The Medicare Improvements for Patients and Providers Act: Improving Enrollment in the Medicare Savings Program Five Years Later

Five years ago this month, the Medicare Improvements for Patients and Providers Act (MIPPA)[1] became law. Since then, MIPPA has successfully increased enrollment in the Medicare Savings Program and helped ensure that thousands of Medicare beneficiaries are able to afford necessary medical care. Despite MIPPA's success, Medicare low-income programs remain under-enrolled. Federal policy makers should continue to pursue structural reforms that improve beneficiary access to, and government administration of, Medicare low-income programs.

Background

Medicare provides essential health coverage to over 49 million older Americans and people with disabilities.^[2] Even so, Medicare can be expensive. Typical out-of-pocket spending for a beneficiary in fair or poor health without supplemental insurance is about $4,500 per year.^[3]

The cost of Medicare premiums and coinsurance is a huge strain on the financial resources of older adults and people with disabilities. This is particularly glaring as just under half of all Medicare beneficiaries live on less than $22,000 per year.^[4]  Furthermore, low-income Medicare beneficiaries tend to be more sick and frail than their higher-income counterparts, and thus require more services. Studies have shown that even nominal cost sharing can discourage the use of necessary services for low-income people, leading to higher spending on costly acute care down the road.^[5]

Financial help is available for Medicare beneficiaries with very low income and assets – primarily through state Medicaid programs, state-run Medicare Savings Programs (MSPs) for Part A and B, and the federally-run Low-Income Subsidy (LIS) for Part D prescription drug coverage (see Medicare Low-Income Programs sidebar).

Despite the importance of these programs, enrollment has historically remained very low. In 2004, the CBO estimated that only 33% of eligible beneficiaries were enrolled in the QMB program and only 13% of eligible beneficiaries were enrolled in the SLMB program. These numbers represent some of the lowest enrollment rates for means-tested public benefits in the nation.^[6]

There are a variety of factors that account for this low enrollment, including: complex administrative procedures involving three to four federal and state agencies; an asset test that requires cumbersome documentation; and lack of beneficiary education on application and enrollment procedures. MIPPA sought to lift some of these barriers to enrollment.

How MIPPA Improved Access to the Medicare Savings Program (MSP)

MIPPA made several significant changes to the Medicare and Medicaid programs, including provisions that limit estate recovery, reduce mental health cost sharing, and address health disparities. For the purposes of this Alert, however, we will focus on two aspects of the law that improve beneficiary access to the Medicare Savings Program: the aligning of asset levels between the Part D LIS program and the Medicare Savings Program, and data transfer between the Social Security Administration and state Medicaid agencies.

• Aligning asset levels between the Part D Low Income Subsidy and Medicare Savings Program

Prior to MIPPA, Medicare Savings Program asset limits were tied to the SSI program.[7] These asset limits were not increased with inflation and had not changed for decades (although some states had allowed for more generous MSP asset limits or removed them completely). By contrast, the LIS program asset limits were higher and indexed to inflation. This created misalignment between the two programs.[8] For example, people enrolled in MSP were automatically eligible for and enrolled in the Part D Low-Income Subsidy.[9] However, beneficiaries found eligible for the Part D Low-Income Subsidy were not automatically eligible, or even required to have their eligibility determined, for the Medicare Savings Programs. As a result, many low-income beneficiaries were eligible for one program but not the other.

Beginning January 1, 2010, MIPPA required all states align MSP asset levels with LIS.[10] This raised the MSP asset limits for the first time since 1989 and ensured that those limits would be adjusted for inflation in the future.  This provision of MIPPA increased the number of beneficiaries eligible for MSPs and effectively expanded eligibility in 41 states.[11]

• Data Sharing Between SSA and State Medicaid Agencies

The federal Social Security Administration determines eligibility for the Part D Low-Income Subsidy while state Medicaid agencies determine eligibility for the Medicare Savings Program. Prior to MIPPA, only limited coordination between these two agencies was required. Since the beginning of the Part D program, Social Security had sent basic demographic data to state Medicaid agencies regarding Part D Low-Income Subsidy enrollees, but states were under no obligation to do anything with the data.[12] As a result, many people who could have been screened for and enrolled for a Medicare Savings Program based on information provided to SSA for a Low-Income Subsidy Program application were not.

