The Obamacare marketplaces approved health care coverage for fake applicants and approved these accounts for $60,000 in subsidies during a new undercover test, according to a report from the Government Accountability Office.
The accountability office created 15 fictitious identities for individual health-care coverage and Medicaid by telephone and online in the federal marketplace in Virginia and West Virginia and California’s own marketplace known as Covered California during the test.
The auditors focused on testing controls related to the identity of citizenship status of the applicant and whether certain applicants had made required income-tax filings.
The marketplaces are required to verify that an applicant’s personal information matched the information provided by various federal data sources. For instance, an applicant’s citizenship status should be validated with Department of Homeland Security records and an individual’s household income should be compared to tax-return data with the Internal Revenue Service.
The report found that the marketplaces approved all 15 of the auditor’s fake applications and determined that the marketplaces’ eligibility and determination processes remain vulnerable to fraud. This is the third year that the auditors have performed the sting and each year the marketplaces approved coverage for fake applicants. This year the marketplaces even approved coverage for fake identities that were used in the 2014 testing that had previously obtained subsidized coverage.
"For each of our 15 fictitious applicants, the marketplaces approved coverage, including for 6 fictitious applicants who had previously obtained subsidized coverage but did not file the required federal income-tax returns," the auditors said. "The marketplaces we reviewed also relaxed documentation standards or extended deadlines for filing required documentation."
"After initial approval, all but one of our fictitious enrollees maintained subsidized coverage, even though we sent fictitious documents, or no documents, to resolve application inconsistencies," the report states.
The marketplaces approved subsidies for all of the qualified-health-plan applications, which totaled about $5,000 on a monthly basis, or about $60,000 annually.
"The Marketplace takes seriously the responsibility to protect taxpayer funds, while making coverage available to eligible people," the Centers for Medicare and Medicaid Services said in response to the report. "We have a robust verification process to make sure people get benefits they are eligible for while protecting taxpayer dollars."
"We appreciate the work the GAO and HHS Office of Inspector General to improve Marketplace operations and take action when provided with recommendations or other information," the agency said.