Not All of the Federally Facilitated Marketplace's Internal Controls Were Effective in Ensuring That Individuals Were Properly Determined Eligible for Qualified Health Plans and Insurance Affordability Programs
David Iwamoto, senior auditor for the Office of Audit Services, is interviewed by Maria Silvestre, a senior auditor in San Diego.
[Maria Silvestre] I'm Maria Silvestre, a senior auditor in San Diego, speaking with David Iwamoto, a senior auditor from our Los Angeles field office. David, let's talk about your audit of the federally facilitated marketplace. That's quite a mouthful. What is the federally facilitated marketplace?
[David Iwamoto] Well, Maria, the federally facilitated marketplace is the health insurance marketplace set up by the Federal Government under the Affordable Care Act. It allows people to buy health insurance in States that didn't set up their own marketplaces. The Centers for Medicare & Medicaid Services, or CMS, operates the federally facilitated marketplace.
[Maria Silvestre] What was the focus of this audit?
[David Iwamoto] We looked at whether the marketplace properly determined whether applicants were eligible to purchase health care coverage through qualified health plans-called QHPs -and applicant eligibility for two insurance affordability programs: the premium tax credit and cost-sharing reductions. We also examined the marketplace's process for resolving inconsistencies in applicant information.
[Maria Silvestre] So what did you find?
[David Iwamoto] We found that the marketplace was effective at verifying some aspects of applicant eligibility, such as incarceration status. But the marketplace was not effective at verifying other aspects of applicant eligibility, such as citizenship and annual household income. We also identified deficiencies in the marketplace's process for resolving inconsistencies.
[Maria Silvestre] Do your findings mean that the marketplace improperly enrolled applicants in a QHP or improperly determined them to be eligible for insurance affordability programs?
[David Iwamoto] Not necessarily, because internal control deficiencies don't always translate to enrollment problems. For example, if the marketplace hadn't implemented a control to allow verification of citizenship through the Social Security Administration as required, it may have been able to do so through the inconsistency resolution process.
[Maria Silvestre] What were your recommendations to fix these problems?
[David Iwamoto] Overall, we made fourteen recommendations to CMS. Generally, these recommendations fall into three different areas. First, we made several recommendations to improve the marketplace's internal controls to address deficiencies identified in our audit that relate to the verification of applicants' eligibility and resolution of inconsistencies. Second, we recommended that the marketplace redetermine, if necessary, the eligibility of the sample applicants that we reviewed. And third, we made a few recommendations for CMS to improve the marketplace's procedures for resolving inconsistencies.
[Maria Silvestre] Can you provide some examples of the recommendations that you made?
[David Iwamoto] Sure. For the first area, we made recommendations to improve the marketplace's internal controls to address specific deficiencies related to verifying an applicant's eligibility or resolving an inconsistency in accordance with Federal requirements. For example, we recommended that the marketplace enhance the design of its system to resolve inconsistencies related to employer-sponsored insurance. We also recommended that the marketplace correct a design error in its system so that it would be able to adjust the amounts of financial assistance payments for annual household income inconsistencies.
For the second area of recommendations, some deficiencies we identified in our audit may require the marketplace to redetermine eligibility for the sample applicants that we reviewed in our audit. For example, if a sample applicant's inconsistency related to citizenship was not resolved properly, the marketplace may have to redetermine the applicant's eligibility for enrollment in a QHP.
For the third area, we made recommendations to improve procedures related to the resolution of inconsistencies. For example, we recommended that the marketplace ensure that inconsistency periods are no longer extended indefinitely. We also recommended that CMS resolve inconsistencies related to annual household income by using the same 10 percent threshold used to verify applicants' attested annual household income.
[Maria Silvestre] So, what is the potential effect of your findings and how do your recommendations address that effect?
[David Iwamoto] If a marketplace has deficiencies in internal controls, it may be more difficult to ensure that an applicant meets eligibility requirements for enrollment in a QHP or an insurance affordability program. Also, the amount of the premium tax credit or cost-sharing reduction may be determined incorrectly. Our recommendations will likely help the marketplace improve its procedures and other internal controls so that it can ensure that applicants meet eligibility requirements and also properly determine the amounts of premium tax credits or cost-sharing reductions an applicant may be eligible for.
[Maria Silvestre] How did CMS respond to your recommendations?
[David Iwamoto] CMS agreed with our recommendations for improving the marketplace's internal controls and provided information on actions that it had taken or planned to take to address our recommendations.
[Maria Silvestre] Thank you, David, for telling us about this audit of the marketplace.