Statement of the National Council on Aging

The National Council on Aging (NCOA) is the nation’s first organization formed to represent America’s seniors and those who serve them. Founded in 1950, NCOA’s mission is to improve the lives of older Americans.  Our programs help the nation’s seniors improve their health, find jobs and job training, discover meaningful opportunities to contribute to society, enhance their capacity to live at home, and access public and private benefit programs.  Our members include senior centers, area agencies on aging, faith-based service agencies, senior housing facilities, employment services, and consumer organizations.  NCOA also includes a network of more than 15,000 organizations and leaders from service organizations, academia, business and labor who support our mission and work.

NCOA chairs the Access to Benefits Coalition (ABC),[1] comprised of national and community-based organizations dedicated to ensuring that Medicare beneficiaries with limited means know about and make the best use of resources available to access their needed prescription drugs and reduce their prescription drug costs. Established in 2004, the Access to Benefits Coalition has involved hundreds of community-based nonprofits through 55 local coalitions in 34 states and the District of Columbia, in educating and enrolling tens of thousands of beneficiaries in the Medicare Part D Low-Income Subsidy (LIS) and other prescription savings programs.

ABC and its network of local organizations use powerful web-based tools such as NCOA’s BenefitsCheckUp® decision support tool[2] to help beneficiaries—as well as family caregivers and organizations who wish to assist them—to understand, apply for, and enroll in public and private prescription savings programs. BenefitsCheckUp® also helps determine if individuals qualify for the LIS, Medicare Savings Programs (MSPs), and other prescription savings programs with application forms available on the site, or enabling users to apply online for some of the benefits.

NCOA is committed to finding and enrolling low-income Medicare beneficiaries in the available needs-based benefits programs for which they are eligible. We are pleased to submit this statement to the Subcommittee to highlight the need to simplify and streamline both the LIS and MSP. The statement also includes discussion of cost-effective strategies for finding and enrolling qualified eligibles in needs-based benefits programs.

The Medicare Part D Low-Income Subsidy (LIS) and the Medicare Savings Programs (MSPs)

The LIS and MSP programs provide substantial financial assistance to low-income Medicare beneficiaries both in accessing their needed prescription drugs and paying their Medicare premiums and cost-sharing.  Although this assistance is available, enrollment rates in both programs remain unacceptably low.  Some of the reasons for the low enrollment rates include confusing and difficult applications and eligible people not knowing the programs exist.  Removing these barriers to enrollment is critical to increasing enrollment rates and providing low-income Medicare beneficiaries with the assistance they need.

The Low-Income Subsidy

It has been estimated by the U.S. Department of Health and Human Services that at least 75 percent of the Medicare beneficiaries still without any prescription drug coverage are eligible for the Low-Income Subsidy.[3]  NCOA estimates that only between 35 and 42 percent of Medicare beneficiaries who needed to voluntarily file an application with SSA in 2005 and 2006 to receive LIS have successfully done so (2.2 million out of 5.2 or 6.2 million).  The remaining 58 to 65 percent are not receiving the assistance for which they are eligible. It is important that efforts to find these people continue as the remaining LIS eligibles stand to gain the most from the prescription drug benefit and are least likely to have had prescription drug coverage before Part D began. 

To find the remaining LIS eligibles, certain changes need to be made to the Part D LIS program.  NCOA and the Access to Benefits Coalition (ABC) released a report entitled The Next Steps: Strategies to Improve the Medicare Part D Low-Income Subsidy[4] in January 2007.  The report outlined legislative, administrative and regulatory changes that should be made to the LIS program to improve access for low-income beneficiaries.  The most important legislative recommendations include:

