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The federal government cannot ensure whether Obamacare subsidies have gone to individuals that have actually paid for health insurance through the marketplace, according to a new audit.
The Centers for Medicare and Medicaid Services has been relying on insurance companies to make sure that low-income enrollees have actually paid their monthly premiums before providing them tax credits, putting taxpayer dollars at risk.
In an audit released Wednesday, an inspector general found that the federal agency responsible for administering Obamacare subsidies had not had an adequate process in place to approve Advanced Premium Tax Credits since 2014.
“[The Centers for Medicare and Medicaid Services] could not ensure that [Advanced Premium Tax Credits] APTC payments made to [Qualified Health Plan] QHP issuers were only for enrollees who had paid their premiums,” the audit said. “Specifically, we found that CMS did not have an effective process in place to ensure that APTC payments were made only for enrollees who had paid their monthly premiums.”
“Instead, CMS relied on each QHP issuer to verify that enrollees paid their monthly premiums and to attest that APTC payment information that the issuer reported on its template was accurate,” the inspector general said.
“Without effective processes for ensuring that APTC payments are made on behalf of confirmed enrollees, federal funds may be at risk,” they said.
The audit is a follow-up report to the inspector general’s findings last year that the agency could not verify $2.8 billion in subsidies that were doled out in the first four months of 2014 alone.
Under the law, CMS is required to ensure that premium subsidies only go to individuals enrolled in a federal or state marketplace, who are paying monthly premiums.
The Advanced Premium Tax Credit is available to individuals and families who earn between 100 and 400 percent of the poverty line. The subsidy is given prior to the individual paying their premium to help cover the cost.
However, CMS did not have a permanent system in place to approve the subsidies when they became available in 2014. The agency instead accepted mass data from health insurers, rather than detailed information on each individual enrollee.
Health insurers are “not required to verify the validity” of eligibility or subsidy amounts.
“Since CMS obtained APTC payment information on an aggregate basis rather than on an enrollee-by-enrollee basis, it was unable to verify the amounts requested through QHP issuers’ attestations,” the inspector general said. “If CMS were able to do this, it could perform tests to ensure that APTC payments were appropriately applied on behalf of confirmed enrollees.”
Complicating matters further, enrollees who do not pay their first monthly premium are required to receive a three-month grace period before their insurance is canceled. Those individuals are required to pay back their first month’s subsidy payment through his or her tax return.
Since the government had not established a computer system to enable marketplaces to share confirmed enrollment data beginning in 2014, they could not verify that improper premium tax credits were returned to the Treasury.
“For the 2014 benefit year, CMS had not developed a permanent process for approving APTC payments,” the inspector general said.
In October 2015, agency officials told the inspector general that it was “pilot-testing an automated policy-based payment process with issuers, and the majority of Federal marketplace issuers should begin using this process in early 2016.”
The agency did not immediately return request for comment on whether the new process is in effect.