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Let IRS Help Medicare Identify Those Eligible for Low-Income Subsidy, IG Says

By John Reichard, CQ HealthBeat Editor

November 22, 2006 -- Congress should pass legislation permitting the IRS to help identify Medicare beneficiaries who might be eligible for the comprehensive drug benefit provided to low-income seniors. That's the recommendation of a new report by the Office of HHS Inspector General (IG) Daniel R. Levinson, which voiced doubt about the effectiveness of a mailing to 19 million beneficiaries this year to try to find and enroll those beneficiaries.

But the current chairman of the Senate Finance Committee and the acting administrator of the Centers for Medicare and Medicaid Services (CMS) stopped short of endorsing the idea, saying only that it merits consideration.

To qualify for the low-income benefit, a beneficiary's annual income in 2006 must be below $14,700 for an individual and $19,800 for a married couple. Assets also must be below $10,000 for an individual and $20,000 for married couples.

Some 7.2 million Medicare beneficiaries were declared automatically eligible for the low-income benefit, also known as the "LIS," which stands for low-income subsidy. Those beneficiaries already had demonstrated they met income criteria for other federal programs for low-income Americans, such as Medicaid. But many millions more were not a part of those programs, and federal officials and grass-roots organizations faced a major challenge this year trying to find and enroll them.

To that end, the Social Security Administration (SSA) mailed forms to 19 million Medicare beneficiaries to apply to confirm that they meet the asset criteria. But only 2 million of the 6.1 million beneficiaries Medicare estimated would be eligible for the coverage were actually approved, according to the study.

The effort was hamstrung by the inability of SSA to check IRS files to identify beneficiaries with incomes low enough to qualify for the coverage, the IG's report said. The IRS said it was barred from providing the data because of a federal law prohibiting disclosure of tax return information.

After it was denied access to IRS data, SSA tapped other federal data sources to come up with names of Medicare beneficiaries who might be eligible. The information included Railroad Retirement Board pension, Veterans Administration benefits, and Social Security benefits. The resulting mailing "was an overestimate of the actual potentially eligible population," the IG's report noted.

"The identification of these beneficiaries would allow for a more targeted and effective outreach effort to ensure that all those who qualify for the subsidy receive this important assistance," the IG's report said. "Without knowing the true population of potentially eligible beneficiaries, it is difficult to judge the success of current outreach and enrollment efforts."

But among the questions that might have to be addressed about such legislation is how effective IRS data would be in finding those eligible because low-income Americans may not have to file tax returns. And privacy worries may be another consideration, even though the data would only be shared among federal agencies.

Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) issued a statement on Tuesday saying that "making sure beneficiaries in need get extra help with their drug costs is a key goal of the Medicare prescription drug program." Both the Centers for Medicare and Medicaid Services and SSA have worked hard on outreach, but "despite those efforts, we know that many beneficiaries who will qualify haven't applied," Grassley said.

If followed, the IG's recommendation might help SSA "focus its limited resources more effectively," he noted. But Grassley stopped short of endorsing the recommendation. "Any change in rules regarding disclosure of tax information must be considered very carefully," he said, adding that he would work with CMS, SSA and the IRS to explore the idea.

Acting CMS Administrator Leslie V. Norwalk said "we greatly appreciate the OIG considering changes that would help us reach the LIS beneficiaries because they are very difficult to reach. We would work with the Treasury Department to consider the recommendations," she said.

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