The new Medicare Part D drug benefit, which became  available in January 2006, enables Medicare beneficiaries to select among  private drug plans sponsored by private companies. SSA Has Made Progress in Approving Subsidy Applicants, despite Barriers That Hindered Its Outreach Efforts, but Measuring Its Success Is Difficult

SSA approved 2.2 million subsidy applicants as of March 2007, despite  factors that limited its efforts to identify the eligible population and solicit  applications; however, measuring the success of its efforts is difficult  because there are no reliable data on the size of the eligible population. SSA officials told us that  their outreach goals were to (1) ensure that as many individuals  potentially eligible for the subsidy were informed of the benefit, (2) ensure  that all potentially eligible Medicare beneficiaries had an opportunity to  apply for the benefit, and (3) solicit 5 million subsidy applications over  fiscal years 2005 and 2006 (SSA actually received 5.5 million applications  during this time period). For example, SSA has conducted  various activities to increase subsidy applications from individuals in rural  and homeless communities. Barriers That Limited SSA’s Efforts in Identifying the Eligible Population

SSA initially targeted 18.6 million individuals who might be eligible for the  subsidy, which was an overestimate of the eligible population. SSA took  this approach because there were no reliable data on the size of the  eligible population. SSA estimates individuals’  assets because IRS income tax return and other tax data do not contain  asset information. SSA’s efforts to solicit applications were hindered by various factors,  including individuals’ confusion over the difference between the  prescription drug program and the subsidy, the reluctance of some  individuals to share personal financial information, and eligibility  requirements, among other factors. Measuring the Success of SSA’s Outreach Efforts is Difficult because of the Lack of Reliable Data on the Eligible Population

Although the low-income subsidy participation rate compares somewhat  favorably to those of some low-income programs during similar stages of  implementation, the success of SSA’s efforts is uncertain because no  reliable data exist on the total number of individuals potentially eligible   for the subsidy. SSA’s Processes for Determining Applicants’ Subsidy Eligibility, Resolving Appeals, and Redetermining Eligibility Lack Key Tools for Monitoring Performance

SSA has established subsidy application processes for determining  applicants’ subsidy eligibility, resolving appeals, and redetermining  subsidy eligibility, but has not established some key tools needed to  monitor the performance of all of its processes. However, SSA does not currently have a performance goal to  assess the timeliness of its appeals decisions, and lacks the capability to  report this information. The Impact of the Subsidy Program Has Been Manageable

Although the subsidy program affected SSA’s workload and operations,  SSA officials said that the additional workload was manageable overall. SSA hired a total of 2,200 field office staff to assist with subsidy  applications, as well as an additional 500 headquarters staff to support its  MMA activities. For fiscal year 2006,  SSA provided us with data showing that staff spent the equivalent of  approximately 2,190 work years on low-income subsidy activities, with  almost 50 percent of the time used to process subsidy applications. SSA officials attribute the light impact of the subsidy program to various  factors, including the automation of the subsidy application process and  the $500 million congressional appropriation it received for administrative  start-up costs to implement its MMA responsibilities. Recommendations for Executive Action

To improve SSA’s outreach efforts and its ability to measure the  effectiveness of the Medicare Part D low-income subsidy application  processes, we recommend that the Commissioner of Social Security:    establish specific performance goals and measures for SSA’s outreach  activities to provide the agency with a means to assess their  effectiveness in soliciting applications from additional individuals who  qualify for the subsidy, but have not yet applied, and    direct staff to begin collecting data on the processing time for  individual redetermination decisions, and establish performance  standards for processing time for the appeals and redetermination  decisions. SSA stated that it monitors the time for completing the overall  redetermination cycle, which provides adequate management controls for  operational data. While SSA  stated that it had established a performance standard for assessing the  timeliness of appeals, in a follow-up discussion with agency officials after  receiving their comments, they told us that the goal did not currently exist,  but that the agency is planning to establish a goal of processing   75 percents of appeals in 60 days. Appendix I: Objectives, Scope, and Methodology

To assess the Social Security Administration’s (SSA) implementation of  the Medicare Part D low-income subsidy, we reviewed the Medicare  Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) to  understand SSA’s responsibilities under the law.
Why GAO Did This Study

Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which created a Part D outpatient prescription drug benefit that enables Medicare beneficiaries to enroll in competing private drug coverage plans. The benefit also offers a subsidy administered by the Social Security Administration (SSA) to assist certain low-income Medicare beneficiaries with out-of-pocket costs. GAO was asked to review (1) SSA's progress in identifying and soliciting applications from individuals potentially eligible for the subsidy; (2) SSA's processes for making eligibility determinations, resolving appeals, and redetermining beneficiaries' eligibility; and (3) how the subsidy has affected SSA's workload and operations. To conduct this study, GAO reviewed the law, assessed subsidy data, and interviewed SSA and other officials.

What GAO Found

SSA approved about 2.2 million Medicare beneficiaries for the low-income subsidy as of March 2007, despite barriers it faced in identifying the eligible population and soliciting applications; however, measuring the success of SSA's outreach efforts is difficult because there are no reliable data on the size of the eligible population. In 2005, SSA mailed 18.6 million subsidy applications to Medicare beneficiaries who were potentially eligible for the subsidy. SSA knew that this mailing was an overestimate, but took this approach to ensure that all who were eligible would be contacted. SSA had hoped to more specifically identify the eligible population using IRS tax data, but current law restricts the use of taxpayer data unless an individual has already applied for the subsidy. Further, SSA conducted a campaign of about 76,000 events held nationwide to educate people about the subsidy and how to apply for it. Since the initial campaign ended, however, SSA has not developed specific performance goals and measures to assess the progress of its continuing outreach efforts. SSA's efforts to solicit applications were hindered by beneficiaries' confusion about the difference between the subsidy and the Medicare Part D prescription drug plan, and the reluctance of some individuals to share personal financial information, among other factors. While the early subsidy participation rate compares favorably to those of some other low-income programs, the lack of reliable data on the size of the eligible population means that the extent to which SSA has signed up the eligible population for the benefit is unknown. While SSA has established processes for making subsidy eligibility determinations, resolving appeals, and conducting redeterminations, it has not established some key management tools to monitor the progress of all of its efforts, as specified in GAO's internal control standards. For example, while SSA tracks various results from its appeals process, it does not currently have a performance goal to assess the timeliness of appeals decisions, but agency officials told us that SSA plans to establish a goal of processing 75 percent of appeals in 60 days. Also, while SSA tracks the status of its redetermination decisions, officials do not believe that it is necessary to measure the time for processing individual redetermination decisions because they said that the time to complete the overall redeterminations cycle provides adequate information. SSA's implementation of the low-income subsidy did affect the agency's workload and operations, but according to SSA officials, the additional workloadhas been manageable overall as a result of increased funding that the agency received to carry out MMA activities. SSA hired 2,200 field office staff, and 500 headquarters staff to handle its new subsidy workload, as well as to carry out other activities for the program. In 2006, SSA staff spent the equivalent of 2,190 work years on low-income subsidy implementation activities, with about 50 percent of the time spent on subsidy applications. While there were periods of high subsidy application activity, SSA officials told us that subsidy program activities did not have an adverse impact on other SSA workloads. The officials attributed the minimal impact of Part D to several factors, including the highly automated subsidy application process and the $500 million congressional appropriation that SSA spent on MMA start-up costs. SSA estimates that its costs for low-income subsidy activities are $175 million annually.