Date: December 11, 2003
President Bush Signs into Law H.R. 1, The Medicare Prescription Drug, Improvement, and Modernization Act of 2003
On December 8, 2003, President Bush signed into law H.R. 1, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173).
H.R. 1 creates a voluntary prescription drug benefit program (Part D) for all individuals eligible for Medicare under which they will pay a monthly premium for coverage in helping them purchase prescription drugs. Part D is effective January 1, 2006. The bill establishes a transitional drug discount card, includes provisions for combating fraud, waste, and abuse in the Medicare program, and makes revisions in existing Parts A and B of Medicare including provisions relating to rural health care, inpatient hospital services, skilled nursing facility services and home health care. The bill also reduces the Medicare Part B premium subsidies for certain individuals and establishes tax-free Medical Savings Accounts.
Following are descriptions of provisions in the bill that directly affect the Social Security Administration (SSA). These provisions are identical to those described in Legislative Bulletin 108-13R, but the descriptions have been modified to reflect their enactment.
Premium and Cost-Sharing Subsidies for Low-Income Individuals Under Part D
- Provides Part D prescription drug premium and co-payment subsidies for low-income individuals. Individuals with incomes of less than 135% of the Federal poverty guidelines for a family of the applicable size, and resources of less than three times the SSI resource limits ($6,000 individual/$9,000 couple, indexed for inflation) are eligible for a 100% premium subsidy.
- Automatically treats as subsidy-eligible individuals those individuals who are eligible for SSI; individuals not eligible for SSI but who are eligible for full Medicaid coverage along with Part D coverage; certain Qualified Medicare Beneficiaries (QMB); and certain Specified Low-Income Medicare Beneficiaries.
- Provides premium subsidy assistance for individuals with incomes between 135% and 150 percent of the Federal poverty guidelines for a family of the applicable size. In order to qualify, the resources of an individual could not exceed $10,000, while resources for a couple could not exceed $20,000. These resource limits will be indexed in the future for inflation. The amount of the subsidy will equal 100% of the monthly premium for individuals at 135% of poverty and would gradually decline until it would be completely phased out for those at 150% of poverty.
- Provides that individuals eligible for premium subsidies will also qualify for lower co-payments when purchasing drugs.
- Requires SSA and the States to accept and adjudicate applications for Part D subsidy assistance. In making determinations, both SSA and the States will employ the SSI definition of income and resources. The law is silent concerning methods of verifying income and resources except under the simplified application process described below. The law appropriates $500 million for SSA's use in administering these subsidies for fiscal years 2004 and 2005.
- The Secretary of Health and Human Services (HHS), in consultation with the Commissioner, is required to develop a modified, simplified application form for determination and verification of such individuals' income and resources. The application is required to include the individual's attestation under penalty of perjury regarding the value of his or her resources. Recent statements (if any) from financial institutions are required to accompany the application, and appropriate methods of verification are required for all matters attested to in the application.
- Requires that whichever entity--SSA or the State--made the initial determination of eligibility for a subsidy would conduct any appeal and redetermination of the case. The Commissioner is required to establish procedures for appeals of SSA determinations similar to the current hearing procedures in the SSI program. SSA redeterminations of eligibility will be made at such time or times as provided by the Commissioner.
- Provides the Commissioner with access to tax information to carry out low-income determinations under Part D as is currently available under the SSI program.
- Will be effective January 1, 2006, with an initial 6-month open season for Part D enrollment between November 15, 2005 and May 15, 2006.
Medicare Prescription Drug Discount Card and Transitional Assistance Program
- The Secretary of HHS will administer the drug discount card transitional assistance program using information from other agencies for verifying an individual's self-certification relating to such matters as income and family size in connection with his or her application for such assistance. SSA is required to provide financial information from its records for this purpose. States will provide the Secretary with Medicaid information, and the Secretary of the Treasury will provide HHS with tax information.
- Will be effective no later than 6 months after the date of enactment—June 8, 2003--and remain in effect until Part D is implemented in January 2006.
Outreach by the Commissioner
- Requires the Commissioner to identify and notify individuals eligible for
Part D subsidies and the transitional drug assistance similar to the current-law requirement in section 1144 concerning identification and notification of individuals potentially eligible for Medicare cost sharing programs (e.g. QMB and SLMB.)
- Requires the Commissioner to furnish appropriate State agencies with the name and address of individuals residing in the State who may be eligible for Part D subsidies or transitional drug assistance based on benefit information in SSA's records.
