House Republicans calling for investigation into improper ACA enrollment

Leading Republicans from the House Ways and Means, Energy and Commerce, and Judiciary committees want the Department of Health and Human Services (HHS) and the Government Accountability Office to review enrollment in Affordable Care Act (ACA) plans.

The lawmakers are concerned brokers are improperly enrolling individuals in ACA plans by incorrectly filling out enrollees' income so they receive the maximum subsidy from benchmark plans.

“Individuals enrolled in this income cohort nationwide exceed the total number of potentially eligible individuals,” one letter reads. “This problem appears to be particularly acute in certain states, with some reporting hundreds of thousands, and, in one case, millions more individuals enrolled in these plans than are reasonably likely to be eligible.”

Zero-premium plans are paid by taxpayers as a result of increased subsidies for insurers through 2025 from Democrat-passed laws, the lawmakers wrote. They point to a report from the Paragon Health Institute finding improperly enrolled individuals in zero-premium plans account for $15 billion to $20 billion per year, with the figure potentially rising to $26 billion.

The report revealed there are nine states with enrolled individuals reporting income above the federal poverty line exceeding the number of potential enrollees. In Florida, there are four times as many enrollees reporting income in that range.

Enrollees that receive the maximum subsidy receive a plan with lower cost-sharing, and the IRS only recaptures a “portion” of the excess subsidy, the Paragon institute explained. Brokers only need basic information like a name, date of birth and address to enroll people in the wrong coverage. Brokers often earn commission when a person switches plans.

“While individuals may reasonably misestimate their income at any given point, the scale of the problem suggests malicious intent from certain actors involved,” the letter continues. “There have been documented issues with broker behavior surrounding these 'zero-premium' plans, with reports and litigation detailing practices of consumers having their plan switched by such brokers without their consent.”

Oscar Health, which operates in Florida, says it's aware of and keeping an eye out for improper enrollment as outlined by the lawmakers.

The company recently recorded its first quarterly profit, has benefited from enhanced subsidies and is bullish on the ACA’s future, as the company explained during its recent investor day. Oscar Chief Insurance Officer Alessa Quane told Fierce Healthcare in a June interview it takes reports of people getting switched to plans without their knowledge or consent seriously.

“We've definitely been hearing about this in the market from a number of sources,” she said. “When we look through our information, and we find hints of these sorts of things, we take action right away. I would say there's probably some heightened alert, if you will, given what we're hearing in in the industry.”

Quane said the insurtech has suspended brokers’ commissions, forwarded bad actors to federal regulators and the authorities and terminated relationships with brokers altogether. The issue is under investigation by Oscar.

“The impact is a shift in relative risk adjustment scores, with the plans enrolling these members having lower risk scores, owing more to others—or in the case of Oscar, reducing what they owe,” said healthcare strategist Ari Gottlieb in a LinkedIn post. “Basically, everyone wins, aside from taxpayers and the victims (who might have to pay back subsidies).”

It appears fraudulent enrollment is more common in states where there is no Medicaid expansion and in states that use the federal exchange, HealthCare.gov, Paragon said.