OIG calls out ineffective processes for premium tax credit payments

The federal government did not effectively ensure that payments it made to insurers under the Affordable Care Act were used only to help enrollees pay their premiums, according to new report from the Department of Health and Human Services Office of Inspector General (OIG).

The report covered the 2014 benefit year, and it looked to determine whether the Centers for Medicare & Medicaid Services (CMS) had a process in place to ensure that advance premium tax credit (APTC) payments were made only for enrollees who paid their monthly premiums and that CMS shared APTC payment data for enrollees with the Internal Revenue Service (IRS) when making these payments.

The OIG determined that CMS did not have effective processes in place to ensure APTC payments were made on behalf of confirmed enrollees. Additionally, CMS' processes limited its ability to ensure that APTC payments made to issuers were only for enrollees who had made their premium payments. Because of this, federal funds may be at risk because funds were authorized for payment to insurers for the wrong amounts.

The OIG  recommended CMS establish policies and procedures to calculate APTC payments without relying solely on insurers' own reporting. Second, it suggested that once CMS implements the improved procedures, it maintains individual enrollee data, consult with the IRS to explore sharing APTC payment data when these payments are made throughout the year in order to allow the IRS to verify the information in a timely manner.

The CMS agreed with the first recommendation, but did not agree nor disagree with the second, the review said. CMS, however, is already taking some steps to a more streamlined process. The agency is pilot-testing an automated policy-based payment process with issuers, and the majority of federal marketplace issuers should begin using this process in early 2016, the report says.

During tax season last year, an issue brief from the Kaiser Family Foundation found that nearly all who got tax credits in 2014 had to reconcile their claims, and half of households that were eligible for APTCs in 2014 owed money to the government. And an OIG report in June found the government paid insurers almost $2.8 billion in federal subsidies for consumers' premiums and deductibles over the last two years without verifying how much it actually owes each insurer.

To learn more:
- here is the OIG report