Y c.: w United States General Accountina Office GAO Report to Congressional Committees May 1990 MEDICARE Employer Insurance Primary Payer for 11 Percent of Disabled Beneficiaries GAO,‘HRD-90-79 United States GAO General Accounting Office Washington, D.C. 20548 Human Resources Division B-235025 May lo,1990 The Honorable Lloyd Bentsen Chairman, Committee on Finance United States Senate The Honorable John D. Dingell Chairman, Committee on Energy and Commerce House of Representatives The Honorable Dan Rostenkowski Chairman, Committee on Ways and Means House of Representatives The Omnibus Budget Reconciliation Act of 1986 (OBRA) (P.L. 99-509) made Medicare the secondary payer for medical expenses of certain dis- abled beneficiaries covered by large group health plans (UHF%). Section 93 19 of the act also directed that we determine (1) the number of benefi- ciaries for whom Medicare became the secondary payer because of their own or a family member’s employment, (2) the resulting annual Medi- care cost savings, and (3) the provision’s effect on the employment of disabled individuals and family members, and the cost and availability of employer health insurance. This report describes our work on the first requirement. A subsequent report will address the remaining requirements. Our field work on this subject, completed on August 28, 1989, was performed in accordance with generally accepted government auditing standards. Our methodol- ogy, discussed in appendix I, included use of mall questionnaires (see app. II and III) and data from the Health Care Financing Administration (HCFA) and the Social Security Administration (sA). HCFA and SA are agencies of the Department of Health and Human Services (HHS); HCFA administers the Medicare Program. Medicare is a federal health insurance program that covers most Ameri- Background cans aged 65 or older and some disabled persons under age 65. In 1988, the program covered on average 3.1 million disabled individuals under age 65.’ E-235026 l 100,000 were not working due to disability but met one or more of HCFA'S indicators3 of employee status and also were covered by an employer-sponsored LGHP. HCFA supplied this estimate. HHS provided written comments on a draft of this report and generally Agency Comments agreed with our conclusions (see app. IV). HHS does not question that our figures should be given a high degree of confidence but suggests that our estimate of beneficiaries eligible for coverage through a spouse’s employment is extremely conservative. We estimate, using scientific sampling methodology, that this group repre- sents 214,000 beneficiaries or 8 percent of the Medicare disabled popu- lation.HHS estimates from actuarial projections and contractor experience that this group represents 16-17 percent of the disabled population. We disagree that our estimate is as conservative as HHS suggests. Our sample methodology does exclude nearly 11 percent of the disabled Medicare population for various reasons (see p. 1 l), but this group is not large enough to explain our differences with HHS’Sfigures. Our estimate provides 96-percent confidence that between 7 and 8.6 percent of the sampled disabled population had LGHP coverage through a working spouse or other family member. Moreover, our figure is consistent with an earlier GAOestimate based on data from the Bureau of the Census’s 1984 Current Population Survey (see p. 10). HHSstates that our referring to disabled individuals having employee status as having health coverage from a “previous” or “former” employer (1) suggests that we believe HCFA'S definition is inconsistent with the statute and (2) could be used against HCFA in the event of litiga- tion. We agree that our wording could suggest that HCFA'S classifying dis- abled individuals who are not actively working as current employees is inconsistent with the statute and have made appropriate revisions. OBFL4 authorized HCFA to define “employee” in regulation. This report is not intended to dispute or endorse the