Transcript for audio podcast: Early Enrollment Challenges in Health Insurance Marketplaces
From the Office of Inspector General of Department of Health and Human Services
[Marc DeGuzman] Hi, this is Marc DeGuzman, a senior auditor from Los Angeles. OIG has two new reports looking at how the new health insurance exchanges, or marketplaces, verify that people signing up for health insurance and financial assistance programs through the marketplaces are eligible to do so. We're going to hear from both report teams in this podcast - so stay tuned to hear about our second report. First, I'll be talking with Maria Silvestre, a senior auditor from San Diego. Maria, tell us about the first report, which focuses on whether marketplaces have effective internal controls in place for safeguarding enrollment.
[Maria Silvestre] Well Marc, Congress mandated that OIG review the enrollment safeguards at health insurance exchanges, or marketplaces, and issue a report by July 1, 2014. These marketplaces were created by the Affordable Care Act.
[Marc DeGuzman] Can you explain more about marketplaces?
[Maria Silvestre] Sure. There is a Federal marketplace and there are marketplaces operated by States. A marketplace is designed to be a one-stop shop where people can get information about health insurance options, including qualified health plans available through the marketplace. Qualified health plans are private health insurance plans that meet certain standards. People can also find out if they qualify for financial assistance through insurance affordability programs. People who are eligible for insurance affordability programs can receive financial assistance to help lower the cost of their premiums or deductibles. In order to buy a qualified health plan through a marketplace or obtain financial assistance, applicants must submit certain information so that the marketplaces can verify whether they are eligible.
[Marc DeGuzman] Can you describe your audit for us?
[Maria Silvestre] We focused on the Federal marketplace and 2 state-run marketplaces: California and Connecticut. We reviewed whether their enrollment safeguards and procedures, what we call "internal controls," met Federal requirements. We examined how the marketplaces verified applicants' identity and eligibility, and how they maintained eligibility data. We looked at early marketplace operations, the timeframe of October 1, 2013, through December 31, 2013, to provide an early snapshot of marketplace operations as well as to meet the July 1 reporting deadline specified in the law.
[Marc DeGuzman] Can you explain a little more what you mean by "internal controls?"
[Maria Silvestre] Sure. Internal controls operate like a first line of defense - they are processes that help make sure programs work the way they are supposed to. An internal control review is useful because it can pinpoint where operational improvements are needed to satisfy statutory requirements or program objectives.
[Marc DeGuzman] I see. So how did OIG conduct this review?
[Maria Silvestre] We interviewed marketplace officials and reviewed a statistically valid sample of applicant enrollment records. Then we looked at how the marketplaces complied with certain Federal requirements to determine an applicant's eligibility.
[Marc DeGuzman] What eligibility requirements did you look at?
[Maria Silvestre] For a Qualified Health Plan, marketplaces must verify an applicant's citizenship status or lawful presence, incarceration status, and residency. If the person applies for an insurance affordability program, the marketplace must verify additional information.
[Marc DeGuzman] What did OIG find?
[Maria Silvestre] Some internal controls, such as verifying applicants' lawful presence through the Department of Homeland Security, didn't meet Federal requirements. Some controls, such as verifying applicants' incarceration status, were effective.
[Marc DeGuzman] What caused these internal control deficiencies?
[Maria Silvestre] Marketplaces did not always have procedures in place or they didn't follow existing procedures. Also, their eligibility or enrollment systems had defects or lacked functionality.
[Marc DeGuzman] Does that mean that marketplaces improperly enrolled applicants in health plans or for insurance affordability programs?
[Maria Silvestre] This is a very important point: internal control deficiencies don't necessarily translate to enrollment problems. For example, if a marketplace did not have a control set up to verify an applicant's citizenship through the Social Security Administration, as required, the marketplace may still be able to verify citizenship if the applicant provided proper documentation.
[Marc DeGuzman] So, what is the potential effect of your findings?
[Maria Silvestre] Although the number and magnitude of deficiencies varied for each marketplace, the deficiencies may have limited the marketplaces' ability to prevent the use of inaccurate or fraudulent information when determining eligibility of applicants for enrollment in Qualified Health Plans.
[Marc DeGuzman] Your audit certainly identified some risks to the three marketplaces. What was their response?
[Maria Silvestre] CMS, which runs the Federal marketplace, agreed with our findings and recommendations for improving the Federal marketplaces. The California and Connecticut marketplaces agreed with some of our findings and recommendations and disagreed with others. All three marketplaces stated that they have made improvements in their internal controls, which we've noted in our report.