• Eliminate the asset eligibility test.  The asset test is the single-most significant barrier to the LIS for low-income seniors and people with disabilities. The asset test penalizes retirees who did the right thing by creating a modest nest egg to provide some security in their old age. People who manage to save a modest sum for retirement and still have very limited incomes should be encouraged and rewarded, not denied the extra help that they need. Of the LIS applications filed, the Social Security Administration (SSA) reports 41 percent of denials were because the asset limits were exceeded. Eliminating the asset test would provide coverage through the “donut hole” for 1.8 million low-income beneficiaries in greatest need of help.    
• Fund the National Center on Senior Benefits Outreach and Enrollment and support organizations that use a person-centered approach to outreach, which has been shown to be one of the most efficient ways to find and enroll LIS eligibles. Finding and enrolling seniors and people with disabilities with limited resources in needs-based benefits programs has been a significant challenge for many years. The Older Americans Act (OAA) includes an authorization for the National Center on Senior Benefits Outreach and Enrollment that will use cost-effective, person centered approaches to reach the remaining LIS eligible beneficiaries. We recommend that $4 million be provided to support the work of the National Center to create Benefits Enrollment Centers that will: maintain web-based decision support tools; develop and maintain an information clearinghouse on best practices; and provide training and technical assistance.
• Permit beneficiaries to apply for LIS and enroll in a plan at any time without penalty. We are grateful to the Centers for Medicare & Medicaid Services (CMS) for extending the Special Enrollment Period (SEP) and waiving the Late-Enrollment Penalty (LEP) for LIS eligibles through 2007.  However, we urge Congress to make these protections permanent. Finding the remaining LIS eligibles will take time, as the experience in other needs-based benefits programs indicates. Under Medicare Part B, low-income beneficiaries eligible for Medicare Savings Programs can enroll any time and are exempt from penalties. The Part D rules should be made to be consistent with the Part B rules.  Remove the LIS application questions on the cash surrender value of life insurance policies, and the value of in-kind support and maintenance (ISM). Many beneficiaries do not have this information and paperwork readily available. Insurance policies often are no longer held by the company they were originally purchased from, making it difficult to track down the company currently holding the policy.  Beneficiaries also often plan for their families to use the life insurance benefit to pay for their burial expenses.  Questions on ISM should also not be included because the amount is very difficult for applicants to estimate, due to its fluctuating nature and if people had assistance with their prescription drug costs they often would not have to rely on ISM. 
• Do not count funds in retirement savings plans such as 401(k) accounts as assets. Forcing people to cash in their 401(k) plans to become eligible for LIS penalizes seniors for doing the right thing by saving for retirement.  Defined benefit pensions are not counted as an asset when determining LIS eligibility. For most of those without a defined benefit pension plan, the resources in their 401(k) are their only retirement savings. It makes no sense to discriminate against those who rely on their 401(k) plan.  Periodic distributions from 401(k) accounts may constitute the only income people have to supplement their Social Security benefits.
• Index the copayments for people between 100 and 150 percent of the Federal Poverty Level to the Consumer Price Index (CPI), not Part D drug cost increases. LIS-eligible people with incomes below 100 percent of the FPL have their prescription drug copayments increased each year according to the CPI.  This roughly corresponds with beneficiaries Social Security cost-of-living adjustment (COLA) reflecting beneficiaries’ ability to pay. However, for LIS-eligible beneficiaries with incomes between 100 and 150 percent of poverty, their co-payments are indexed to increases in Part D prescription drug costs, which rise at twice the rate of beneficiaries COLAs. Therefore, copayments become increasingly unaffordable and the value of the benefit for people between 100 and 150 percent of the FPL diminishes significantly over time.
• Require the Internal Revenue Service (IRS) to provide SSA with tax-filing data to better target outreach efforts, while recognizing privacy concerns. Strategic partnerships among federal agencies, such as SSA, CMS, and IRS, will allow for targeted outreach directly to the people who are most likely eligible for LIS. CMS and SSA should have access to income and resource data contained in IRS files, thereby allowing them to more accurately identify potential LIS eligibles. This information would allow these agencies to target their outreach and enrollment efforts and would result in increased enrollment in the LIS program.  Such data sharing has been permitted for the Medicare-approved drug discount card Transitional Assistance (TA) program and for administering Part B income related premiums.  
• Do not count prescription drug LIS assistance when determining benefits under other benefits programs. The effect of the LIS is compromised when reductions are made in other needs-based assistance, due to receipt of the LIS benefit. Congress should pass legislation to ensure that benefits under other needs-based programs, such as food stamps, Section 8 housing, and the Medicaid Medically Needy program, are not lost or reduced on account of receiving LIS benefits. Low-income beneficiaries should not be forced to choose between their housing or food needs and receiving help to pay for their prescription drugs. The Medicare Modernization Act (MMA) included this type of provision for the $600 TA under the Medicare-approved drug discount cards.
• Have SSA screen LIS applicants for participation in the Medicare Savings Programs (MSPs). State Medicaid offices are required to screen for MSPs when a person applies for the LIS.  However, most LIS applications are not filed at state Medicaid offices, but instead are processed by SSA.  SSA should also be required to screen for MSP eligibility at the time of the LIS application. Participation in any of the MSPs automatically qualifies a person to participate in the full LIS. Since SSA already is collecting income and asset information for the LIS application, it would be relatively easy to screen for MSP eligibility at the same time.   A study by the Access to Benefits Coalition found that 71 percent of the people who were found eligible for LIS also screened eligible for one of the MSPs.  There is precedent for this as SSA already enrolls Medicare beneficiaries who receive Supplemental Security Income (SSI) in Medicaid in 32 states and the District of Columbia.

