As a follow up to our earlier posting on enforcement problems with ACA, the Obama Administration and The Department of Health and Human Services (HHS) have begun taking a closer look at subsidies and Special Enrollment Period (SEP) loopholes.
The State of ACA Subsidies
The Government Accountability Office (GAO) recently released a report chastising the administration for taking a “passive approach to identifying and preventing fraud”. The report enumerated several issues such as the inability to verify citizenship for 8.2 million applicants, not tracking information that could highlight fraud and abuse, and the inability to verify family size and income for 30.7 million applicants. HHS Secretary Burwell assured the GAO they take the issue of taxpayer subsidy “very seriously”, but had no plan or timeline for fixes for the faults found in the report.
Cracking Down on SEP Fraud
In a first of many steps to prevent fraud and abuse of the Special Enrollment Period (SEP), the Obama Administration will now require documents proving eligibility instead of taking the insurer’s word. Over the past two years several insurance companies have complained to the administration that people were using the SEP to sign up for coverage when they needed it, and dropping after they received care. These abuses played a part in premium increases by the carriers to offset claims, and have been an ever growing threat to stability in the marketplace.
Currently HHS is taking comments from insurers, consumer advocate groups, and others regarding the new documentation process. Their hope is to continue to foster a “meet in the middle” approach which will help insurers, as well as protect the consumer.