[Marc DeGuzman] Thank you, Maria, for telling us about this early review of marketplaces under the ACA. Now, let's hear about OIG's companion report from our Deputy Regional Inspector General in Boston, Russ Hereford.
[Russ Hereford] Thanks Marc. I'm Russ Hereford, with Danielle Fletcher, a program analyst, to talk about how the Federal and State health insurance marketplaces resolve inconsistencies with information submitted by applicants. Danielle, can you start by telling us about the difference between the Federal and State marketplaces?
[Danielle Fletcher] Sure. As Maria mentioned, all States had the option of operating their own marketplace. At the time of our evaluation, 14 States and Washington D.C. did so, and the remaining 36 States used the Federal marketplace.
[Russ Hereford] This report focuses on inconsistencies. Danielle, what exactly is an inconsistency?
[Danielle Fletcher] Well, an inconsistency happens when the Federal or State marketplace can't verify information that an applicant submits on an application, like Social Security number and income.
[Russ Hereford] How do the marketplaces verify this information?
[Danielle Fletcher] Marketplaces connect to information through the Federal Data Hub. The Data Hub doesn't actually store data, but it links to information from agencies like the IRS, Social Security, and Homeland Security. The Data Hub allows the marketplaces to confirm information like Social Security numbers, income, and citizenship.
Russ Hereford] If there's an inconsistency with an applicant's data, does that mean the applicant submitted inaccurate information?
[Danielle Fletcher] Not necessarily. The marketplace needs to take additional steps to figure out what the problem is.
[Russ Hereford] So what if an inconsistency occurs?
[Danielle Fletcher] First, the marketplace has to make a reasonable effort to contact the applicant to confirm there are no obvious errors or typos on the application. If the marketplace still cannot resolve the inconsistency, it must generally provide the applicant with 90 days to submit proper documentation.
[Russ Hereford] Do applicants have to wait until the inconsistency is resolved to enroll in a health plan or get financial assistance for their monthly insurance premiums or other out-of-pocket expenses?
[Danielle Fletcher] No, in fact, the law provides that the applicant may choose to enroll in a health plan and may be eligible to receive financial assistance during this inconsistency period.
[Russ Hereford] What happens if the 90 days passes and the marketplace hasn't resolved the inconsistency?
[Danielle Fletcher] There are a few possibilities: The marketplace could access the Data Hub and determine whether the applicant is eligible, or ineligible. If ineligible, the marketplace could end coverage and/or stop or adjust financial assistance. Or the marketplace could make an exception in special circumstances and use only the information that the applicant has attested to be true. However, marketplaces may not accept the applicant's attestation to verify citizenship or immigration status.
[Russ Hereford] Are the marketplaces able to resolve inconsistencies?
[Danielle Fletcher] As of the end of February 2014, the Federal marketplace reported that it had not resolved 89 percent of inconsistencies. That translates to about 2.6 million out of 2.9 million total inconsistencies.
[Russ Hereford] Wow that's a large number. Does that mean that 2.6 million applicants are enrolled in a qualified health plan or receiving financial assistance inappropriately?
[Danielle Fletcher] No, the 2.6 million is the number of inconsistencies, not individual applicants. An individual can have multiple inconsistencies on each application. For example, if an applicant had inconsistencies for both income and citizenship, it would count as 2 inconsistencies. In addition, an inconsistency does not necessarily mean that an individual was inappropriately enrolled. There can be legitimate reasons for an inconsistency. For example, peoples' income can change if they change jobs since their last tax return.
[Russ Hereford] Ok. So why are there so many inconsistencies in the Federal marketplace?
[Danielle Fletcher] Well, the CMS eligibility system was not fully operational when it started receiving applications. In particular, it could not resolve inconsistencies tied to citizenship, income, and whether somebody had health insurance through their employer.
[Russ Hereford] So how are the State marketplaces doing in resolving inconsistencies?
[Danielle Fletcher] Their performance varied widely. Nearly half of the 15 State marketplaces reported resolving inconsistencies without delay but the other States did not fully resolve inconsistencies during our reporting period.
[Russ Hereford] So, given your findings, what did you recommend?
[Danielle Fletcher] Our main goal was to see how inconsistencies were resolved. With that in mind, we recommended that CMS develop and make a plan on how and when the Federal marketplace will resolve inconsistencies. We also recommended that CMS conduct additional oversight of State marketplaces to ensure that they are resolving inconsistencies according to Federal requirements. CMS agreed with both of our recommendations.
[Russ Hereford] Thank you, Danielle, for talking about this specific report.
[Danielle Fletcher] You're very welcome Russ.
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Significant OIG activities in 6-month increments.