The Medicare Modernization Act of 2003 (MMA) established the Low-Income Subsidy (LIS) program to reduce the financial burden on low-income Medicare beneficiaries paying out-of-pocket costs for prescription drug coverage under Medicare Part D. This AARP Public Policy Institute Issue Paper examines whether processes established to enroll persons in LIS facilitate such enrollment and whether and how LIS application processes increase the potential for applicants to be screened for Medicare Savings Programs (MSP), which pay low-income beneficiaries' share of costs for Medicare-covered hospital and outpatient services.
MMA established two “front doors” to LIS, requiring both the Social Security Administration (SSA) and state Medicaid agencies to accept and process LIS applications. This study conducted interviews with federal, state, and local agencies responsible for LIS outreach, application assistance, and eligibility determination and found that by December 2006 (18 months after LIS applications could first be submitted) SSA had processed more than 5 million applications, while state Medicaid agencies processed only a few thousand. MMA intended the LIS application process to provide an opportunity to screen applicants for MSP, but the process is not producing the desired outcome. SSA's LIS application processes are simpler and more convenient for beneficiaries than state MSP application processes. In addition, eligible individuals who apply for LIS benefits are likely to be treated uniformly regardless of state of residence. This contrasts with the state-administered MSP, which is characterized by different eligibility standards and wide variation in application modes and processes.
Several suggestions are offered to identify potential beneficiaries and help them gain access to LIS and MSP:
- Improve SSA communication with Medicare beneficiaries who may be eligible for LIS
- Strengthen state Medicaid agency involvement in both the LIS application process and MSP screening
- Establish regular communication and data-sharing agreements between SSA and state and local organizations the help people apply for LIS
- Forge stronger partnerships between SSA, state Medicaid agencies, and state and local organizations that provide one-on-one assistance to Medicare beneficiaries applying for LIS
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