Health Reform WK-EDGE Federal marketplace properly determined eligibility for enrollment in QHPs
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Tuesday, February 25, 2020

Federal marketplace properly determined eligibility for enrollment in QHPs

By Karin Hicks, J.D.

Sample results also reveal that an estimated 8 percent of individuals may have been improperly determined to be eligible for Insurance Affordability Programs.

The HHS Office of Inspector General (OIG) reviewed a sample of 110 of the 7.5 million individuals who were determined to be eligible for qualified health plans (QHPs) and for insurance affordability programs during open enrollment for coverage in 2018. The audit revealed that all 110 sampled individuals were properly determined by the federal marketplace to be eligible for enrollment in QHPs. Additionally, of the 110 sampled, 102 individuals were found to be eligible for insurance affordability programs. However, it was determined that three of the remaining eight individuals were improperly determined to be eligible for affordability programs. In addition, five of the remaining eight individuals may have been improperly determined to be eligible for the affordability programs (OIG Report, A-09-18-01000, February 7, 2020).

Purpose. Under the Patient Protection and Affordable Care Act (ACA), states have the option to establish and operate their own insurance marketplaces. CMS operates the federally facilitated marketplace in states that choose not to operate their own marketplaces. The OIG audited the federal marketplace in 2014, its first year of operation, and found that internal controls were not completely effective in identifying individuals that qualified for QHPs and insurance affordability programs. Since that time, additional eligibility verification requirements have been put into place that further complicate eligibility determination. The additional requirements and earlier audit results prompted the OIG to conduct the present audit for the 2018 coverage year.

Audit Results. The audit reviewed a sample of 110 of the 7.5 million individuals who were determined to be eligible for QHPs and for insurance affordability programs. The audit found that all 110 sampled individuals were properly determined by the federal marketplace to be eligible for enrollment in QHPs. The review also determined that 102 of the 110 sampled individuals were found to be eligible for insurance affordability programs. Three of the remaining eight individuals were improperly determined to be eligible for affordability programs. In addition, five of the remaining eight individuals may have been improperly determined to be eligible for the affordability programs.

Using these results, the OIG estimates that the marketplace improperly determined that 191,896 individuals were eligible for insurance affordability programs in coverage year 2018. These individuals received an estimated $40.8 million in monthly advanced premium tax credit (APTC) payments when they were determined eligible. The OIG also estimates that 402,207 individuals may have been improperly determined to be eligible for affordability programs. These individuals received an estimated $180.1 million in monthly APTC payments when they were determined eligible.

Recommendations. The OIG has identified two key reasons for deficiencies in the eligibility determination system: (1) CMS’s written guidance allowed the marketplace to improperly extend the income inconsistency period and did not provide specific instructions related to resolving income inconsistencies; and (2) the eligibility and enrollment system had errors in its design that did not allow for proper verification of individuals’ eligibility for affordability programs and proper expiration of inconsistencies.

In order to address the issues discovered with determining eligibility for insurance affordability programs, the OIG made several recommendations to CMS, including: (1) redetermine the eligibility of the eight sampled individuals who may or may not have been determined in accordance with federal requirements; (2) revise written guidance related to the extension of an individual’s inconsistency period when mail is returned undelivered; (3) correct an error in its eligibility and enrollment system so that the system does not incorrectly show that an individual is no longer enrolled in a QHP; and (4) improve procedures related to verifying whether individuals complied with the requirement to file a federal tax return and reconcile APTC payments received.

CMS Response: In total, the OIG made nine detailed recommendations to CMS. In written comments to the draft report, CMS concurred with our several of the recommendations and provided information on previous actions that had been taken to address some of these recommendations. CMS did not concur with three of the recommendations, most notably, the first recommendation to redetermine eligibility for the eight sampled individuals who may or may not have been determined in accordance with federal requirements.

ReportsLetters: OIGReports AgencyNews HealthInsuranceExchangeNews InsurerNews NewsFeed

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