GAO Report Recommends Better Fraud Tracking for ACA Marketplaces

The health insurance marketplace’s application/verification process is vulnerable to fraud, and the marketplace not resolve about one-third of applicant inconsistencies for coverage year 2014, involving $1.7 billion in associated subsidies, according to a report from the US Government Accountability Office (GAO).

Following a Congressional request that the GAO examine the enrollment process and verification controls of the Patient Protection and Affordable Care Act (ACA)’s federal Marketplace, the GAO issued a report with 8 recommendations, including that CMS consider analyzing outcomes of the verification system, take steps to resolve inconsistencies, and conduct a risk assessment of the potential for fraud in Marketplace applications. CMS operates the federal Marketplace in approximately two-thirds of the states.

The ACA provides subsidies to people purchasing private health insurance plans who meet certain income and other requirements that are estimated (with related spending) to cost $37 billion for fiscal year 2015, rising to $105 billion for fiscal year 2025, and totaling $880 billion for fiscal years 2016 to 2025. The GAO report explained that because subsidy costs are contingent on being eligible for coverage, enrollment controls that help ensure only qualified applicants are approved for subsidies are key to determining federal expenditures under the ACA. The federal “data hub” is central to enrollment controls and provides a way to check applicant-provided information against a variety of data sources.

The report was based on federal Marketplace data from January 2014 to February 2016 and examined the extent to which applicant-submitted information is verified through an electronic system, and the extent to which the federal Marketplace resolved “inconsistencies” in which applicant information does not match information from federal data sources. It also described, by means of undercover testing and related work, potential vulnerabilities to fraud in the federal Marketplace’s application, enrollment, and eligibility verification processes.

“A greater understanding of the effectiveness of the data hub process could inform assessments about effectiveness of enrollment and eligibility controls, while still incorporating procedures that seek to safeguard applicant information,” the report noted, and recommended a set of actions CMS should take to better oversee the efficacy of the ACA’s enrollment control process; to better monitor costs, risk, and program performance; to assist with tax compliance; to strengthen the eligibility determination process; to provide applicants with improved customer service and up-to-date information about submission of eligibility documentation; and to better document agency activities.