The Medicare Savings Programs

MSP is a joint Federal and State program that provides needed financial assistance to Medicare beneficiaries with their premiums and cost-sharing. There are four MSP programs: the Qualified Medicare Beneficiary program (QMB) pays Medicare premiums and cost sharing for people under 100% of the Federal Poverty Level (FPL); the Specified Low-Income Medicare Beneficiary program (SLMB) pays Part B premiums for people between 100 and 120% of FPL; the Qualifying Individual program (QI) pays Part B premiums for people between 120 and 135% of FPL, and the Qualified Disabled and Working Individual program (QDWI) pays Part A premiums for people with Medicare who are under age 65 and disabled, whose incomes are at or below 200% FPL and who no longer qualify for premium-free Medicare Part A only because they returned to work. Additionally, people eligible for QMB, SLMB or QI are automatically eligible for the LIS.  Although MSPs provide much needed assistance, enrollment rates in the program are low. Only 33 percent of people eligible for QMB and 13 percent eligible for SLMB are enrolled.

QMB and SLMB are entitlement programs jointly financed with both Federal and State money.  This means that anyone who meets the qualifications can enroll in the program. QI, however, is not an entitlement program and is entirely financed by a grant from the Federal government to the states.  Because QI is not an entitlement program, people who are otherwise eligible may not be able to receive the benefit if the money available to the states through the Federal grant is used up. Additionally without Congressional action, the QI program is set to expire at the end of Fiscal Year 2007.

Changes to simplify the MSP application and align the program with the LIS would increase the number of people enrolled in the program. Some of the recommended changes to the MSP program include:

• Merge the QI program with the SLMB program to make QI permanent, and provide funding to the states for SLMB at the increased SCHIP rate.
• Eliminate the asset test for MSP eligibility.  If this cannot be done, we support increasing and aligning both the MSP and LIS asset tests to be more reflective of people with limited incomes who have managed to save a modest amount of money for retirement.More closely align MSP and LIS programs (see earlier LIS recommendations on life insurance, in-kind support and maintenance, 401(k)) by gradually increasing income eligibility to 150 percent of the Federal Poverty Level. Also deeming should take place between both programs—those eligible for LIS should automatically be eligible for MSP.
• Do not require face-to-face interviews for MSP eligibility, as it deters people from seeking assistance under the program. In addition, the MSP application should be available both in multiple languages and online in all states to encourage potential eligible beneficiaries to apply.
• State Health Insurance Assistance Programs (SHIPs) should be given $1 per Medicare beneficiary to conduct outreach and education.  In addition, first year funding of $4 million should be provided for the National Center on Senior Benefits Outreach and Enrollment authorized under the OAA.  Funding should be targeted to MSP and LIS eligibles.  Eliminate estate recovery for the MSP program in all states that have not already done so on their own. It does not amount to a significant amount of money for the states, it is administratively expensive, and it serves as a barrier to MSP enrollment for people who need the assistance offered under the program. 
• The SSA Commissioner should include information on MSP for those people who are likely eligible when the letter for newly eligible Medicare Parts A and B beneficiaries are sent. One of the reasons MSP enrollment numbers remain low is that most people do not know the programs exist.  In addition to sending letters, other outreach efforts need to be made to increase awareness of the program. 
• IRS data provided to SSA for the indexing of Part B premiums should be used by SSA to screen potential eligibles for participation in MSPs and LIS.
• We support three months of retroactive eligibility for people found eligible for QMB, as it is for both the SLMB and QI programs.
• NCOA supports extending the LIS rule for determining family size to the MSP program.  This would allow those with larger families to have more resources, making it consistent with their larger family responsibility.  Many states currently do not take into account family members in addition to the spouse.

Simplifying and aligning the LIS and MSP programs will encourage low-income Medicare beneficiaries to enroll in the programs as people eligible for one of the programs are likely eligible for the other.

