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By Sara Hansard
July 16 — Allowing Affordable Care Act enrollees to use “good faith” efforts to verify their eligibility for health insurance subsidies may contribute to less control in stopping fraud, the Government Accountability Office's director of forensic audits testified July 16.
The policy of the Centers for Medicare & Medicaid Services has been to allow enrollees to submit only one document to support their application for ACA subsidies regardless of how many documents were requested, Seto J. Bagdoyan said. “That can create a control gap and raise questions about their eligibility for participation,” he said at a hearing before the Senate Finance Committee.
The hearing addressed a GAO “secret shopper” audit that resulted in 11 of 12 fake applicants being enrolled in subsidies throughout 2014 and re-enrolled for 2015.
However, Bagdoyan said under questioning from committee ranking member Ron Wyden (D-Ore.) that the control testing from January 2014 through April 2015 can't be used to generalize the fraud rate for the more than 10 million Americans who received coverage under the law. Bagdoyan also said the GAO hasn't uncovered any real individuals who fraudulently obtained health coverage using the techniques employed by GAO investigators.
The GAO findings were similar to a report it issued in July 2014, with the additional findings that the fake applicants kept their coverage and about $30,000 in subsidies through 2014 and were automatically re-enrolled for 2015. The federal HealthCare.gov marketplace terminated subsidized coverage for six of the 11 fictitious applicants in early 2015, but coverage was restored for five of the applicants, with larger subsidies, after they sought to restore it, Bagdoyan testified.
“Since the federal exchange was first implemented, success has been measured by the number of applicants that have signed up for insurance,” Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said. “However, with these findings from GAO, it seems obvious, at least to me, that the administration has been preoccupied with signing up as many applicants as possible, ignoring fraud and integrity issues along the way.”
Bagdoyan said during the hearing that “the CMS explanation has been that they have to balance the ease of access to coverage with program integrity controls.” Based on the GAO's undercover work, “As of now I think the balance would probably favor access over program integrity.”
Hatch said that as the Finance Committee considers the nomination of acting CMS Administrator Andy Slavitt to be CMS administrator, he would ask Slavitt about the investigation “and why CMS has been interfering with our oversight efforts.”
In an e-mail response to Bloomberg BNA July 15, Meaghan Smith, Department of Health and Human Services director of communications for health care, said, “The Marketplace has a multi-layer verification process, including checking an application filer's identity and eligibility in real-time, safeguards that blocked the GAO investigators' initial attempts to enroll online. Over the last year, we have made continuous improvements to our processes and communications for those with a data matching issue as we work to bolster the integrity of the process.”
Consumers completing applications attest under penalty of perjury that the information provided is correct, according to background information provided by the HHS. The CMS ended enrollment at the end of March for about 226,000 consumers who failed to produce sufficient documentation of their citizenship or immigration status, the HHS said.
To receive advance payment of premium tax credit subsidies, applicants must agree they will file a tax return for the coverage year, and the tax credits are subject to reconciliation, the HHS said. The GAO failed to reconcile taxes for their fake applicants, the congressional watchdog said.
The health insurance subsidies and payments for the ACA's expanded Medicaid program are expected to cost $1.7 trillion over the next decade, said Sen. Tim Scott (R-S.C.). “And in the year 2025 we'll have about 31 million Americans still without coverage, perhaps after billions and billions of dollars of subsidies that have been received by people who don't deserve them,” he said.
Contractors working on HealthCare.gov only process documents submitted, and they aren't required to detect fraud, Bagdoyan said. “That would be a whole different transaction at greater cost.”
The GAO plans to issue a report in the fall with initial recommendations for improving fraud controls. The report is expected to include a forensic audit on the entire enrollee database and might include recommendations about contractors, Bagdoyan said.
The GAO findings follow a June 16 report from HHS's Office of Inspector General finding that a lack of effective internal controls prevented the federal government from determining the accuracy of roughly $2.8 billion in subsidy payments made to insurers participating in ACA marketplaces between January 2014 and April 2014.
To contact the reporter on this story: Sara Hansard in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Janey Cohen at email@example.com
The GAO's written testimony is at http://op.bna.com/hl.nsf/r?Open=shad-9yfq2b.
Information on the Senate Finance Committee hearing is at http://www.finance.senate.gov/hearings/hearing/?id=8f005d6d-5056-a055-6441-d6bbef0cdca9.
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