By Jeffrey H. Brochin, J.D.
An OIG review of financial assistance payments to Qualified Health Plan (QHP) issuers pursuant to the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), has determined that out of 140 policies sampled, CMS accurately authorized financial assistance payments for 109 policies; however, financial assistance payments for 26 policies were not accurately authorized in accordance with Federal requirements. For the remaining five policies, CMS authorized potentially improper financial assistance payments to QHP issuers that did not provide documentation to support that enrollees had paid their premiums, a requirement for receiving these payments. On the basis of the sampling, it is estimated that CMS authorized improper financial assistance payments totaling almost $434.4 million for 461,127 policies that were not in accordance with federal requirements and authorized potentially improper financial assistance payments totaling almost $504.9 million for 183,983 policies during the 2014 benefit year (OIG Report, No. A-02-15-0213, August, 2018).
ACA and financial assistance to QHP issuers. The ACA established marketplaces to allow individuals and small businesses to shop for health insurance in all 50 States and the District of Columbia. CMS operates the federal marketplace and is responsible for reviewing, approving, and generating financial assistance payments, i.e., advance premium tax credits and advance cost-sharing reductions, for the federal and state-based marketplaces. During the 2014 benefit year, CMS used an interim process for approving financial assistance payments. The OIG previously reviewed CMS’s internal controls under its interim process to ensure the accuracy of aggregate financial assistance payments and determined that the controls were not effective.
Why OIG did the study. Under the ACA, a marketplace allows insurance companies (issuers) to offer individuals QHPs, and enrolls individuals in those plans. CMS generates financial assistance payments (i.e., advance premium tax credits (APTCs) and advance cost-sharing reductions (CSRs)) for the federal and state-based marketplaces. The objective of the review was to determine whether CMS accurately authorized financial assistance payments in accordance with federal requirements for policies associated with individuals enrolled in QHPs operating through the federal marketplace.
How OIG did the review. The OIG reviewed a stratified random sample of 140 policies for individuals who enrolled through the federal marketplace and for whom financial assistance payments were made to QHP issuers during the 2014 benefit year. They obtained documentation CMS and QHP issuers supporting these payments.
What OIG Recommends and CMS’s Comments The OIG recommends that CMS (1) work with the U.S. Department of the Treasury (Treasury) and QHP issuers to collect improper financial assistance payments, which are estimated to be almost $434.4 million, for policies for which the payments were not authorized in accordance with federal requirements; (2) work with Treasury and QHP issuers to resolve the potentially improper financial assistance payments, which are estimated to be almost $504.9 million, for policies for which there was no documentation provided to verify enrollees had paid their premiums; and (3) clarify guidance with QHP issuers on federal requirements for terminating an enrollee’s coverage when the enrollee fails to pay his or her monthly premium.
CMS partially concurred with the first and second recommendations and concurred with the third recommendation. CMS stated that it will not require QHP issuers to return improper financial assistance payments for policies on which issuers acted in good faith, nor will it resolve potentially improper financial assistance payments for issuers that are out of business. CMS also provided documentation to support some payments to QHP issuers that were identified as improper in the draft report. After reviewing the documentation, the OIG revised some findings but maintained that their recommendations are valid.
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