The Centers for Medicaid and Medicare Services (CMS) paid out an estimated $434 million in improper payments in 2014 for financial assistance designed to help drive down health care costs for qualified customers, according to an audit released Monday.
CMS is the agency responsible for creating and operating the federal health care marketplace because of the Patient Protection and Affordable Care Act (ACA), generally known as Obamacare.
In reaching that dollar figure, the Health and Human Services inspector general's office sampled 140 policies and found that "financial assistance payments for 26 policies were not accurately authorized in accordance with Federal requirements."
A handful of other policies did not have all of the proper documentation "to support that enrollees had paid their premiums, a requirement for receiving these payments."
"On the basis of our sample results, we estimated that CMS authorized improper financial assistance payments totaling almost $434.4 million for 461,127 policies that were not in accordance with Federal requirements and authorized potentially improper financial assistance payments totaling almost $504.9 million for 183,983 policies during the 2014 benefit year," the report said.
Because implementation of the ACA was in its beginning stages, CMS was using an interim process for approving the assistance payments, which was later automated in 2016.
In 2014, an insurer would submit a template form to CMS which aggregated all of the financial assistance totals for customers who had at least paid the first month's premium. However, the audit noted "CMS did not have an effective process in place to ensure that financial assistance payments were made only for confirmed enrollees and in the correct amounts."
As a result, the inspector general's report recommended that CMS "work … to collect improper financial assistance payments, which we estimate to be almost $434.4 million, for policies for which the payments were not authorized in accordance with Federal requirements."
CMS partially agreed with the recommendation, but cited numerous technical challenges in that year when saying they did not plan on requiring return payments from companies who distributed the payment assistance "while acting in good faith on the basis of CMS-provided flexibility."