By Robert B. Barnett Jr., J.D.
Enrollment fraud in the health insurance marketplace for the 2015 plan year was relatively small—about 1 percent of plan participants, a Government Accountability Office (GAO) report determined. Nevertheless, the GAO suggests that the total could be reduced further if the marketplace improved its methods for identifying deceased individuals prior to automatic enrollment, which currently relies on voluntary family notification (GAO Report, GAO-18-169, December 2017).
All marketplaces, including the federally facilitated marketplace (FFM), are required under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) to verify applicant information to determine eligibility for enrollment and subsidies. For example, the FFM checks Medicaid eligibility, validates Social Security numbers, verifies citizenship status, and verifies household income and family size. The GAO’s analysis of plan year 2015 revealed that about one percent of enrollments were improper or fraudulent because of an unresolved issue related to citizenship, status as a national, unlawful presence, false Social Security number, or death. When information that was provided to the FFM does not match the data source, the FFM generates an inconsistency, and the applicant is notified that he or she has 90 days to resolve the inconsistency. The GAO suspects (based on previous analysis about the application process) that, if the FFM is not corroborating information with the appropriate agency, some applicants with data-matching inconsistencies may be receiving coverage fraudulently.
Citizenship status. Of the 8.04 million applicants, about 12 percent had inconsistencies related to citizenship, status as a national, or lawful presence. Of the 961,000 applicants with an inconsistency, the GAO found that 75 percent were not queried against the DHS SAVE records as they should have been largely because of the poor quality of information submitted by applicants, including missing immigration numbers that the DHS SAVE program requires. FFM efforts to resolve those inconsistencies, including by using additional documents requested from applicants, have been largely successful, with 95.5 percent of inconsistencies either being satisfied or the applicants were rejected. The remaining inconsistencies, less than 1 percent of the total, remained open at the end of 2015.
Social Security numbers. More than 96 percent of applicants submitted consistent SSN information. About 1.7 percent of applicants submitted information that was inconsistent with SSN records (the remainder submitted no SSN information). The GAO found that one-third of those applicants with an SSN inconsistency for plan year 2015 still had an open inconsistency at the end of the year. The open inconsistencies could have resulted from FFM’s failure to take to steps to resolve the inconsistency or it could have resulted from a late-year application that was not resolved by year’s end. In an undercover operation for an earlier report, the GAO was able to successfully enroll and receive coverage both by using no SSN and by using an invalid SSN. Although an SSN is not required for plan eligibility, the FFM should resolve data-matching inconsistencies with corroborating information from the appropriate agencies to reduce fraud. In March 2017, system functionality upgrades were deployed to help FFM update SSNs. Also, new procedures were begun in May 2017 for verifying SSNs. Both steps should help further reduce fraud.
Death. Under HHS regulations, if death occurs, enrollment in a plan through FFM ends. FFM, however, does not always terminate enrollment on the date of death. Of the 19,000 who died in 2015, about 17,000 received or maintained coverage with an associated subsidy after their date of death. In fact, about 1,000 policies actually began after the date of death. In the majority of cases in which coverage was continued, FFM had automatically submitted an application to reenroll the applicant. FFM checks applicants’ information against SSA’s full death file to identify deceased individuals before enrolling them for coverage and subsidies. Periodic checks, however, are not done throughout the year, and the FFM does not recheck the death file before the automatic reenrollments. Instead, FFM relies on third parties, such as family members, to report deaths. When an applicant’s policy is terminated for nonpayment (because the applicant is dead), the system will still provide a full month of coverage after death. Even after the applicant dies, however, the policy will continue as long as someone else pays the premium.
Recommendation. The GAO concluded that the FFM is generally doing a good job guarding against fraud. Where gaps exist, CMS has taken steps to plug those gaps. The FFM, however, can do a better job with monitoring enrollee deaths. As a result, the GAO has recommended that CMS reassess its approach to tracking deaths, including by rechecking the full death file periodically after enrollment to identify deaths prior to automatic enrollment. HHS concured with the recommendations.
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