Affordable Care Act



HHS OIG: CMS Did Not Provide Effective Oversight To Ensure That State Marketplaces Always Properly Determined Individuals' Eligibility for Qualified Health Plans and Insurance Affordability Programs

September 2017

The Centers for Medicare & Medicaid Services (CMS) oversees implementation of health insurance provisions for the Affordable Care Act and works with States to establish marketplaces, which evaluate individuals' eligibility for qualified health plans (QHPs) and insurance affordability programs (i.e., the premium tax credit and cost-sharing reductions). OIG's prior reviews of seven State marketplaces found that not all of their internal controls were effective in ensuring that individuals were properly determined eligible for QHPs and insurance affordability programs. These deficiencies led OIG to review the effectiveness of CMS's oversight of State marketplaces. OIG's objective was to determine whether CMS provided effective oversight to ensure that State marketplaces determined individuals' eligibility for QHPs and insurance affordability programs according to Federal requirements.

Although CMS provided oversight and technical assistance, it did not ensure for the 2014 through 2016 coverage years that all State marketplaces (1) had the system functionality to verify individuals' eligibility for QHPs and insurance affordability programs and resolve inconsistencies in eligibility data according to Federal requirements and (2) had or used the system functionality to perform the process for determining ineligibility for individuals who had not filed a tax return to reconcile the premium tax credit. Further, CMS did not ensure that all of the marketplaces completed required independent audits. Report


GAO: IRS Should Mitigate Limitations of Data to Be Used for the Age and Gender Adjustment for the Tax on High-cost Health Plans

September 2017

Starting in 2020, the Affordable Care Act is scheduled to impose a 40% tax on high-cost health plans when an employee's annual cost of coverage exceeds a certain dollar limit. The limit may be adjusted if an employer's workforce—based on age and gender—is likely to have higher than average health costs.

The adjustment is to be made based on the costs of the federal employee BlueCross BlueShield Standard plan, but GAO found that an adjustment based on this plan's costs alone may not be effective due to the relatively high costs incurred by its young members. Report


GAO: State Health-Insurance Marketplaces: Three States Used Varied Data Sources for Eligibility and Had Few Indications of Potentially Improper Enrollments

September 2017

For plan year 2015, GAO reviewed three selected state-based marketplaces' key processes to verify applicant eligibility for subsidized coverage and found that they used various data sources. Under the Patient Protection and Affordable Care Act (PPACA), marketplaces are required to verify applicant eligibility using data sources and methods approved by the Department of Health and Human Services (HHS). Applicant information that must be verified or validated to receive subsidized coverage includes Social Security number (SSN), citizenship or lawful presence, and income.

For the three selected states, GAO found few indications of potentially improper or fraudulent enrollments for plan year 2015 in the verification processes reviewed, but did identify data-quality issues, such as data-entry errors or name changes. Report


GAO: ACA: Concentration, Plan Availability and Premiums, and Enrollee Experiences in Health Insurance Markets Since 2014

January 2017

ACA contained provisions, many of which took effect in 2014, that could affect how issuers determine health insurance coverage and premiums and how they market their plans. For example, ACA prohibits issuers from denying coverage or varying premiums based on consumer health status or gender. ACA also requires health plans to generally be marketed based on metal tiers (bronze, silver, gold, and platinum), which allows consumers to compare the relative value of each plan. It also required the establishment of health insurance exchanges in each state, through which consumers can compare and select from among participating health plans.

This testimony describes (1) private health-insurance market concentration and issuer participation from 2011 through 2014, the year by which key ACA provisions took effect, (2) health plans and premiums available to individuals in 2014 and 2015, and (3) the experience of enrollees that obtained coverage through the exchanges from 2014 through 2016. It is based on three GAO reports issued in 2015 and 2016. Report




GAO: Actions Needed to Enhance Information Security and Privacy Controls 

March 2016

The Centers for Medicare & Medicaid Services (CMS) reported 316 security- related incidents, between October 2013 and March 2015, affecting—the web portal for the federal health insurance marketplace— and its supporting systems. According to GAO’s review of CMS records for this period, the majority of these incidents involved such things as electronic probing of CMS systems by potential attackers, which did not lead to compromise of any systems, or the physical or electronic mailing of sensitive information to an incorrect recipient. None of the incidents included evidence that an outside attacker had successfully compromised sensitive data, such as personally identifiable information. 

