Medicare Snafu Sends $50 Million to Recipients

Aug. 23, 2006 — -- Ninety-one-year-old Gertrude Orton became completely confused when a letter arrived from the Social Security administration that contained reimbursement for her Medicare premium and notification that her fees would no longer be deducted from her Social Security payments.

"Well, I was kind of surprised. I didn't really understand," she said.

Orton, a relative of an ABC News producer, is not the only one who's confused.

Medicare admits that someone in the organization "pressed the wrong key" on a computer, sending bad information to 230,000 people, with reimbursement checks averaging $215 for a total of $50 million.

The government now wants the money returned and is offering payment plans to ease the financial burden for those on a fixed income.

The glitch will not affect insurance coverage for those who received the reimbursements and the halts in fees.

"We have taken steps already to make sure that this processing error did not cause any disruption in beneficiary coverage, and to make sure that their premium withholding is restarted as soon as possible," said Dr. Mark McClellan at the Centers for Medicare and Medicaid Services.

System in Need of Change?

This is the latest embarrassing headache for managers of Medicare's new prescription drug benefit program.

When it launched in January, hundreds of thousands of seniors couldn't get their medicines because of computer problems and sign-up difficulties.

Advocates for seniors say this incident is further proof that the new drug benefit program is too complicated and should be reworked by Congress.

"Go back to the lessons that we have learned from Medicare over the years, that simplicity works," said Paul Precht of the Medicare Rights Center

Medicare said those who received the letters and faulty checks make up less than 1 percent of those using the drug benefit.

"Why would Social Security make a mistake like that?" Orton said. "I can't understand that."

But Orton said she could return the funds easily. She hasn't spent the money and said she'd let the government take it back.