GAO: Verification gaps leaves ACA enrollment susceptible to fraud

Federal officials' failure to appropriately verify consumers enrolling in Affordable Care marketplace plans underscores the agency's "passive approach to fraud" that compromises billions in federal spending, according to a review by the Government Accountability Office (GAO).

In its review of ACA marketplace enrollment data during 2014 and 2015, the GAO found that the Centers for Medicare & Medicaid Services (CMS) does not track or aggregate the outcomes of enrollee verification queries through the agency's "data services hub," an approach that could offer critical insight into potential fraud. Furthermore, the GAO found CMS has an ineffective process for resolving discrepancies that arise during the enrollment process, such as inconsistencies with Social Security numbers, incarceration and pertinent tax information, leaving approximately $1.7 billion in federal spending susceptible to fraud.

As consumers enroll in ACA marketplace health plans, their information is verified against databases from the Social Security Administration, the Internal Revenue Service (IRS), and the Department of Homeland Security. But investigators found millions of inquires did not match agency records, including nearly 8.2 million inquiries in 2014 in which citizenship verification remained in question, and nearly 30 million instances in 2015 in which the IRS could not confirm tax information, a key element in determining subsidies for marketplace enrollees.

Furthermore, the GAO found 431,000 applications still had unresolved verification issues several months after the 2014 open enrollment period closed, including 35,000 applicants with Social Security number inconsistencies, and 22,000 potentially incarcerated applicants.

The GAO also revisited its creation of 12 fake marketplace applications in 2014, noting that 11 were approved and given subsidies without providing supporting documentation. Last year, the GAO reported that those phony applicants were re-enrolled in 2015.

"Adopting a more strategic, risk-based approach could help identify fraud vulnerabilities before they could be exploited in the enrollment process," the GAO wrote in its report. "A comprehensive risk assessment identifying the potential for fraud in the enrollment process--which thus far has not been performed--could inform evaluations of program integrity and the effectiveness of enrollment and eligibility controls."

The agency provided eight recommendations to CMS, including conducting a fraud risk assessment and creating a written plan for resolving enrollee inconsistencies. Although the Department of Health and Human Services generally concurred with the recommendations, the GAO noted the agency had no specific plans or actions in place to resolve the issues outlined in the report.

This week's report echoes similar concerns highlighted by the Office of Inspector General last year, in which investigators found deficiencies in certain tools used to verify information provided by marketplace applicants. has also weathered ongoing criticism for various IT flaws, including a recent report that showed CMS leadership failed to respond to key inadequacies during the 2013 launch.

To learn more:
- here's the GAO report