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Health law vulnerable to errors in coverage, federal investigators find

Federal investigators from the Government Accountability Office said Thursday that they had discovered many errors in eligibility decisions under the Affordable Care Act that had led the government to pay for duplicate coverage for some people and an excessive share of costs for others.

The investigators said some people were getting subsidies for private insurance at the same time they were enrolled in Medicaid.

In other cases, the investigators said, the government is probably overpaying because it cannot always distinguish between newly eligible beneficiaries under the Affordable Care Act and those eligible under the old rules. The federal government is paying 100 percent of the cost of Medicaid for newly eligible people, but for others it should pay a much smaller share, averaging 57 percent of the costs.

The discrepancy is potentially significant, the investigators said, because the federal government expects to spend more than $400 billion on newly eligible Medicaid beneficiaries from 2014 to 2023.

The accountability office, a nonpartisan investigative arm of Congress, described its findings in three reports to the House Energy and Commerce Committee and the Senate Committee on Finance. The reports came 10 days before millions of people will start applying for subsidized health insurance through online federal and state marketplaces, also known as exchanges.

The Obama administration, commenting on the reports, said it was stepping up efforts to “prevent duplicate coverage” under Medicaid and government-subsidized private insurance policies sold through the marketplaces. In addition, the administration said it had provided “significant training and guidance” to make sure states correctly identify new Medicaid beneficiaries for whom the federal government should pay the entire cost.

In testimony prepared for a House hearing on Friday, Carolyn Yocom and Seto Bagdoyan of the Government Accountability Office suggest that the goal of expanding coverage has sometimes been a higher priority for the Obama administration than the integrity of the program.

“The Centers for Medicare and Medicaid Services cannot identify erroneous expenditures due to incorrect eligibility determinations,” said Yocom, a director of health care studies at the accountability office. “The federal government could be paying twice — subsidizing exchange coverage and reimbursing states for Medicaid spending — for individuals enrolled in both types of coverage.”

Moreover, the auditors said, the Centers for Medicare and Medicaid Services, which runs the federal marketplace, “does not have procedures to automatically terminate subsidized exchange coverage when individuals are determined eligible for Medicaid.”

The administration said on Sept. 28 that it had started a data-matching program to help ensure that Medicaid beneficiaries would not receive subsidies through the marketplace. But the accountability office said this was not enough to minimize the potential for duplicate coverage.

In a separate study, undercover investigators from the accountability office created 18 fictitious identities and filed applications in their names. Federal and state officials approved subsidies or Medicaid coverage for 17 of the applicants, even though they used nonexistent Social Security numbers, invalid immigration document numbers, fictitious birth certificates and other counterfeit documents.

“Our undercover testing for the 2015 coverage year found that the health care marketplace eligibility determination and enrollment process remains vulnerable to fraud,” said Bagdoyan, the director of forensic audits at the accountability office.

In one case, Bagdoyan said, a fictitious applicant received subsidized insurance coverage from the federal marketplace and from two state marketplaces at the same time.

Federal and state officials “told us there is no current process to identify individuals with multiple enrollments through different marketplaces,” Bagdoyan said. Federal officials told auditors that they would “look at the risk associated with multiple coverage,” according to one of the accountability office reports.

“The undercover results, while illustrative, cannot be generalized to the full population of enrollees” in the insurance exchanges, Bagdoyan said. But the findings are potentially embarrassing for the administration, especially because Bagdoyan and his team found similar weaknesses when they conducted undercover tests in 2013-14.

The Department of Health and Human Services said that its online verification systems had thwarted the investigators’ initial attempts to enroll, and that consumers must attest to information they provide under penalty of perjury.

Consumers are not eligible for subsidies on an exchange if they have coverage from an employer that meets certain federal standards. Bagdoyan said the exchanges had allowed some people to obtain subsidies without verifying their claims that their employers offered substandard coverage.

Federal and state officials often ask consumers for documents with their applications. But “if the documentation submitted does not appear to have any obvious alterations, it would not be questioned for authenticity,” Bagdoyan said.

The accountability office found that states had made incorrect decisions about Medicaid eligibility, leading to the “enrollment of individuals with incomes exceeding Medicaid standards.” In addition, it said, the federal government continued to pay subsidies for private insurance for some people after they obtained Medicaid, and states often have difficulty determining whether Medicaid beneficiaries have other sources of coverage.

The investigators also found a significant risk that people moving to insurance on the federal exchange from Medicaid would experience gaps in coverage because their records were not transferred promptly from state Medicaid agencies to the exchange.

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