Note 11. Entitlement Benefits Due and Payable

Entitlement Benefits Due and Payable represent benefits due and payable to the public at year-end from entitlement programs enacted by law. The Medicare and Medicaid programs are the largest entitlement programs in the HHS and comprise all of the HHS Entitlement Benefits Due and Payable.

Entitlement Benefits Due and Payable at September 30, 2007 and 2006, are summarized in the following schedule:

Medicare benefits payable consists of a $35,063 million estimate ($36,628 million in FY 2006) by CMS Office of the Actuary of Medicare services incurred but not paid as of September 30, 2007.

Medicare Advantage and Prescription Drug Program benefits payable consist of a $2,653 million estimate ($1,683 million in FY 2006) for amounts owed to plans relating to risk and other payment related adjustments in addition to $982 million owed to plans after the completion of the Prescription Drug Payment reconciliation.

The Retiree Drug Subsidy (RDS) consists of a $2,906 million estimate ($2,377 million in FY2006) of payments to plan sponsors of retiree prescription drug coverage incurred but not paid as of September 30, 2007. As part of MMA (incorporated in Section 1860D-22 of the Social Security Act), the RDS program makes subsidy payments available to sponsors of retiree prescription drug coverage. The program is designed to strengthen health care coverage for Medicare-eligible retirees by encouraging the retention of private, employer- and union-based retiree prescription drug plans.

During FY 2006, CMS implemented the State to Plan Reconciliation Demonstration project under the authority of Section 402 of the Social Security Amendments of 1967 in order to ensure appropriate care continuation for dual eligibles and other low-income subsidy entitled beneficiaries. As of September 30, 2006, the liability of $136 million relating to the demonstration project represents estimated amounts to be paid to States for costs incurred in assisting dual eligible beneficiaries to transition to the Medicare Part D Prescription Drug Benefit. As of September 30, 2007, no liability exists because the project was completed during FY 2007.

Undocumented aliens consist of a $163 million estimate ($170 million in FY 2006) of emergency health services furnished by providers to eligible aliens but not paid as of September 30. As part of the MMA, Section 1011, Congress mandated HHS directly pay hospitals, physicians, and ambulance providers for their otherwise un-reimbursed costs of providing services required by section 1867 of the Social Security Act related to undocumented aliens.

Medicaid benefits payable of $19,414 million ($19,182 million in FY 2006) is an estimate of the net Federal share of expenses that have been incurred by the States but not yet reported to CMS as of September 30, 2007. An estimated SCHIP benefits payable of $289 million has been recorded ($284 million in FY 2006) for the net Federal share of expenses that have been incurred by the States but not yet reported to CMS as of September 30, 2007.

A liability reported at September 30, 2006, for Katrina relief waivers of $704 million which consisted of $543 million in actual services rendered but not paid plus a $161 million estimate for services incurred but not paid by eligible States with respect to evacuees who did not have other coverage for assistance through insurance under title XIX of the Social Security Act does not exist as of September 30, 2007. Services were rendered by September 30, 2006, and the payments were made during FY 2007. CMS has this authority under an approved Multi-State Section 1115 Demonstration Project of Public Law 109-171, Subtitle C.

Report Date: November 15, 2007

AFR Section II Links:

• Message from the Chief Financial Officer
• Office of Inspector General Transmittal
• Independent Auditor's Reports
• Financial Statements and Notes
• Required Supplementary Stewardship Information
• Required Supplementary Information