OIG Finds Ineffective Controls In The Federal Marketplace To Verify Eligibility

In a recent blog I addressed a Government Accountability Office (GAO) report that described their ability to enroll fraudulently in health plans and qualify for subsidies. Now the Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a report that reinforces the GAO finding that Federal marketplace’s internal controls has not been fully effective in ensuring that individuals met eligibility for enrollment in qualified health plans (QHPs) and for insurance affordability programs. The marketplace was set up by the Federal Government, under the Affordable Care Act and operated by the Centers for Medicare & Medicaid Services (CMS), permit people to buy health insurance in States that did not set up their own marketplaces. The OIG checked to see whether the marketplace properly determined whether applicants were eligible to purchase health care coverage through QHPs and for two insurance affordability programs: the premium tax credit and cost-sharing reductions. They also examined the marketplace’s process for resolving inconsistencies in applicant information.

The OIG found some controls were effective, such as the controls for verifying applicants’ incarceration status. However other controls, found by the GAO, were not effective in verifying eligibility and subsidies. The proper controls means making a determination about an applicant’s eligibility based upon available data sources and this was found to be flawed. This suggests that the Federal marketplace cannot ensure that the applicant eligibility for enrollment in a QHP and for insurance affordability programs. It also means that the amounts of the advance premium tax credit and cost-sharing reductions may not be determined correctly. The OIG made fourteen recommendations to CMS that fell into three areas:

1. The OIG called for CMS to improve the marketplace’s internal controls to address specific deficiencies related to verifying an applicant’s eligibility or resolving any inconsistencies in accordance with Federal requirements. This included that the marketplace needs to enhance the design of its system to resolve inconsistencies related to employer-sponsored insurance; and correct a design error in its system to be able to adjust the amounts of financial assistance payments for annual household income inconsistencies.
2. For the marketplace to re-determine eligibility for the sample applicants that the OIG reviewed in their audit, such as if citizenship was not resolved properly, the marketplace should have to re-determine eligibility for enrollment in a QHP.
3. Improve procedures related to the resolution of inconsistencies, such as ensuring that inconsistency periods are no longer extended indefinitely, as well as having CMS resolve inconsistencies related to annual household income by using the same 10 percent threshold used to verify applicants’ attested annual household income.

The OIG noted that without correcting internal control deficiencies, ensuring applicant eligibility will remain a problem and the amount of the premium tax credit or cost-sharing reduction may be determined incorrectly. CMS concurred with all three of our recommendations and provided information on actions that the agency had taken or planned to implement to address OIG’s recommendations.