August 13,2008

Baucus Calls For Better Administration Of Medicare Premium Withholding

Medicare transactions rejected due to problems with schedule, timing of withholding from Social Security payments

Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) said
today that significant improvements need to be made to the Medicare premium
withholding process, which automatically takes Medicare Advantage and prescription
drug coverage plan monthly premiums out of participants’ Social Security payments.
Baucus’s comments come following the release of a new Government Accountability
Office report that outlined problems with the complex Medicare Part C and D premium
withholding payment options that have resulted in confusion and delays in premium
payment for many Medicare beneficiaries and private insurance plan sponsors. Baucus
requested the report after 231,000 beneficiaries had their premiums refunded by mistake
in 2006 when records wrongly indicated they had paid too much. The report can be
found online at http://www.gao.gov/docsearch/repandtest.html.

“Paying Medicare premiums directly from Social Security benefits should be an
easy way to make sure seniors don’t have to deal with a bill in the mail and to save
taxpayer dollars on administrative costs,” Baucus said. “But the way it’s set up now,
the withholding process is a mess that discourages Medicare recipients from signing
up for it. There’s ample evidence of how confusing it is even for the agencies
running this program. Medicare, the Social Security Administration, and the
Department of the Treasury need work together to build a withholding schedule
that works for seniors.”

Though GAO said new information systems and new information matching standards
have helped alleviate the situation, the complex timing of payments between the
Treasury, Social Security, Medicare and private insurance plan sponsors can still result in
long delays and canceled transactions. In 2006, over 44 percent of Medicare premium
withholding transactions between CMS and SSA were rejected. In 2007, that number fell
to just over five percent. Nevertheless, the GAO said that the scheduling of payments
still posed significant challenges to the premium withholding program.

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