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Watchdogs: PPACA exchanges had lousy walls in 2014

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The managers of the Patient Protection and Affordable Care Act (PPACA) public exchange system are trying to prove two federal watchdog agencies wrong and show that they are capable of policing the exchange enrollment process.

The U.S. Government Accountability Office (GAO) today put out a report blasting the Centers for Medicare & Medicaid Services (CMS) efforts to keep the process honest for the first PPACA exchange plan coverage for 2014.

See also: Sebelius: The exchanges really will open Oct. 1

GAO investigators looked at verification documents for 2014 PPACA exchange plan enrollments in April 2015.

Seen in that light, “CMS has assumed a passive approach to identifying and preventing fraud,” Seto Bagdoyan, a GAO director, writes in a summary of GAO investigators findings. “CMS relies on a contractor charged with document processing to report possible instances of fraud, even though CMS does not require the fraud detection capabilities.”

Bagdoyan cites charges from earlier GAO reports, in which investigators found that — the exchange enrollment system that CMS runs for the U.S. Department of Health and Human Services (HHS) — provided subsidized coverage for 11 of 12 fictitious GAO applicants.

Based on GAO data, it looks as if CMS had failed to resolve application inconsistencies, or conflicts between information on exchange applications that are available from other information sources, for about 431,000 exchange plan enrollees as of April 2015, Bagdoyan writes.

CMS has still not performed a comprehensive fraud risk assessment of the PPACA enrollment and PPACA tax credit subsidy eligibility determination processes, Bagdoyan said.

Investigators at another agency, the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG), have recently completed two reports on “internal controls,” or basic application review processes, at the state-based PPACA exchange programs in Minnesota and Washington state.

The HHS OIG investigators found that the exchanges performed some reviews well for 2014, with Washington state doing a good job of verifying whether applicants were incarcerated, according to officials in the Washington state report.

But neither exchange always properly determined eligibility for insurance affordability programs, and, in one case, the Minnesota exchange’s systems for verifying application information reasonably was so weak that one sample file investigators reviewed indicated that the applicant had a total annual income of $2.3 billion, officials say.

CMS has argued that many of the watchdog agency findings are out of date, and that the exchange system fixed many of the problems by the second or third annual enrollment periods.

But the watchdog reports come on the heels of insurance company allegations that the public exchange system is still doing a worse job than off-exchange individual health insurance distributors of verifying whether consumers are eligible for special enrollment periods (SEPs), or for opportunities to buy coverage after the end of the annual open enrollment period.

CMS announced Wednesday that it now will require consumers applying for SEPs through to document that they really are eligible for the SEPs, rather than letting many of those applicants qualify for SEPs by “attesting,” or swearing, that they are qualified upon penalty of perjury.

“CMS will solicit feedback from consumer advocates, insurers and other stakeholders over the next few weeks on verification requirements, processes and acceptable documentation,” CMS officials say.

See also: 

GAO: HHS took too much security risk when it launched

Watchdog: IRS deployed PPACA system before completing full security checks


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