On August 10, 2015 yet another report was released evaluating the performance of the federally facilitated marketplace (FFM), this one from the Department of Health and Human Services Office of Inspector General (OIG). The evaluation concerns the system that the FFM had in place for determining eligibility for qualified health plan (QHP) enrollment and for eligibility for advance premium tax credits (APTC) and cost sharing reduction (CSR) payments between January 1, 2014 and April 19, 2014. This covered the 2014 months of the first FFM open enrollment period, which lasted until March 31, plus the special enrollment periods that lasted up until April 19.
It is unclear why this report is being released now, more than a year after that time, or to what extent its findings remain relevant to the FFM. It appears from the response of the Centers for Medicare and Medicaid (CMS) included in the report—which was provided in May of this year—that some of the problems identified in the report have since been resolved. It also appears, however, that some issues remain, and to that extent the report may be relevant.
Enrolling In A QHP
To be eligible to enroll in a QHP, an individual must be a U.S. citizen, U.S. national, or an alien lawfully present in the United States; not be incarcerated; and meet residency standards. To be eligible for the insurance affordability options an individual must additionally meet household income requirements and not have other minimum essential coverage, such as employer-sponsored or government program coverage.
When an individual applies for QHP coverage the individual fills out an application, verifying the information requested under penalty of perjury. The marketplace uses multiple electronic data services, including the Federal Data Services Hub (Data Hub) to verify this information. The Data Hub provides access to data from the Department of Health and Human Services (HHS), the Social Security Administration (SSA), Homeland Security, and the Internal Revenue Service (IRS). Social Security numbers are verified though the Social Security Administration, as is citizenship. Citizenship and alien status can also be identified through the Department of Homeland Security. Household income is compared to information available through the IRS and Social Security Administration, as well as with information available through Equifax.
If the marketplace cannot verify information provided by the applicant through the Data Hub and other sources, it must generally give the applicant 90 days to submit satisfactory documentation to resolve the inconsistency (95 days for citizenship issues). The marketplace may extend this period if the applicant makes a good faith effort to resolve the inconsistency. During the inconsistency period, the individual may enroll in a QHP and receive ATPC and CSR payments, subject to later reconciliation.
If the marketplace cannot resolve an inconsistency involving citizenship or lawful alien status within the inconsistency period, the marketplace must terminate the individual’s QHP enrollment. If it cannot resolve an income inconsistency during the period, it should determine eligibility based on available data and adjust APTC and CSR payments accordingly.
OIG’s Evaluations
To evaluate marketplace eligibility controls, the OIG reviewed the processing of 45 randomly selected applications from the 3.7 million applicants who applied between January 1 and April 19, 2014. The OIG also revisited a sample of 45 applications it had earlier reviewed from the fall of 2013, which had resulted in 20 inconsistencies. The OIG reviewed the resolution of these inconsistencies. The sampling methodology was not designed to estimate the percentage of applicants for whom the marketplace did not properly evaluate eligibility. Under OIG audit rules, each of the 45 items sampled must be processed correctly to conclude that a control is effective — if one or more fails, the control can be judged ineffective.
The OIG determined that in four of the 45 cases in 2014 the FFM did not properly validate the applicant’s Social Security number. (Applicants are not legally required to provide a Social Security number.) In one of the cases it appeared that the FFM did not properly verify citizenship. In one of the 45 cases, the FFM improperly determined that the applicant’s income was verified when further documentation should have been required since the income was more than 10 percent below the income that was shown through available data sources. In one of the 45 cases family size was not determined correctly. The report concluded that the FFM had effectively verified incarceration status.
Resolving Inconsistencies
The OIG also determined that the FFM did not always resolve inconsistencies properly. In one of the six cases involving citizenship, for example, the FFM accepted a birth certificate without requiring a second document, as required by CMS guidelines. In one of the cases involving income inconsistencies the FFM found an individual eligible where documentation showed income less than 100 percent of poverty and in another where income appeared to be more than 20 percent above the individual’s attested income. The FFM failed to resolve inconsistencies with respect to employer coverage, and indeed is not fully capable of doing so at this point since employer reporting requirements are not yet in place.
