both important factors in LIS denials, but income was of greater importance. In 2006, 4.5 million beneficiaries applied for the LIS and more than half were denied the subsidy. About half of LIS denials in 2006 were based solely or in part on applicants' assets exceeding program thresholds, and in 2007, about 30 percent of LIS denials were for this reason. By contrast, 66.2 percent of denials were due at least in part to income in 2006 and 81.2 percent in 2007. Because some applicants in both years were denied the LIS by an initial screen that only asked about assets and were not required to give information on income, it is impossible to know the number of these applicants who would also have been denied the LIS because of their income. Among those who provided detailed information about their assets, applicants denied the LIS often exceeded the asset threshold by a relatively small amount, and in both years more than one-quarter of these applicants exceeded the threshold by less than $5,000. Some states and drug manufacturers offer programs that assist low-income Medicare beneficiaries in obtaining prescription drugs, but the availability of these programs and the assistance they offer are uneven. Twenty-three states offer State Pharmaceutical Assistance Programs (SPAP), which can supplement Part D benefits. These SPAPs differ in the type and extent of assistance they offer, but they generally cover some of the beneficiaries' out-of-pocket prescription drug costs. Prescription drug manufacturers' Patient Assistance Programs (PAP) also assist low-income individuals in obtaining prescription drugs. However, not all PAPs are open to Part D beneficiaries, and the drugs provided are limited to those of the sponsoring manufacturers. CMS concurred with our report. SSA expressed appreciation that we used its analysis of applicants denied the LIS in 2006 and 2007 as the foundation for our analysis of the impact of the assets test on LIS applicants.