appropriateness of HCFA’S proposed definition. Our wording was an attempt to communicate that these dis- abled individuals, while classified as “employees,” are not actively 3HCFA,under proposedregulations,setsforth three situations in which an individual is consideredto have employeestatus. In addition. the proposedregulationsListfive factors,the presenceof any one of which could be the basisfor concludii that an individual is an employee.An exampleis a disabled individual who participates in an employer’sbenefit plan in which only employeesmay participate or has right8 to rehrn to duty if his/her condition improves. page 3 GAO/‘HlU%99-79Medicare Costa for Disabled Shift to Employer Page ti GAO/HlUN@79 Medlm Costa for Disabled Shift to Employer Abbreviations GAO General Accounting Office HCFA Health Care Financing Administration HHS Department of Health and Human Services LGHP large group health plan OBRA Omnibus Budget Reconciliation Act of 1986 SSA Social Security Administration Paee7 GAO/HRDW79 Medicare Costafor Ohbled Sldft to Employer Appendix I Objective, Skope, and Metlmdolc$y . Not older than age 63-3/4 as of September 30,1986.’ Our final universe was composed of 2,600,941 beneficiaries. From this universe, we selected a simple random sample of 5,776 beneficiaries, to whom we sent a questionnaire during April 1987. In it, we asked about marital status, employment, and health insurance coverage, and employ- ment of any spouse-all as of December 31,1986, the day before the law became effective. The response rate was 88 percent. Through the survey, we learned that some disabled beneficiaries might be covered by an employment-based LGHPthrough a family member other than a spouse. These beneficiaries are disabled adult dependents who are (1) primarily sons or daughters of deceased, retired, or disabled workers; (2) at least 18 years of age; and (3) disabled before age 22. To the 1,046 beneficiaries in this subgroup, we sent a second questionnaire to obtain more specific information about health coverage through an employed family member. The response rate for the subgroup sample was 83 percent. (See app. II and III for the questionnaires.) The overall response rate for the two questionnaires was 87 percent, and after removing unusable questionnaires, 82 percent. In making our statistical estimates, we assumed that the nonresponding and in- adequately responding beneficiaries were not materially different from those who responded. For beneficiaries who indicated coverage under a spouse’s or other fam- ily member’s employer-sponsored health insurance plan, we determined whether the plan was a large or small group plan. Using various resource materials and telephone contacts, we classified employers as having fewer than 100 or 100 or more employees as of December 31,1986. References we consulted included Dun’s Marketing Services Million Dollar Directory, Standard and Poor’s Register of Cor- porations, and the American Hospital Association Guide. We contacted companies with fewer than 100 employees to confirm their size and that they did not belong to a multiple employer health plan or a labor union plan that covered employees of at least one company that employed 100 or more employees. Table I.1 shows our sample results. ‘Our design called for dropping beneficiariesolder than 633/4 years as of September30,19&K This WBSbecause they would be in “aged Medicare"rather than “disabled Medicare” at the beginning of 1983when we planned to resurvey beneficiarieswith employedspouseaas part of our study of the cost savingsassociatedwith OBRA.Disabledpersons66 and over generally a~ coveredunder Medl- careon the basisof ageand may beaffected by its secondarypayer provisions that pertain to aged employedindividuals and spouses.Wedo not believethat excluding this group materially affectsour sampleresults. Page 9 GAO/‘EEDm79 Medlm Costa for LMsabledShift to Employer Table 1.2 Disabled Medicare Beneficiaries With LGHP Coverage Btatua 1999 1998 Throu h a Working Family