'Data Processing Error' Was a Medicare Slip-Up

231,000 Beneficiaries Wrongly Received Refunds

When a program is as big as Medicare, even a little bureaucratic mistake can affect a lot of people.

What Medicare chief Mark McClellan yesterday called a "data processing error" recently led the government to erroneously send 231,000 Medicare beneficiaries a refund of several months' worth of premiums they had paid for prescription drug coverage.

About the same time, beneficiaries received a letter from the Social Security Administration saying the agency will no longer electronically deduct their drug premiums from their monthly Social Security benefits -- even though they did not request an end to the service.

The Centers for Medicare and Medicaid Services is trying to fix both mistakes, which affected less than 1 percent of the 33 million Americans who get their drug coverage through Medicare. The agency mailed letters this week notifying the 231,000 beneficiaries about the glitch, which McClellan said will not cause any interruption in drug coverage under what is known as Part D of Medicare.

"We're very concerned about any inconvenience that this causes, and we apologize for that," McClellan said in an interview yesterday. "This was our mistake, and we are working right now to fix it as quickly as possible. . . . We're making sure that the plans continue to get the payments they need to continue coverage."

The average erroneous refund was about $215, making this a nearly $50 million mistake, he said. Some people received it by check, others by direct deposit into their bank accounts.

The government will resume automatically deducting drug premiums from Social Security benefits in October, according to the CMS letter sent to beneficiaries this week. The letter, signed by John R. Dyer, chief operating officer of the CMS, also notifies them that the wrongly refunded money must be returned to the government, although it does not specify how.

"We will let you know soon about that process," Dyer wrote. "Again, you do not need to do anything other than set that money aside."

The problem represents another growing pain for a big federal program that began enrolling seniors for the first time this year, sometimes amid considerable confusion about how to select the most appropriate coverage from the many plans offered by private insurers. Recent polls have found a large majority of beneficiaries are satisfied with the plan they picked, but about 20 percent said they had encountered a major problem in using the benefit.

Robert Wilson, 69, a retired software systems analyst in Reedville, said he suspects that fixing the mistake will be harder than making it. And he could have done without the stress in the first place.

"If initially deciding on whether to sign up for Medicare D selecting from among the various plans was baffling to senior citizens, receiving this cryptic letter from the Social Security Administration could not have been better designed to create anxiety," he said via e-mail.

David L. Elliott, 74, a retired engineering professor in College Park, said he was "amused" that a small computer problem could lead to so much trouble. "I'll be annoyed when I find out how to give it back," he said of the money. "But I wouldn't call it a major inconvenience. It's a nuisance-level problem."

McClellan said the CMS and the Social Security Administration regularly share data about Medicare beneficiaries -- to start and stop drug premium withholding, for instance.

"In this case, because of a data processing error, we sent data to Social Security for these 231,000 beneficiaries along with other requests for stopping withholding status this past month," he said.

Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, sent McClellan a letter yesterday saying he is "troubled" by the error. Grassley asked for a report on what happened and advised the agency to recover the erroneous refunds in small, "manageable" increments over "as long a period as possible."

"Some may not realize the error that was made and may not have put the money aside," he wrote.