Cost Effective Strategies for Enrolling Beneficiaries in Needs-Based Benefits

Over the past three years, NCOA has been testing a variety of strategies for increasing enrollment in the LIS and other key needs-based public benefits.  Various pilot projects have been funded primarily by The Commonwealth Fund, The Atlantic Philanthropies, CMS, and Kaiser Permanente. 

Over the past year, four evidence-based strategies have emerged that are particularly cost-effective for finding and enrolling low-income beneficiaries in available Medicare programs for low-income beneficiaries: 

1. Use comprehensive, person-centered approaches to outreach and enrollment (rather than focusing solely on a single benefit). 

People who are eligible for one means-tested public benefit are highly likely to also be eligible for, but not receiving other key public benefits.  Many people who are applying for LIS are also eligible for other public benefits and vice versa. 

A major benchmarking study by The Bridgespan Group and NCOA examining more than 30 different single-benefit outreach and enrollment projects shows that, consistently, about 55 percent of the total costs per enrollment are related to identifying qualified individuals and persuading them to apply and only 45 percent of the costs relate to actual assistance with applications[5].  

Most federal agencies are limited by statute and/or practice from conducting outreach for more than a few benefits (e.g., USDA conducts Food Stamps outreach; SSA conducts LIS and SSI outreach; CMS conducts Medicare Part D outreach).  As a result, the government is incurring the same costs of identification and persuasion over and over again. Much more could/should be done to increase the cost-effectiveness of government-sponsored outreach and enrollment efforts by encouraging/requiring screening for multiple benefits.  

2.Invest in the aging network and trusted, non-profit community-based organizations that can create broad-based networks to efficiently connect people who are likely eligible for needs-based benefits to enrollment specialists who will help them apply.

The “aging network” and other community-based non-profit organizations are well-suited to find and enroll low-income Medicare beneficiaries because they: are client-focused and person-centered; have trusting relationships with many beneficiaries; can create community-wide referral systems; and are able to leverage funding from multiple sources.

The most cost-effective, community-based approach seems to be to create referral networks in which key organizations (such as drug stores, health plans, health centers, social service agencies, etc.) efficiently refer people seeking assistance and who are likely eligible to specialty enrollment centers.  Ideally, these referrals should be “warm transfers” (i.e., the “real-time” transfer of a caller who has been identified in some way as having a specific need) to a helpline dedicated to assisting them with the applications.

Warm transfers to LIS enrollment centers result in the highest numbers of actual applications and are, on average, almost five times more cost-effective than direct mail and three times more cost-effective than outbound calls. In every community, there is a need for some targeted funding, particularly to focus on enrollment assistance (helping people to fill out the application forms once they have been identified).

3.  Promote the widespread use of person-centered, online screening and enrollment services (such as the BenefitsCheckUp) that enable consumers and organizations to screen for multiple benefits and directly file LIS applications; 

Online screening and enrollment services have the potential to help two different groups of low-income Medicare beneficiaries: consumers who can successfully use the Internet to get benefits for themselves or family members; and consumers who need the assistance of intermediary organizations to learn about and enroll in benefits.

There are many advantages to online screening and enrollment tools, including: they can be easily accessed by both consumers and intermediary organizations and they can simultaneously screen for and facilitate enrollment in multiple benefits. Online filing for LIS significantly reduces processing costs for SSA.

The BenefitsCheckUp® program, which is supported by foundations and corporations, served 232,000 clients in 2006 and its consumer edition (serving people and/or their caregivers directly accessing the site) is currently producing enrollments in major public benefits at a cost $15 per benefit.  If the online service was sponsored and/or promoted by government, it could reach and serve many more people and would likely achieve enrollments for $7 - $10 per major benefit. Online tools also increase the efficiency and effectiveness of community-based organizations. Enrollment centers that assist consumers by filing online for LIS (either directly to SSA or through BenefitsCheckUp®) are more cost-effective than organizations filling out application forms and mailing them in. Online tools make person-centered screening (for multiple benefits) and application filing much easier to do. 

4. Encourage states to work across departments and use cross-matched state lists of people already enrolled in other public benefits to identify individuals eligible for and not receiving LIS and MSP.

