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Regulation and Compliance > Federal Regulation > IRS

Watchdogs to CMS: Cut subsidies for exchange deadbeats

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The Centers for Medicare & Medicaid Services (CMS) is disagreeing with its watchdog agency about which entity should reconcile what health insurers and consumers say about exchange plan premium tax credit subsidy payments.

Officials at the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) have described the dispute in a report on how CMS runs the Patient Protection and Affordable Care Act (PPACA) premium tax credit program.

See also: Watchdog: PPACA exchange payment system is a mess

PPACA drafters created the exchange system to help consumers shop for qualified health plan (QHP) coverage, and they created the premium tax credit program to help moderate-income consumers pay for QHP coverage. Exchange plan enrollees usually end up having to pay at least part of the cost of the premiums.

During the 2014 benefit year, CMS had no process in place for cutting off premium tax credit subsidy payments for QHP enrollees who failed to pay their bills, HHS OIG officials said in the report.

CMS also had no process in place for telling the Internal Revenue Service (IRS) about the subsidy payments it was making, officials said.

HHS OIG said CMS should establish procedures for calculating the subsidy payments without relying on insurers’ attestations that the enrollees have paid their premiums, officials say.

CMS should also find a way to share premium tax credit payment data with the IRS throughout the year, to help the IRS verify what consumers say about the subsidy payments on their 1095-A forms, officials said. 

See also: Last-minute filers narrow PPACA tax credit reporting gap

CMS officials told HHS OIG that they agree that they ought to pay subsidies only for consumers who have paid their QHP premiums, but they said the IRS is the agency responsible for comparing what insurers say about the subsidy payments with what consumers report on the 1095-A forms.

Under a memorandum of understanding between CMS and the IRS, CMS simply sends the IRS the information the IRS to make the comparisons, CMS officials said.

HHS OIG officials said they still think CMS needs to do a better job of sending subsidy payment information throughout the year, because the IRS needs for CMS to have an effective process in place to ensure that the premium tax credit payments went only to enrollees who had paid their QHP premiums. 

See also:

HHS OIG says skipped group coverage access checks

HHS watchdogs to focus on PPACA, other health programs

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