2006 MEDICARE PART D PREMIUM WITHHOLD
PAYMENT RECONCILIATION PROCESS AFFECTS THOUSANDS
The Centers for Medicare & Medicaid Service (CMS) announced recently that it will be taking action to address premium withholding issues that remain unresolved from 2006. This comes as the result of the reconciliation process undertaken by CMS this summer to identify people who owe Medicare Advantage and/or prescription drug plan premiums for 2006, people whose plan(s) were not properly paid by Medicare, and people who are owed a refund.
The number of people who will be affected by this reconciliation process is unclear. However, a January 25, 2007 e-mail sent by CMS to Region IX stakeholders after the last reconciliation effort suggested that there were at least 80,000 beneficiaries with premium withholding problems from 2006 that still needed to be resolved. The affected beneficiaries fall into three general groups.
1. People Who Owe Premiums
CMS will be sending letters (available at http://www.cms.gov/partnerships/downloads/11322.pdf) to beneficiaries who are identified as owing premiums for 2006. These beneficiaries exercised the option of paying their premiums via withholding from their Social Security payments, but either “premium amounts weren’t withheld or were withheld incorrectly” for one or more months of that year. The letter from CMS notifies them of the amount they allegedly owe to one or more plans and asks them to work with the plan(s) to pay the premiums. The letter recognizes that the amount owed “may be different” than the figure cited if the beneficiary has already paid the plan(s) directly. If this is the case, CMS advises the beneficiary to “check with your plan for any changes to the amount listed in this letter.”
Beneficiaries who have already received a bill from their plan are advised in the letter to follow the plan’s instructions regarding payment. Those who have not been billed yet are instructed to initiate contact with the plan to arrange payment. According to the Tip Sheet that is being mailed to partners, CMS is “encouraging plans to work out payment options that best meet the needs of the people who owe premiums.”
Beneficiary advocates were not given sufficient advance notice of the letter in order to prepare to respond to questions and concerns following the receipt of the letter, which may be confusing to certain beneficiaries. While the CMS letter tries to assure recipients that they still have their Medicare coverage, it does not give them all of the information they need. It fails to provide them with:
An accounting broken down by month showing how CMS calculated the premium amount owed;
Contact information for the relevant Medicare Advantage and/or Part D drug plan(s);
Information on what to do if they encounter problems obtaining a payment arrangement that does not cause them hardship;
Steps they can take if they want to dispute the fact that they owe any premiums at all or the amount that they owe; and
The process for requesting a waiver of repayment of the premium amount allegedly owed.
What Beneficiaries Who Are told They Owe Premiums Should Do
Check their records to make sure that they do, in fact, owe premiums for any part of 2006;
Verify the amounts withheld from their Social Security checks that year, as well as any unusual deductions or deposits that may have been made in 2007 (particularly in the early months);
Verify any payments they may have made directly to the plan for 2006 premiums;
Cite the correct amount they believe they owe in premiums if and when they contact the plan;
Request a payment schedule from the plan if they believe they owe premiums and are able to repay the premium amounts;
If the payment of the premium(s) not previously withheld would create a hardship, request a waiver of the repayment requirement, and
Keep records of all written correspondence, phone calls, emails, or other contact they have with their plan(s), CMS, or SSA regarding this money, noting specifically the dates of contact and the requests and information that were conveyed.
2. People Whose Plan(s) Were Paid Incorrectly
Beneficiaries in this category had the correct premium amounts withheld from their Social Security payments, but Medicare failed to properly forward the withheld money to their plans for one or more months in 2006. CMS has announced that Medicare will pay the money owed to the plans and that the beneficiaries do not need to do anything. It is uncertain whether individuals in this category will receive a written notice confirming that Medicare has paid or will pay the withheld money to the plan, and the amount of the payment.
Because of the error, some beneficiaries may have been incorrectly directly billed by their plan for the amount Medicare owes. According to CMS, “People who were directly billed will be notified by their plan. If people made payments to their plan, they will be refunded. If they received a letter asking for payment and haven’t paid yet, they shouldn’t pay.” CMS does not indicate a timeframe for when these beneficiaries can expect the notification and refund from the plan.
3. People Who Are Owed a Refund
According to CMS, people who had too much money withheld from their Social Security payments for one or more months in 2006 will be issued a refund. From July through September 2007, Social Security is processing these refunds. The Center has heard reports of premium refunds being sent or deposited into individuals’ bank accounts without an accompanying announcement or explanation of the amount refunded. As such, it is advisable for beneficiaries and their advocates to examine recent bank statements to ascertain whether an amount from SSA was deposited, and if so, to check that figure against their own records and calculations to determine if the refund is correct.
People who believe that they are still owed money should file a complaint with CMS. Those who believe that they were refunded too much money may want to exercise caution about spending the excess. As previously noted, CMS does not currently recognize the right to a waiver of recovery when it seeks to recoup incorrect payments made in connection with Part C and Part D premiums.
CMS claims that data and call center scripts have been furnished to
caseworkers and 1-800-MEDICARE customer service representatives, who are
“prepared to answer questions from all people who may be
affected by the premium withholding payment reconciliation process, including those who get refunds.” The Tip Sheet for Partners also contains information specific to these issues and is available at:
Nevertheless, distressing reports from beneficiaries and advocates describe problems in the wake of the recent reconciliation process. Some individuals have received letters from their plans stating that their coverage was being retroactively terminated for reasons related to premium withholding. In a few of these instances, after advocates contacted the CMS Central or Regional Offices, the matter was straightened out with the plan and the beneficiary was re-enrolled without a break in coverage.
Without ample warning, numerous other beneficiaries have had large lump-sum deductions taken from their Social Security checks to make up for premiums that the government failed to withhold earlier. The Center for Medicare Advocacy is evaluating the possibility of challenging the legality of this practice, and is interested in speaking to anyone for whom this large deduction has caused hardship.
 Beneficiaries who request a waiver of recovery should be prepared for the likelihood that the plan or agency representative to whom they make their request will either not understand their request or deny the existence of a waiver process. This is because CMS does not acknowledge a waiver right in this instance. The Center for Medicare Advocacy holds the position that beneficiaries are legally entitled to have recovery waived for mistaken payments arising from premium withholding in Part D, and is presently litigating this issue before the United States District Court for the District of Columbia, in Action Alliance v. Leavitt, No. 1:06 01607.
 On June 19, 2007, Medicare beneficiaries, represented by the Center for Medicare Advocacy and Western Massachusetts Legal Services, filed a lawsuit in the U.S. District Court for the District of Massachusetts, challenging CMS’s and SSA’s failure to properly implement the premium withhold mechanism for beneficiaries. Specifically, Machado v. Leavitt, 3:07-cv-30111-KPN, seeks to require the agencies to timely correct errors in the amounts withheld, to promptly forward withheld premiums to plans, and to promptly issue refunds of erroneously withheld money. It is plaintiffs’ position that the agencies’ lengthy delay in carrying out these activities deprives beneficiaries of the value of their Social Security income.
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