Member (1986 Disabled Medicare beneficlarles on the rolls as of July 1 and 19%8) and living wlthin the Unlted States, less those who 2,852,856 2,995,174 Have end-staae renal disease I1 18.4631 (139.3751 Have risk-based health mamtenance organization coverage a (64,189) (67,391) Are in extended trial work’ WVJW (30,~) Subtotal of disabled beneficiaries 2.640.204 2.799.409 Percentage of beneficiaries with a family member who has LGHP coverage 7.75 7 75 Total disabled beneficiaries with LGHP coverage through a family member 204,907 213,993 aOur estimate. Associated with the statistical estimate that 7.75 percent of the disabled Medicare population has LGHPcoverage through a working spouse or other family member is a standard error of 0.39 percentage points. Thus, although we use the point estimate of 7.76 percent for the sake of simplicity, strictly speaking we can estimate only (with 95-percent con- fidence) that the percentage is between 6.97 percent and 8.52 percent. Likewise, we use the point estimates of 204,607 and 213,663 for 1986 and 1988. But strictly speaking, we can estimate only (with 9.5~percent confidence) that the figure for 1986 is between 183,943 and 225,071; and for 1988, between 192,178 and 236,148. The percentage and absolute estimates of the average number of dis- abled Medicare beneficiaries with LGHPcoverage through a working spouse or other family member are conservative. They exclude nearly 11 percent of the disabled Medicare population, that is, beneficiaries who l live outside the United States (roughly 3.57 percent of the disabled Medicare population in 1986); 9 have end-stage renal disease or are end-stage renal disease/disabled (roughly 4.15 percent of the disabled Medicare population in 1986); l are in a risk-based health maintenance organization (roughly 2.25 per- cent of the disabled Medicare population in 1986); or l are in the final 3 years of extended Medicare eligibility resulting from the completion of trial work with substantial gainful activity (roughly 0.97 percent of the disabled Medicare population). Page 11 GAO/KUBBMB Medicare Cab for LMsabledSldft to Employer AppendIxI Objective, Scope, and Methodology The end result of these calculations was a rough estimate of 26,413 dis- abled Medicare beneficiaries with employer coverage in a LHGP through their own active employment. We rounded it to 26,000 to reflect the approximation inherent in it. The third group, disabled Medicare beneficiaries who come under OBRA Determining through their nonworking “employee status” relationship with their Beneficiaries With employer at the time they became disabled, was delineated by HCFA in LGHP Coverage April 1988, about 1 year after we mailed our initial sample question- naire. Because our data collection began before this group was defined, Through Their HCFA- we chose not to study this group through an independent sampling pro- Defined Employee cess. Instead, we relied on HCFA'S rough approximation of the group’s size. A HCFA analyst estimated that between 50,000 and 150,000 benefi- Status After Becoming ciaries are unable to work but still are “employees” and have LGHP insur- Disabled ance through the employer for whom they actively worked at the time they became disabled. We used the midpoint of his estimated range (lOO,OOO),which he agreed would be his “best guess.” This analyst and other HCFA officials noted that HCFA has little information available for estimating this group’s size. In fact, HCTFAofficials advised us that the 50,000-150,000 estimate was a preliminary figure and might be too low. They were unable, however, to provide a more precise estimate. Our overall estimate of 340,000 disabled beneficiaries affected by OBRA Overall Estimate a thus represents the sum of three very different types of estimates: Cumulation of Disparate l A statistically valid projection of 214,000 beneficiaries insured through a family member’s employment, based on our sample of 5,776 disabled Subestimates Medicare beneficiaries; l An estimate