CMS Unable to Resolve Nearly 2.89 Million Obamacare Application Inconsistencies

Audit: Government resolved less than one percent of ‘inconsistencies’ in applications

Marilyn Tavenner
Medicare and Medicaid chief Marilyn Tavenner / AP
July 1, 2014

The federal Obamacare marketplace was unable to verify nearly 3 million irregularities in the applications for enrollment, according to a new audit by the Health and Human Services (HHS) Office of the Inspector General (OIG).

The audit, released Tuesday, found that the Centers for Medicare and Medicaid Services (CMS) resolved less than one percent of so-called "inconsistencies" related to the citizenship and residency status of Obamacare sign ups.

"The Federal marketplace was not able to resolve inconsistencies related to: citizenship, status as a national, lawful presence, residency, family size, annual household income, and whether the applicant was eligible for minimum essential coverage through employer-sponsored insurance," the audit said.

"According to CMS officials, as of Feb. 23, 2014, the Federal marketplace had resolved approximately 10,000 of the 2.9 million inconsistencies (less than 1 percent)," the audit said.

President Barack Obama touted the exchanges for signing up 8 million people, though only 67 percent had paid their premiums as of April. The latest audit raises additional questions on how many enrollees were eligible.

The OIG examined, Covered California, and Access Health CT, the Connecticut exchange. It found all three were ineffective in verifying applicants’ information needed to ensure their eligibility to enroll in a health insurance plan.

"The deficiencies in internal controls that we identified may have limited the marketplaces’ ability to prevent the use of inaccurate or fraudulent information when determining eligibility of applicants for enrollment in [qualified health plans] QHPs," the audit said.

For example, was not effective at validating Social Security numbers (SSN), California was unable to verify citizenship, and Connecticut could not confirm proof of identity of applicants over the phone.

The audit reviewed a random sample of 45 applicants in each marketplace who had been determined eligible. An individual can only enroll if they are a U.S. citizen, have legal status, and are not incarcerated.

There were 7 out of 45 cases where California did not verify citizenship, and one case out of 44 where did not validate an SSN. One application left the SSN blank for the federal exchange.

"The Federal marketplace did not always validate applicants’ Social Security numbers through [the Social Security Administration]," the audit said. "Without validating an applicant’s Social Security number, a marketplace cannot ensure that the applicant meets eligibility requirements for enrollment in a QHP."

Covered California did not verify citizenship information through the Department of Homeland Security when the Social Security Administration (SSA) system "indicated that the applicant was not a U.S. citizen." In other cases, "SSA information was unavailable because of Data Hub outages or the SSA system was offline."

In addition, 30 out of 45 applicants had conflicting application and eligibility data, and California did not resolve inconsistencies in 19 cases.

All three exchanges were able to verify whether applicants were in prison or not.

The report also identified "other issues" with the federal and state exchanges, including simply taking an applicants’ word for their identity and residency status.

"Residency was verified by the federal, California, and Connecticut marketplaces only by accepting applicants’ attestation of residency," the audit said.

"Identity proofing of applicants was performed by the California marketplace only by accepting applicants’ electronic signatures or verbal attestations," it added.

The government does not require any "further verification" other than the applicants’ attestation of residency.

"In written comments on our draft report, CMS stated that it did not believe that the marketplaces’ verification of residency by accepting applicants’ attestations needed to be a noted issue," the OIG said. "CMS stated that the marketplaces followed Federal requirements and there were not comprehensive, national electronic data sources for residency verification available to the federal marketplace."

The report was mandated by the continuing resolution Congress passed to resolve the government shutdown last fall, which asked the OIG to report on what safeguards the exchanges have to prevent fraud.

CMS agreed with the OIG’s recommendations to address inconsistencies.

"This report confirms what many of us already knew—that despite repeated reassurances from this administration, the systems were not in place to determine income eligibility for Obamacare subsidies when this law was implemented," said Rep. Diane Black (R., Tenn.). "This outrageous mismanagement of taxpayer dollars will likely lead to billions of dollars in waste and abuse, all because this administration moved forward with implementation despite repeated warnings that the systems were not ready."