However, GAO identified weaknesses in technical controls protecting the data flowing through the data hub. GAO also identified additional weaknesses in technical controls that could place sensitive information at risk of unauthorized disclosure, modification, or loss. Report

Media Coverage

Federal Times: Poor controls leave, state exchanges vulnerable


GAO: PPACA: CMS Should Act to Strengthen Enrollment Controls and Manage Fraud Risk 

February 2016

GAO was asked to examine the enrollment process and verification controls of the federal Marketplace. The Patient Protection and Affordable Care Act (PPACA) requires applicant information be verified to determine eligibility for enrollment or income-based subsidies. During undercover testing, the federal Marketplace approved subsidized coverage under the act for 11 of 12 fictitious GAO phone or online applicants for 2014. The GAO applicants obtained a total of about $30,000 in annual advance premium tax credits, plus eligibility for lower costs at time of service. The fictitious enrollees maintained subsidized coverage throughout 2014, even though GAO sent fictitious documents, or no documents, to resolve application inconsistencies.

In addition, according to GAO analysis of CMS data, about 431,000 applications from the 2014 enrollment period, with about $1.7 billion in associated subsidies for 2014, still had unresolved inconsistencies as of April 2015—several months after close of the coverage year. Report

Final Results: 9/9/16 Report

Media Coverage

NBC News: Feds 'Passive' About Policing Obamacare Fraud, Report Finds

Americans For Tax Reform: Watchdog Finds Billions in Possible Fraudulent Obamacare Payments

The Fiscal Times: Obamacare Fraud Is Rampant and Unchecked, GAO Warns 

The Wall Street Journal: Federal Health Exchange Approved Fake Claims


HHS OIG: Case Study of CMS Management of the Federal Marketplace 

February 2016

OIG's review spans 5 years, providing a chronology of events and identifying factors that contributed to the website's breakdown at launch, its recovery following corrective action, and implementation of the Federal Marketplace through the second open enrollment period.

We found that HHS and CMS made many missteps throughout development and implementation that led to the poor launch of Most critical was the absence of clear leadership, which caused delays in decisionmaking and a lack of clarity in project tasks. Additional missteps included devoting too much time to developing policy, which left too little time for developing the website, and failing to properly manage its key website development contract. CMS's organizational structure and culture also hampered progress, including poor coordination between policy and technical work. CMS continued on a failing path despite signs of trouble, making rushed corrections that proved insufficient.

In addition, the Federal Marketplace project and development of came at a substantial cost financially and organizationally to CMS. CMS contract costs for the Federal Marketplace project were ultimately much higher than initially estimated by CMS, but the total contract amount would have been expected to rise from the initial allotment. CMS originally estimated the contract value for six key Federal Marketplace contracts to be $464 million. As of early 2014, CMS had updated the estimated value of these contracts to $824 million. The value more than tripled for the FFM contract awarded to CGI Federal, from $58 million to $207 million. In addition, the value for the Hub contract more than doubled, from $69 million to $180 million. The remaining four contract values increased between 1 and 54 percent. Report

Media Coverage


HHS OIG: Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2015 

February 2016

During FY2015, the Federal Government won or negotiated over $1.9 billion in judgments and settlements, and attained additional administrative impositions in health care fraud cases and proceedings. As a result of these efforts, as well as those of preceding years, approximately $2.4 billion was returned to the Federal Government or private persons. Of this $2.4 billion, the Medicare Trust Funds received transfers of approximately $1.6 billion during this period; and another $135.9 million in Federal Medicaid money was transferred to the Treasury separately as a result of these efforts. 

The return on investment (ROI) for the Health Care Fraud and Abuse Control Program (HCFAC) program over the last three years (2013-2015) is $6.10 returned for every $1.00 expended. Report