of 26,000 beneficiaries insured through their own employ- ment, based on adjustments to and extrapolations from SA estimates from a l-percent sample of Medicare beneficiaries (i.e., roughly 30,000 disabled beneficiaries); and l A HCFA estimate of 100,000 beneficiaries who are insured by their employer at the time they became disabled. Because of the difference in the quality of the underlying estimates, we cannot assign an overall confidence interval to our estimate of 340,076 disabled beneficiaries affected by OBRA. page13 :IF YOU NEED HELP ANSYERIN6 THESE! IQUESTIONS, PLEASE ASK A CLOSE : :FRIENO OR RELATIVE TO ASSIST YOU: 2. Uhat is the full name of your spouse? (PLEASE PRINT CLEARLY) I I First Name Middle Name Last Name 3. Uhat is the birth date of your spouse? (PLEASE PRINT CLEARLY) I *I Month Day Year 4. Uhat was the working situation of your spouse on December 31, 1986? [CHECK ONE) ---I-- Working full! PLEASE TURN '0 [I Or -- PAGE 3 AN0 ANSUER ---------- part time I QUESTION 5 ------- ----------- Not uorklng, : [ 1 but looking I I for work .- I ilomemaker --------_ [I I [ 3 Unable to work: , [I Retired THIS ENDS ftlE 3UE3:13NS. PUT THE ]kJ;$'::VU:::: / I THE AOORESSEJ E'c,f-,zt q/u [ 1 Other HAIL IT AS SOON iS sclSS:3L:. [I Oon't know THANK YOU! -------------- Page 16 GAO/EItD9@79 Medlcme Costa for Disabled Sblft to Employer Questionnaire Sent to Disabled Adult Dependents t GAO/HltD99-79 Medicare Costafor Disabled Sbift to Employer PW *&~ents From the Department of Health and Human Services DEPARTMENT OF HEALTH & HUMAN SERVICES Olfice Of InspeCtOrGeneral w,I”mplo” DC 20201 MAR27isfl Ms. Janet L. Shikles Director, Health Financing and Policy Issues United States General Accounting Office Washington, D.C. 20548 Dear Ms. Shikles: Enclosed are the Department's comments on your draft report, "Medicare: Employer Insurance Primary Payer for 11 Percent of Disabled Beneficiaries." The comments represent the tentative position of the Department and are subject to reevaluation when the final version of this report is received. The Department appreciates the opportunity to comment on this draft report before its publication. Sincerely yours, QlW Richard P. Kusserow Inspector General Enclosure Page19 GAO/RBD9079MedieareCostsforMsabledShirttoEm~loyer AppendirlV c!olnments hoIn the DL?partment of Hultb andlium.mServicee Setian 9319 of the Cmihe B.@et Rgnriliatim &A of 1986 M the ksP forthedisabledprwvisim. AlthaqhthaseMte auer&mt inclrded healthaueragefor"f-~~"as~ towh.i&MBaieretid ~secarjary,~~-agreemant eliminatadvlis,jncl~inthe fimlpxwibimmlyaxerage hasdm~~status. *H.R. Pap. No. 1012, 99th "s., 2d Sesp. 320-321 (1986). In implemmtin3 the pmvisim,XFAd&enumdthatcsxtaindhbledinSvidul.swerestill Eventtwxghtkywaranotactivelyworkingbacauseof EZEir lhe prcpxed rule plblisbed at 55 Fed. Ibeg. 8491 (March 8, 1990) adepts this position. lhecaodraftmportreferstothesepeE.ons ashaviqhselthcovarage au6 "previcms 6mplcyars" or "former enplayers." Useofsuchl~clmrlysqysLsthatuY,ke.lieves HCPA's*lsentatimis incus* with ttm staWtory autbrizatim, ti uxldbeused againstHCE4 inthaeventof litigatim overHCF?.'s * tim. Wehvepmvidedqecificlaquagesubstitutimsbel~to addressas-. Now on p. 2 Now on p. 3 Page 4, line 3, delete "fcamer." Now on p. 8 Page 7, ParagraFh “1,” "place of qlm" shcllld be dwqed to "current erploymmt"in%oplaces. Ihasam~~dbmedainthecaptim Now on p 8 m page 8. Also mpga 8, lhl, rrtkirplaceofemploynwtpriorto bcminqdisabled"shouldbe~to"their~~loyeestatus afte.rtemningdisabled.n Nowonp 13 Page17, inthecaptim, Wuygha PrehabilityFx@oyex?'shmldbe ~to'%KU#l'lheirCBb.lWd~CryeestatusAfter~ Nowonp 13 Disbled.