The OIG criticized the FFM’s procedures for resolving inconsistencies. In four of 16 cases, the FFM relied on the applicants’ explanations to resolve income inconsistencies. Although the FFM identifies an inconsistency if attested income varies more than 10 percent from income as revealed by electronic data sources, the FFM will resolve an inconsistency if documentation shows that the income is no more than 20 percent off, a practice that was criticized by the OIG but defended by CMS.
During 2014, inconsistency periods were extended indefinitely because of a “good faith” effort if the applicant provided any documentation, even if it was not relevant to the inconsistency. This happened in five of the 40 cases involving inconsistencies. The FFM further failed to resolve inconsistencies in four cases where applicable data demonstrated the household income was below 100 percent of poverty.
CMS refers to resolving an inconsistency where the applicant does not submit requested data as “expiring” the inconsistency. The OIG concluded that the FFM had failed to “expire” inconsistencies in a timely fashion in some of its sample cases. This was true of the two of 30 cases involving income inconsistencies.
The OIG also determined that inconsistencies with respect to verifying whether an applicant was an Indian or eligible for non-employer sponsored minimum essential coverage were not expired. Finally, the OIG determined that applicant data and documentation relating to resolving of inconsistencies were not always properly maintained. In particular, it appeared that because of a design error, when enrollees updated their information, earlier documentation disappeared.
Recommendations Moving Forward
The OIG recommended at the conclusion of its report that CMS:
- take action to improve the FFM’s internal controls related to verifying applicants’ eligibility and resolving and expiring inconsistencies
- redetermine the eligibility of the sample applicants for whom the OIG determined that verifications of eligibility and resolutions and expirations of inconsistencies were not performed according to federal requirements; and
- improve procedures related to resolving inconsistencies.
CMS concurred in part with all three recommendations, noting that it had already resolved some of the issues identified. It also stated that it is working with its verification contractor to improve its performance. It pointed out that the Affordable Care Act (ACA) specifically allowed CMS to extend the inconsistency period during 2014, but not during subsequent years, and that it is expiring inconsistency periods during 2015 for applicants who do not resolve inconsistencies in timely fashion.
Finally, it asserted that CMS has discretion in resolving income inconsistencies and takes into account the inherent difficulty that many of the low-income enrollees have in accurately predicting their income. CMS in fact terminated 226,000 applicants for inability to establish citizenship and has adjusted the APTC eligibility for hundreds of thousands of others.
In sum, the report demonstrates again that the FFM was “glitch-prone” in 2014. It does not address, however, the extent to which this continues to be the case. It certainly does not establish the extent to which individuals who are not eligible for enrolling in a QHP or receiving APTC or CSR are in fact being allowed to do so. And it does not prove that fraud is infecting the program. But it does point out areas where the FFM could improve its early 2014 performance. Apparently it has already done so with respect to some of the issues raised.
New Announcement On Risk Corridor Data
In other news, CMS announced on August 7, 2015, that it will not be releasing risk corridor data on August 14, 2015, as earlier stated. CMS stated that it had received timely submissions of risk corridor data from virtually all QHP insurers, but that it had identified a significant number of data discrepancies, making necessary further data validation. It did not say when the risk corridor data would be released.
Collection Of Transparency Information On QHPs
CMS also reiterated on August 11, 2015, in an agency information collection activity notice, its intention to begin collecting transparency information on qualified health plans under section 1311(e)(3) of the Affordable Care Act. This section requires the exchanges to collect from QHPs:
- Claims payment policies and practices.
- Periodic financial disclosures.
- Data on enrollment.
- Data on disenrollment.
- Data on the number of claims that are denied.
- Data on rating practices.
- Information on cost-sharing and payments with respect to any out-of-network coverage.
- Information on enrollee and participant rights under this title.
- Other information as determined appropriate by the Secretary.
This information is important not only to help consumers understand coverage being offered to them, but also for regulators to ensure compliance with ACA requirements.
CMS states in the notice that it intends to implement later, in conjunction with the Labor and Treasury departments and after notice and comment rulemaking, reporting requirements for health plans other than QHPs, and may delay reporting to state exchanges as well. Later in the day on August 11 the agencies released a frequently asked question making the same statement. Section 2715A of the Affordable Care in fact states, “A group health plan and a health insurance issuer offering group or individual health insurance coverage shall comply with the provisions of section 1311(e)(3) of the Patient Protection and Affordable Care Act,” so it is unclear on what basis the agencies have authority to delay implementation and impose different requirements for non-QHP health plans.
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