Panel questions administration on Medicare data errors

In a closed meeting, members of the Senate Finance Committee Thursday questioned Centers for Medicare and Medicaid Services Administrator Mark McClellan and Social Security Administration Commissioner Jo Anne Barnhart on data-processing errors affecting Medicare beneficiaries who opted to have premiums deducted directly from Social Security checks.

The option was offered as a convenient way for individuals to pay Medicare premiums, but a number of computer glitches have made the system costly for the government and a headache for beneficiaries. About 4.5 million individuals have chosen to pay their premiums through Social Security. The problems affect approximately 150,000 of the beneficiaries.

The problem of the Medicare prescription drug coverage gap known as the "doughnut hole" was also addressed in the meeting. The doughnut hole is a gap in benefits that begins when an individual's drug expenses exceed $2,250 and only ends when catastrophic coverage takes over.

At a news conference following the meeting, McClellan said the number of people affected by the coverage gap this year will be lower than previous estimates. He did not offer an exact figure but said it was expected to be fewer than the 3 million individuals estimated in a recent Health Leadership Council study conducted by PriceWaterhouseCoopers.

As for the data-processing glitches, McClellan said the problems will be resolved by next month.

Senate Finance Chairman Charles Grassley, R-Iowa, said McClellan and Barnhart "demonstrated a good faith effort to solve those problems," adding, "I think we're working things out."

Finance ranking member Max Baucus, D-Mont., was more pessimistic. "I expect more problems like this down the road," he said, blaming the Bush administration for creating an "unnecessarily complicated" drug program.

The urgency to resolve the problems is increased by the upcoming open enrollment period, which begins Nov. 15. In addition, McClellan announced this week that he will leave the agency next month, and the administration has not announced his replacement.

The most recent problems followed on the heels of a widely publicized processing error that resulted in CMS erroneously sending refunds of drug benefit premiums to more than 230,000 Medicare beneficiaries. CMS was forced to apologize and request that the payments, which averaged $215 and totaled almost $50 million, be returned to the federal government. Beneficiaries also received a letter incorrectly stating that their premiums would no longer be deducted from their Social Security checks.

Finance Committee members expressed concern that the incorrect withholdings are a burden to constituents on fixed incomes. The problems affect some beneficiaries who are eligible for a low-income subsidy, with some of those low-income beneficiaries receiving reduced Social Security checks due to the error.

A spokesman for CMS said the number of low-income beneficiaries so affected is small.