~l Alsompage17, inlh 3 ofthelastparqqh, "predisabilityenployer" sharldte&aq&towen@oyeratthetiuettq became disable%" Nowon o. 13 paSe18,lines 3 and4,"bef~temhqdisabkd" shcllldbechanqedto "at the time they beaaae disabled.n VowonD 73 lbreisalsoan-infcutmt8 1%dl.idlmaykeoorrected if specific reportlanguageiSaddressed. I.nfoohpte1mpage2,%verage65" vow on p 1 slxuld be charqxl to "age 65 ard over." Requests for copies of GAO reports should be sent to: U.S. General Accounting Office Post Office Box 6015 Gaithersburg, Maryland 20877 Telephone 202-275-6241 The first five copies of each report are free. Additional YII@ $2.00 each. There is a 25% discount on orders for 100 or more copies 11~ single address. Orders must be prepaid bv cash or bv check or IIIUII~~~:~~~~~-... __ out to the Superintendent of ticuments. -,,- ,,.- ,, -,- -1 United States First-Class Mail L General Accounting Office Postage & Fees #‘I8 Washington, D.C. 20548 GAO Permit No. GlOO Official Business Penalty for Private Use $300 Appendix V Major Contributors to This Report Jane L. Ross, Senior Assistant Director, (202) 275-6195 Human Resources Terence J. Davis, Assistant Director Division, Washington, Peter J. Oswald, Assignment Manager D.C. William A. Eckert, Design and Data Analysis Group Frank G. Pasquier, Issue Area Manager Seattle Regional Office Walter R. Eichner, Evaluator-in-Charge Lori D. Pang, Site Senior Evan L. Stoll, Jr., Technical Assistance Group Page 22 GAO/HltD9&79 Medicare Coats for Disabled shut to Employer i mmmltsoftheBcmhlmtof~ardMrmanServlcesonthe u-u 0ffia31Xarr8 "I&&-. mlw Inmrawe Primary ker for 11 Fkrmnt of Disabled Beneficia% A significant wea)oress of the rqnrt lies inthslaclcof data orttkepoor qxalityofdata. 0f the 340,000 individuals identified as potentially beingsubjecttotheprovisim,uL0develcpsthreesokqmqs: beneficiaries ho are workiq (26,000 ir&VidUls), "XtiVe irdividuals" m lol-qer achJally working (100,OOO Mviduals), and wcare-e ligible family m of anplayed i&iv&duals (214,000 individuals). Kh.ile the estimate of 214,000 is the stmzqststatistically,theothertm estimates ana less so, withtbeestimate of Qctive individuals" being the nmtunreliable, based as it is on 'Wum~guesses~ fmMedica.z plrgmm staff. Hmever, tile the estimate of 214,0G.l is statistically strong (representw VP- tely 8 pwcentofthe disabledpqxlation), ax figuresarenm~mtheorderof16til7percent. 'IWGWfigumsare basedonascientificsanplirqmethodology~le--onlyactuKial projections buttressed byacIxalcontzactor~ieme.Wedonot questirmthattheGAOfigures~dbeaccordedahi~degreeof calfiderrz:wemerelywishtosuggestthattheC9D'sestimateofdisabled beneficiaries eligible for wverage thmqh their qcusds enplcynmt is, if anythhq, extremely oarservative. W-Ale thedata pxc4lem rerhKas smz&k she reliability of the report, we believeCaDhasdonsthe~itcanwith~tisavailable. Wealso believe there am sufficient %aveats" in the report so that the reader is p.3tonnotice cc8mahq the gulityof thedata. Inpkrentatim of section 6202 of the Cam&us Bxiget Remmiliation Act of 1989 myprovide theHealth Qxe Financ~~tion (HCFA) with a b&terbasis fordetennhhgthe nm&rofdisabled in3ividualswhohave employer grcup health cmemge thrtxgb their spxse. This legislation mr&tesaseriesofdatamat&esbetweentkeIntem3l Revenue Service, the Social Searity prhninistratim snd HCFK Itwill assist HCFA in identifyirq secom%rypayer-. In particular, this provision will be useful inidentifyirq both aged arddisabledkeneficiarieswith health averagethmqhtheirq.cuse~sBlployergrmphealthplan. RR15,within ayear,afterthefirstravldofdata~~isccmpleted,HCFAwillhave mxe cmp1et.s infomtion on thisgruq~ofdisabledbmeficiaries. page20 GAO/tlIU29079MedicareCostr,foor~bledShiPttoEmployer Appendix ill Qneatlonnalre Sent to JHmbled Adult Dependents Page 18 GAO/HUB@@79 Medicare Costs for Disabled Sbif-t to Employer Appendix II Qnestiod Sent to Dlaabled Medim Ben.dIduies IIF YOU NEED HELP ANSYERING THESE I ;QUESTIONS, PLEASE ASK A CLOSE I :FRIENll OR RELATIVE TO ASSIST YOU.; 5. Uhat was the name of your spouse's employer on December 31, 1986? (PLEASE PRINT CLEARLY) 6. On December 31, how long had your spouse worked for that employer? (PLEASE PRINT CLEARLY) Years Months 7. At that time, did your spouse's employer have a health insurance program that provided medical coverage to u? (CHECK ONE) L: 1 Yes I: 1 NO [ ] DON'T KNOW THIS ENDS THE QUESTIONS. PUT THIS QUESTIONNAIRE