107-21 (H.R. 4954)
June 21, 2002

Ways and Means Committee Reports H.R. 4954, the "Medicare Modernization and Prescription Drug Act of 2002"

On June 19, 2002, the Ways and Means Committee approved H.R. 4954, the "Medicare Modernization and Prescription Drug Act of 2002," by a vote of 22-16. The bill would provide a voluntary prescription drug benefit as an entitlement to Medicare beneficiaries.

Following are descriptions of provisions in the bill that may affect SSA.

Collection of Premiums

  • Would provide that, at a beneficiary's option, premiums for the prescription drug plan would be deducted from the beneficiary's Social Security benefit.

Premium and Cost-Sharing Subsidies for Low-Income Individuals and Eligibility Determinations

  • Would provide that individuals whose incomes are less than 150 percent of poverty would have their prescription drug plan premium fully subsidized and their cost-sharing limited to no more than $2 per prescription for generic drug and $5 per prescription for non-preferred drug. Individuals with incomes between 150-175 percent of poverty and resources below twice the SSI resource limits would be eligible for a sliding scale reduction in their prescription drug plan premiums and reduced cost-sharing.
  • Would require States to make such income determinations under State Medicaid plans as a condition of receipt of Federal finances for their Medicaid programs. Also provides that SSA make the income determinations. (The amendment language is not clear as to when or how SSA would make the determinations. Explanatory material from the Subcommittee says that the bill would provide "Medicare beneficiaries the option of having low-income subsidy eligibility determination made by SSA.")
  • Would authorize appropriations for "such sums as necessary" for SSA to make low-income eligibility determinations.

Beneficiary Outreach Demonstration Program

  • Would require the Secretary of Health and Human Services (HHS) to establish a 3?year demonstration project where Medicare specialists who are HHS employees would be placed in at least six SSA offices to advise and assist Medicare beneficiaries. The Secretary would be required to evaluate the project with respect to beneficiary utilization, beneficiary satisfaction, and cost effectiveness, and recommend whether the demonstration should be established on a permanent basis.

Transfer of Responsibility for Medicare Appeals

  • Would require SSA and the Secretary of HHS to develop a plan by 10/1/03 to transfer the functions of Administrative Law Judges (ALJs) responsible for hearing Medicare cases from SSA to HHS. GAO is to evaluate the plan within 6 months of its receipt and report to Congress. Transfer of adjudicative authority is to be implemented between 7/1/04 and 10/1/04 (i.e., by the end of FY 2004).
  • Other provisions would require that the:
    • Secretary of HHS is to assure the independence of the transferred ALJ functions from CMS and its contractors;
    • Secretary shall provide an appropriate geographic distribution of judges;
    • Secretary shall have the authority to hire ALJs to hear cases giving priority to judges with experience hearing Medicare cases (subject to amounts provided in advance in appropriations act); and amounts payable to SSA for ALJs for performing the transferred functions shall be payable to the Secretary;
    • Secretary and SSA will make arrangements with respect to the transferred functions to share office space, support staff, and other resources, with the appropriate reimbursement from the HI and SMI trust funds;
  • Would authorize increased appropriated funds from the HI/SMI funds to the Secretary necessary for FY 2004 (the year the transfer is to take place) and future years to increase the number of ALJs, improve education and training opportunities, and increase staff at the Departmental Appeals Board.