Grace-Marie Turner of the Galen Institute said states should send money recovered from exchange IT vendors to the federal government. (House hearing screen capture)

Some Republicans want to put the U.S. Department of Justice in charge of any suits against vendors that may have shortchanged failed public health insurance exchange programs.

The department would get to file any suits based at least in part on allegations of fraud, waste or abuse at the vendors in federal court. If the department won settlement or judgment awards, it would have to turn any cash recovered over to the U.S. government.

See also: PPACA World: Legal work heats up

Members of a House Energy and Commerce Committee subcommittee considered the bill containing that proposal — H.R. 4262, the Transparency and Accountability of Failed Exchanges Act bill — today at a hearing in Washington that was streamed live over the Web.

Rep. Rick Allen (R-Ga.) introduced H.R. 4262 in December. In addition to the provision putting the Justice Department in charge of failed Affordable Care Act (ACA) exchange vendor suits, the bill would require a state to audit its failed exchange and send the results of the audit to the federal government. The bill also would put the federal General Services Administration in charge of disposing of the assets of failed ACA exchange programs.

The GSA could auction off a failed exchange program’s computers, copiers and other property, transfer the property to federal agencies for those agencies’ official use, or lease the property to other entities.

Hawaii, Nevada and Oregon are examples of states that tried to set up state-based, state-built ACA exchange programs but ended up shifting to using HealthCare.gov, the ACA exchange enrollment and administration system built by the U.S. Department of Health and Human Services. HHS set up the system to provide ACA exchange services in states that were unable or unwilling to do so.

Related: PPACA creeps into state and local courts: 5 early cases

Grace-Marie Turner, president of the Alexandria, Va.-based Galen Institute, praised the bill at today’s hearing.

HHS has given states $5.5 billion in ACA exchange development grants, Turner said.

“States have decided they can sue the [information technology] managers who set up their websites, when their websites have failed,” Turner said. “They then want to keep that money. That’s an abuse of taxpayer money.” 

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Other proposals

Witnesses also talked about several other proposals, including H.R. 3463, the Aligning Children’s Dental Coverage Act bill, and a draft bill, which does not yet have a bill number, that would toughen the requirements for consumers who try to buy individual major medical coverage outside the ordinary open enrollment period.

H.R. 3463, the children’s dental insurance bill, would loosen an ACA children’s dental benefits requirement.

The ACA classifies children’s preventive dental coverage as a benefit that any individual or major medical or small-group major medical plan sold since January 2014 must cover.

HHS lets states free individual and small-group major medical coverage issuers from the need to provide the dental benefits if consumers can buy stand-alone dental coverage for their children through the ACA exchange.

H.R. 3463 would let a major medical issuer leave out children’s dental benefits as long as an insurer was offering children’s dental coverage either through the ACA exchange in a community or in the off-exchange market.

Lawmakers also considered a proposal to require consumers who are applying for individual major medical coverage outside the regular enrollment period to document that they qualify for special enrollment periods before they get their health coverage.

Federal regulators, state regulators and insurers developed the special enrollment period to keep healthy consumers from seeing ACA medical underwriting restrictions as an invitation to wait until they get to pay for coverage. Consumers are supposed to be able to buy individual coverage on a true guaranteed-issue basis only from Nov. 1 through Jan. 31. Consumers who want a special enrollment period are supposed to show that they have moved, lost access to employer coverage, or have some other good excuse for buying coverage.

Rep. Frank Pallone, D-N.J., the highest-ranking Democrat on the committee, said increasing special enrollment period documentation requirements is a good idea, but that people should be able to have coverage for a short period while they are getting the required documentation.

If consumers have to provide documentation before getting covered, that could lead to gaps in access to care, Pallone said.

“Cancer patients can’t wait a month to get health treatments,” Pallone said.

Pallone said overly tight documentation requirements back also backfire.

Urban Institute analysts have estimated that, even today, only about 15 percent of the people who qualify for special enrollment periods are applying for them, Pallone said.

“I worry that stricter documentation requirements could deter all but the sickest individuals” from applying, Pallone said.

In that case, instead of reducing the odds that a few sick people might lie about eligibility for special enrollment periods, the requirements could increase the percentage of special enrollment period enrollees who are very sick, Pallone said.

See also:

View: Gaming of Obamacare threatens the whole program

View: That Obamacare death spiral isn’t panning out

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