Income-Related Reduction in Part B Premium Subsidy
- Requires, beginning in 2007, that Part B Medicare beneficiaries with modified adjusted gross incomes over $80,000 for an individual and $160,000 for a married couple pay a higher Part B premium than individuals with lesser incomes. The amount of the increased premium will be based on ranges of income specified in the bill. For example, an individual with modified adjusted gross income between $100,000 and $150,000 would pay a higher Part B premium than an individual with income between $80,000 and $100,000.
- Requires SSA to make the determinations as to the amount of an individual's Part B premium if above the applicable threshold.
- Authorizes the Secretary of the Treasury to give SSA information concerning an individual who may be subject to the increased premium. Such information will include an individual's modified adjusted gross income, filing status, and amounts of tax-exempt interest. Generally, tax information used for the determinations will be for the taxable year beginning in the second calendar year preceding the year involved.
- Provides that tax information from an earlier year will be used on a temporary basis if an individual's tax information for the applicable year were not yet available. When tax information from the applicable year is available, such information will be used and adjustments in the premiums would be made.
- Requires the Commissioner and the Secretary of the Treasury to develop regulations to provide for an increased premium if an individual does not file a tax return and there is information that the individual's modified adjusted gross income exceeds the thresholds. Generally, this will apply in situations in which individuals pay their taxes in full on a quarterly basis over the tax year.
- Requires the Commissioner, in consultation with the Secretary of the Treasury, to develop procedures to use more recent year's tax information at the request of the individual and an appropriate method for aggregating or disaggregating information from tax returns in the case of marriage or divorce. Also requires the Commissioner, in consultation with the Secretary, to promulgate regulations about using more recent information in the event of an individual's life changing circumstances and what constitutes such circumstances.
Collection of Premiums Under Medicare Advantage Program
- Provides individuals who are enrolled in Medicare Advantage programs the option of having their Medicare premiums deducted from their Social Security benefits or by an electronic funds transfer such as an automatic withdrawal from a bank account or by debit or credit card. (Medicare Advantage replaces existing Medicare + Choice plans and enables individuals to enroll in designated private plans, which may be local Health Maintenance Organizations or regional Preferred Provider Organizations. Medicare Advantage plans will offer drug coverage in addition to other medical benefits.
Beneficiary Outreach Demonstration Program
- Requires Secretary of HHS to establish a 3-year demonstration project under which Medicare specialists employed by HHS would be stationed in at least 6 SSA field offices to assist Medicare beneficiaries. At least 2 of the demonstration sites would be in rural areas.
- Requires an evaluation by the Secretary about the utilization and satisfaction of the individuals served by the Medicare specialists and the cost-effectiveness of providing such assistance in SSA field offices.
- Requires a report to Congress on the evaluation of the project and recommendation regarding permanently out-stationing Medicare specialists at SSA offices.
ALJ Medicare Hearing Transfer
- Requires SSA and HHS to provide a plan to Congress and the General Accounting Office (GAO) for transferring administrative law judge (ALJ) Medicare hearing functions from SSA to HHS no later than April 1, 2004. The plan is required to include information on the following:
- anticipated workload and staffing requirements;
- funding requirements;
- transition timetable;
- case tracking system;
- feasibility of developing a process to give Department Appeals Board decisions binding precedential authority;
- feasibility of filing appeals with ALJs electronically and conducting hearings using teleconferencing or video-conferencing technologies;
- steps that should be taken to ensure the independence of ALJs;
- steps that should be taken to provide for an appropriate geographic distribution of ALJs throughout the United States;
- steps that should be taken to hire ALJs and support staff;
- appropriateness of establishing performance standards;
- steps that should be taken to carry out any needed shared resources with SSA;
- needed training; and,
- any additional recommendations for further congressional action.
- anticipated workload and staffing requirements;
- Requires GAO to evaluate the plan and submit a report to Congress on its evaluation no later than 6 months after the date on which it receives the plan.
- Requires the Commissioner and Secretary to implement the plan no earlier than
July 1, 2005, and no later than October 1, 2005.
- Requires the Secretary to provide for appropriate geographic distribution of ALJs, authorizes the Secretary to hire ALJs and support staff and enter into arrangements with the Commissioner, as appropriate, to share office space, support staff and other resources with appropriate reimbursement.
Funding Start-Up Administrative Costs for Medicare Reform
- As mentioned earlier, appropriates through September 30, 2005, $500 million to SSA and $1 billion to the Centers for Medicare and Medicaid Services to carry out the provisions of this bill.