IN THE AOORESSED ENVELOPE AND fiAIL IT AS SOON AS POSSIBLE. THANK YOU! L Page 16 GAO/lilUb9W9 Medium coata for DiMbled shin to Employu Questionnaire Sent to Disabled Medicare Beneficiaries r U. 5. GENERAL ACCOUNTINC OFFICE STUDY OF NEOICARE’S SECONDARY PAYER PROCRAN FOR DISAEILITY BENEFICIARIES < --- LABEL Please read each of the questions carefully. Answer only those questions that apply to you or your spouse (husband or wife). We would like you to complete this questionnaire as soon as you receive it. IF YOU NEED HELP ANSWERING THESE QUESTIONS, PLEASE ASK A CLOSE FRIEND OR RELATIVE TO ASSIST YOU. Please give us a telephone number where you can be reached in case we have questions about your answers: I 1 Area Code Phone Number 1. What was your marital status as of December 3:, 1986? (CHECK ONE) 1 1 [ 1 loivorced Widjwed [ ’ Single! IMaLriled Separated! -------------- ------------ -------- ----------- , ! , PLEASE TURN TO PAGE 2 AND ANSWER OUESTION 2 THIS ENOS T;IE OUESTIONS PLEASE PUT THE QUESTIONNAIRE IN THE AOORESSEO ENVELOPE AND NAIL IT AS SOON AS POSSIBLE. L Page 14 GAO/HIUMO-79 Medlm Coats for Disabled SMft to Employer Appendix I Objective, Scope, and Methodology To estimate the average number of disabled Medicare beneficiaries in Determining 1988 with employer coverage in a LGHPthrough their own active Beneficiaries With employment, we used Social Security statistics and discussions with SA LGHP Coverage officials. First, we estimated the number of those on trial work with sub- stantial gainful activity (generally those earning at least $300 per Through Their Own month) or in the 39-month period of extended Medicare eligibility while Current Employment performing substantial gainful activity. We assumed that disabled Medi- (Trial Work) care beneficiaries working at lower levels of income generally would not have health coverage from their employer and thus would not be subject to the Medicare secondary payer provision. To make our estimate, we obtained figures as of December 1987 and December 1988 from SA for the number of persons in the final 36 months of substantial gainful activity after completion of trial work. SA cautions that these figures were based on a l-percent random sample. They included an unknown (but presumed small) number of other bene- ficiaries whose Social Security cash benefits had been suspended (for example, prisoners or beneficiaries who had refused vocational rehabili- tation). Averaging the two yearend figures, we estimated the mid-1988 figure (31,960) and used it to represent the average number of benefi- ciaries in 1988. We reduced this figure to 30,000 beneficiary years to provide some recognition of the non-trial-work beneficiaries. Then we increased it by one-third to incorporate an estimate of those in trial work with substantial gainful activity or the first 3 months of substan- tial gainful activity after completion of trial work. These adjustments provided an estimate of 40,000 beneficiaries in either trial work with substantial gainful activity or the 39 months of extended Medicare eligi- bility while performing substantial gainful activity after completing trial work. We assumed the percentage of trial workers without health insurance was the same as that for the U.S. population as a whole. Therefore, we adjusted this number downward to reflect the percentage of civilian nonagricultural workers (24.1 percent) without employer-sponsored health insurance. (This percentage came from an issue brief published by the Employee Benefit Research Institute, based on March 1986 Bureau of the Census data.) We also assumed that the percentage of cov- ered trial workers in small rather than large group health plans was the same (13 percent) as that obtained from our sample of family members who provide employer-sponsored health insurance for disabled Medi- care beneficiaries. Therefore, we further adjusted downward the num- ber of trial workers to reflect this factor. Page 12 GAO/HlUMlW9 Medicare Costa for J&tabled Shift