MIPPA requires SSA to send, upon consent of the applicant, a complete data record to states when a consumer applies for LIS.[13] States Medicaid agencies, in turn, are required to treat the information as a Medicare Savings Program application. States are allowed to choose whether to accept each comprehensive data record as a completed Medicare Savings Program application, or require additional verification of information from applicants.[14] SSA began transferring applications in January 2010, and reported transferring over 1.9 million applications to states between January 4, 2010, and May 31, 2012.[15]

MIPPA's Impact: Improved access to MSP

Preliminary reports show that MIPPA has had a positive impact on MSP enrollment. Using CMS data, the Government Accountability Office recently found that MSP enrollment increased each year from 2007 through 2011.[16] The largest increases in MSP enrollment occurred in 2010 and 2011 (5.2 percent and 5.1 percent respectively,) the first two years the legislation was in effect.[17] The Medicare-Medicaid Coordination office likewise found an uptick in MSP enrollment, noting that growth in MSP enrollment outpaced enrollment in full Medicaid by Medicare beneficiaries.[18] 

According to a GAO survey, most state Medicaid officials believe that MIPPA' s data transfer provisions have increased MSP enrollment.  Officials from 28 states reported that MSP enrollment had increased as a result of the application transfers. In contrast, officials from 12 states reported that the application transfers did not have an effect on MSP enrollment, and officials from the remaining 10 states reported they did not know the effect of the transfers.[19]

There are numerous factors that may account for increased enrollment in the Medicare Savings Program, including the economic downturn and enhanced outreach and education efforts. Nevertheless, there is strong evidence to suggest that MIPPA's alignment of MSP and LIS asset tests, and MSP application data transfer between Social Security and State Medicaid offices, has been successful in bolstering enrollment in these traditionally under-enrolled programs.

Learning from MIPPA: Continued Improvement for Medicare Low-Income Programs

Medicare low-income programs still require significant structural improvements to work optimally. MIPPA's implementation – its successes and difficulties – can illuminate areas in most critical need of reform. Federal policy makers should continue to pursue greater alignment between the Part D Low Income Subsidy, the Medicare Savings Program and Medicaid. Increased coordination between these programs will cut down on administrative obstacles to enrollment and ensure that all eligible beneficiaries are enrolled.

State variation in MSP asset levels continues to be a barrier to enrollment. While under MIPPA, states must keep MSP asset limits at or below LIS levels, states still have significant flexibility in determining how and what resources to count. For example, MIPPA required that the value of a life insurance policy not be counted when determining an applicant's assets for LIS purposes. This requirement does not, however, extend to state MSP programs.

This continued misalignment between the state-run Medicare Savings Program and the federal LIS program undermines MIPPA's data transfer provisions. CMS policy allows states to treat the information in the transferred LIS applications as verified, although states are not required to do so. An application that is considered verified can result in automatic MSP enrollment.[20]  Because of difference in state and federal asset and income requirements, many states choose to independently re-verify transferred LIS application information.[21] This requires additional work by the state and presents a substantial hurdle to applicants.

According to a GAO survey, 35 states reported that they required applicants to re-verify some or all of the information before the state would determine eligibility for MSPs. The GAO found from interviews with officials from selected states that requiring re-verification from applicants included multiple additional steps by both the state and applicant. In contrast, officials from states that accepted SSA's verification of the information told GAO that the state was able to enroll more transferred applicants automatically. States that did not require re-verification and auto-enrolled LIS applicants saw higher MSP enrollment rates than those requiring re-verification.  For example, in Pennsylvania, a state that accepted the LIS application transfer as a complete MSP application, enrolled 16,000 of 37,500 applicants.  In contrast, Arizona, which required re-verification by beneficiaries, enrolled only 800 of 16,000 applicants. 

Conclusion

MIPPA has achieved some success in aligning and streamlining MSP enrollment procedures and has successfully increased MSP enrollment. However, Medicare low-income program enrollment continues to be hampered by administrative inefficiency and unnecessary complication. Congress must continue to pursue greater alignment and coordination between Medicaid, Medicare Savings Programs and the Part D Low-Income Subsidy.