State benefit lists are a valuable resource that should be utilized to maximize enrollment in LIS and other benefits.  The potential of this approach is being demonstrated in Pennsylvania.  For the past three years, the State Department on Aging has been contracting with Benefits Data Trust to locate and apply individuals for the PACE/PACENET (Pharmaceutical Assistance Contract for the Elderly) program as well as the State of Pennsylvania Property Tax and Rent Rebate Program (PTRR) and MSP.  This partnership exemplifies how this strategy can work to successfully locate, contact and enroll individuals into benefits they are eligible to receive. 

By cross-matching a list of 300,000 PACE  enrollees with a list of 250,000 Property Tax and Rent Rebate program enrollees (list came through Department on Aging from Department of Revenue), the State identified 100,000 Property Tax and Rent Rebate program enrollees that were likely eligible for and not receiving PACE. By cross-matching the 250,000 Property Tax and Rent Rebate program enrollees against the list of 300,000 individuals receiving PACE/PACENET, the State identified  90,000 PACE/PACENET enrollees who were likely eligible for and not receiving Property Tax and Rent Rebate. By cross-matching the 300,000 PACE file with the Department of Public Welfare (state Medicaid office) file, the State identified 100,000 PACE enrollees who were likely eligible for and not receiving MSP benefits).

Using state lists of people enrolled in other public benefits has resulted in higher percentages of people who apply for and, ultimately receive, other benefits, as compared to lists that have less accurate income and contact information (i.e., people “believed to be” eligible). Response rates and application conversion rates are higher when outreach efforts are able to use pre-existing benefit lists. Accuracy of both the financial and contact information provided by the Property Tax/Rent Rebate program has resulted in response rates for benefits application that are 250% greater than those resulting from efforts using purchased commercial lists.  From an economic perspective, this means the cost of getting people into the benefits is also two and a half times less when using a well-targeted list.  In other words, for the same fixed cost, more people are being helped at a much lower cost when efforts are much more targeted.  Furthermore, the residual effect is that people who were in just one public benefit program in the beginning potentially end up being enrolled into three programs.

The National Center on Senior Benefits Outreach and Enrollment

A more focused, coordinated effort that utilizes person-centered assistance, web-based decision-support tools, and sophisticated lists of likely eligibles is needed to find and enroll low-income beneficiaries.  Drawing directly on these strategies, the recently reauthorized Older Americans Act now provides a clear path to solving the problem by harnessing the potential of the aging network, new technology, and best practices based on lessons learned.  The OAA includes new authorization for a National Center on Senior Benefits Outreach and Enrollment that will:

• maintain and update web based decision support and enrollment tools and integrated person-centered systems;
• utilize cost-effective strategies to find those with greatest economic need;
• support efforts for community-based organizations and coalitions to serve as benefit enrollment centers;
• develop and maintain an information clearinghouse on best practices; and
• provide training and technical assistance regarding the most effective outreach, screening, enrollment and follow-up strategies. 

Now that the Center is authorized, initial funding of $4 million is needed to:

•  Work with trusted, experienced community-based and state organizations to support 25 Benefits Enrollment Centers (BECs) across the country with funding at $100,000 per Center.  [$2.5 million]
• Conduct pilot projects on list strategies, call centers, and other innovative strategies to test the most cost-effective outreach and enrollment methods. [$500,000]
• Maintain and update web-based decision support and enrollment tools and integrated, person-centered systems that are available to BECs, the entire aging network and directly to consumers. [$500,000].  
• Train and provide technical assistance to the BECs and to the rest of the aging network, administer the pilot projects and begin to develop an information clearinghouse on cost effective best practices. [$500,000]

Conclusion

Congress created the MSP and LIS programs to provide needed assistance to low-income Medicare beneficiaries in paying for their health and prescription drug costs.  Unfortunately, enrollment in these programs has historically been low.  To increase enrollment, needed changes should be made to the programs, including simplifying and aligning them, to increase access for Medicare beneficiaries with limited incomes. Cost-effective best practices should be used in outreach and enrollment efforts for needs-based benefits. 

Thank you for the opportunity to submit this statement on behalf of the National Council on Aging.  If you have any questions please contact Howard Bedlin, NCOA’s vice-president for Public Policy & Advocacy at (202) 479-6685 or howard.bedlin@ncoa.org.

[1] www.accesstobenefits.org

[2] www.benefitscheckup.org

[3] Statement of Michael Leavitt, Secretary of U.S. Department of Health & Human Services, May 2006.

[4] http://www.accesstobenefits.org/library/pdf/TheNextSteps.pdf

[5] http://www.accesstobenefits.org/library/pdf/PathwaysToSuccess.pdf