to Employer Appendix I Objective, Scope,and Methodology Table 1.1: Employment and Health Insurance Status of Family Members of Percent of Disabled Beneficiaries (1986) usable Error range’ status Total responses (percent) Sample populatron of drsabled Medicare beneficianes 5,776 N/A NIA Usable resoonses 4,738 100.00 N/A Beneficianes wrthout a workrng famrly member, 3.699 78.07 1 20 Beneficrary is single, drvorced, or wrdowed, and not a disabled adult dependent 1,758 37 10 1 40 Spouse IS lookmg for work 84 177 0 39 Family member IS a homemaker, unable to work, retrred. or other 1,154 24 36 1 24 Beneficrary IS a disabled adult dependent without a workina famrlv member 703 1484 1 03 Beneficranes wcth a working family member: 1,039 21 93 1 20 Beneficrary has a working famrly member but no employer-related health Insurance 618 13.04 0.98 Beneficrarv has an emolover-swnsored health Insurance elan: ’ 421 8 89 0 83 Large group health plan 367 7 75 0 78 Small qrouo health elan 54 1.14 0 32 TVs are 95.percent confident that the disabled Me&care population does not drffet from our sample by more than the number of percentage pomts shown Using our sample results, we estimated for the entire disabled Medicare population the number of Medicare beneficiaries with LGHP coverage obtained through a working family member (see table 1.2). For the 1988 estimates, we assumed that the percentage of JAXP coverage2 would not have changed dramatically in the l-1/2 years between the “as of” date of the sample-December 3 1,1986-and July 1,1988. 2Another 1.14percenthad similar coverage under smafl grouphealth plansnot affected by OBRA. Thesetwo groupsconstituted an &imxted 9 percentof disabledbeneficiarieswho had coverage through a WOrkklgfamily member-consistent with an estimatewe provided in an earlier report, The Chgreas Should 0msider AmendingThe MedicareSecondaryPayer ProvisionsTo Include Disability Beneficiaries(GAO--1021, basedon data from the Bureauof the Census’s1984Cwent Pop ulation Survey. Page 10 GAO/llRMl@79 Medicare Costs for LXsabledShift to Employer Appendix I Objective, Scope,and Methodology Amendments to Section 1862(b) of the Social Security Act contained in the Omnibus Budget Reconciliation Act of 1986 made Medicare the sec- ondary payer for hospital and other medical expenses of disabled Medi- care beneficiaries covered under a LGHP through their own or another family member’s current employment. These amendments were effec- tive January 1, 1987. OBRA also directed the Comptroller General to study and report to Congress the effect of these amendments. The report was to include an estimate of the number of disabled Medicare beneficiaries for whom Medicare had become secondary payer. In responding to this objective, we considered three groups of disabled Medicare beneficiaries for whom employer-provided health insurance has become the primary payer, namely those with LGHP coverage through 1. a spouse’s current employment or a parent’s or other family member’s current employment, 2. their own current employment (trial work) or its aftermath, and 3. their continued employee status, as defined by HCFA (see p. 3), after becoming disabled. For each group of beneficiaries, we used a different methodology. To estimate the number of beneficiaries in the first group, we obtained Determining from HCFA a file that included all disabled persons receiving Medicare Beneficiaries With coverage as of September 30, 1986. We adjusted this file to obtain only LGHP Coverage beneficiaries with the following characteristics: Through a Family l Alive as of September 30, 1986; Member’s Current l On Medicare due to disability as of September 30, 1986; Employment . Not disabled due to end-stage renal disease (a related secondary payer provision applies to disabled Medicare beneficiaries whose entitlement is solely based on end-stage renal disease); . Living within the United States; l Not in a health maintenance organization that provides beneficiaries with all Medicare-covered services