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HHS OIG says skipped group coverage access checks

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As late as December 2014, the exchange system still lacked a standard process for catching premium tax credit applicants who gave information about access to employer-sponsored coverage that was different from the story told by other data sources, according to officials at the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG).

The Patient Protection and Affordable Care Act of 2010 (PPACA) makes exchange plan premium tax credits available only to consumers who lack access to affordable employer-sponsored health coverage with a minimum value.

PPACA originally required employers and health insurers to send workers coverage verification notices, or 1095-B and 1095-C notices, starting with the 2014 plan year. When the Obama administration put off requiring employers and insurers to send the notices, administration officials said the exchange system would set up an alternative process to keep tax credit applicants from lying about lack of access to employer coverage.

The Centers for Medicare & Medicaid Services (CMS), the part of the U.S. Department of Health and Human Services (HHS) in charge of the exchange program, was supposed to come up with a manual system for handling conflicts between what applicants said about access to employer coverage and what other government data sources, such as income tax filings, implied about the applicants’ access to employer coverage. CMS officials told the HHS OIG investigators that they were starting by emphasizing inconsistencies that affected a larger number of applicants, that they had a temporary manual process in place, and that applicants who lied on the applications are subject to possible prosecution for perjury.

See also: Exchange plan users face calls about ‘inconsistencies’

When HHS OIG investigators visited the offices of Serco Inc., the company in charge of processing exchange plan applications, in December 2014, they found that, even at that point, the company was not routinely comparing what applicants had said about access to employer coverage to information from other data sources.

“We confirmed that CMS had not implemented the interim manual process,” HHS OIG officials say in a new report on exchange program internal controls. ”Serco officials stated that they were still waiting for procedural guidance from CMS to implement a process for resolving the inconsistencies.”

HHS OIG investigators based the report partly on a review of the files of 45 applicants who were deemed eligible to enroll in exchange qualified health plan (QHP) coverage from Jan. 1, 2014, through April 19, 2014.

The HHS OIG team also looked at the files of 20 applicants who had problems with applications submitted from October 2013 through December 2013. The team looked only at internal controls at the federally facilitated marketplace (FFM) exchanges managed by HHS, not at the state-based exchanges. The team identified possible weaknesses in exchange program procedures for catching wrongdoing, but they did not identify any actual cases of wrongdoing.

See also: Watchdog warns states may be misusing PPACA funds

The team found that exchange systems seemed to resolve apparent inconsistencies between exchange plan application information and information from other sources correctly most of the time, but that the system ran into occasional problems.

Fourteen sample applications reviewed had income inconsistency problems, for example. The investigators found that the exchange system seemed to resolve 12 of those problems correctly but may have had problems with two. The exchange system let one of the 14 applicants get the premium tax credit even though his unemployment benefits statement showed he earned too little to qualify for the tax credit, officials say.

In some cases, officials say, the exchange system let applicants get exchange coverage without adequate documentation, based on promises the applicants would make good-faith efforts to get the coverage, and the exchange let the coverage stay in place as late as December without checking to see whether the applicants had provided the documentation they had promised to provide.

See also: What agents have to know about IRS PPACA problems