for a fixed amount per person; and pages GAO,‘HRBi3O-79MdcareCustsforMsabled ShifttnEmployer Contents Appendix I Objective, Scope, and Methodology Appendix II 14 Questionnaire Sent to Disabled Medicare Beneficiaries Appendix III 17 Questionnaire Sent to Disabled Adult Dependents Appendix IV 19 Comments From the Department of Health and Human Services Appendix V 22 Major Contributors to This Report Tables Table I. 1: Employment and Health Insurance Status of 10 Family Members of Disabled Beneficiaries (1986) Table I.2 Disabled Medicare Beneficiaries With LGHP 11 Coverage Through a Working Family Member (1986 and 1988) Page 6 GAO/ABD69.79 Medicare Coatsfor Disabled Shift to JZm~lo~er working. In most cases, HHS’s proposed revisions clearly achieve this. In several places, however, we used language different from HHS’s to clar- ify this distinction. HHS made additional comments of a more technical nature. These were considered and revisions were made to address them. We are sending copies to the Secretary of Health and Human Services, the Administrator of the Health Care Financing Administration the Commissioner of Social Security, the Director of the Office of Manage- ment and Budget, and other interested parties. Copies also will be made available to others upon request. Please telephone me at (202) 275-545 1 if you or your staff have any questions about this report. Other major contributors are listed in appendix V. ‘Janet L. Shikles Director, Health Financing and Policy Issues Page 4 GAO/‘llRDW79 lbiedlcare Co&a for Disabled Shift to Employer .- B2S6926 Since 198 1, the Congress has enacted a series of amendments to the Social Security Act that make Medicare the secondary payer if benefi- ciaries are covered by certain other health plans. Prior to these amend- ments, Medicare paid first (as primary payer) and the other plans paid at least part of what Medicare did not pay (as secondary payer). OBRA’S secondary payer provisions applied to three groups of disabled beneficiaries who have “employee” status and LGHP coverage: Individuals who have coverage through a working spouse or other fam- ily member (the largest group), Individuals who are employed in a trial work program,2 and Individuals who are unable to work but whose link to an employer con- stitutes employee status. Factors that HCFA lists in proposed regulations as indicative of employee status include having a legally enforceable right to return to work in the event disability ceases and participating it an employer’s benefit plan in which only employees may participate. HCFA published proposed rules defining employee status for disabled beneficiaries on March 8, 1990. We estimate that OBRA made Medicare the secondary payer for 340,000 Disabled Medicare disabled beneficiaries during 1988, or approximately 11 percent of the Beneficiaries Affected 3.1 million disabled Medicare beneficiaries: by OBRA l 214,000 had health insurance coverage through a family member’s LGHI We based this estimate on a random sample of 5,776 beneficiaries, drawn from HCFA files, to whom we sent a questionnaire regarding their families’ employment and health insurance. . 26,000 were in trial work programs, or had extended eligibility after completion of trial work, and had health insurance coverage through their employer’s LGHFJ.We estimated this group from HCFA and Social Security Administration data. ‘Under this program,disabledpersonscan attemptto m-enterthe work force by working up to 9 months,not neceSSari ly corwcutively, and cont.inueto receivemonthly disability benefits and Me carecoverageeven though they earned“substantial income”(defmedBSat least$300 per month). disabledpersonwho continuesto work beyondthe 9-monthtrial work period can retain Medicare benefits for up to an additional 39 months.
Medicare: Employer Insurance Primary Payer for 11 Percent of Disabled Beneficiaries
Published by the Government Accountability Office on 1990-05-10.
Below is a raw (and likely hideous) rendition of the original report. (PDF)