Watchdog Finds Billions in Possible Fraudulent Obamacare Payments

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The federal government has failed to properly monitor enrollee eligibility for Obamacare, according to a reportby the Government Accountability Office (GAO). As a result, the government has made billions of dollars in Obamacare subsidy payments to individuals that may have been committing fraud.

As the report notes, the system used by the Centers for Medicare and Medicaid Services (CMS) relies on data sent by three government agencies – the IRS, SSA, and DHS – to check eligibility for Obamacare. However, the system used by CMS is unable to verify many inconsistencies in the data.

This inability to properly verify enrollment has meant billions of dollars have been sent out to enrollees without verifying whether the applicants were fraudulent. As the report notes:

“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.”

While CMS has information that could shed light on fraud, it has not developed any procedure to utilize it. As the report notes:

“CMS foregoes information that could suggest potential program issues or potential vulnerabilities to fraud, as well as information that might be useful for enhancing program management.”

These latest findings should not be surprising. Time and time again, watchdogs have sounded the alarm over Obamacare exchange verification and controls.

An auditor’s report examining Minnesota’s Obamacare exchange found the exchange enrolled more than 100,000 individuals who were ineligible for the program. In all, the audit estimated an error rate of close to 50 percent, and the state overpaid up to $271 million over the five-month period that was analyzed by auditors.

A December 2015 report by the Health and Human Services Inspector General (HHS OIG) found that CMS relied entirely on data from health insurers to verify whether enrollees had paid their premiums and were eligible. However, this data was completely insufficient - insurers provided payment information on an aggregate rather than enrollee-by-enrollee basis, making verification all but impossible. A October 23, 2015 report by GAO found that Obamacare exchanges (both state and federal) were failing to verify key enrollment information of applicants including Social Security numbers, household income, and citizenship.A September 1, 2015 report by the Treasury Inspector General for Tax Administration (TIGTA) found that Obamacare exchanges are failing to provide adequate enrollment information to the IRS for proper payment and verification of tax credits.A August 2015 report by HHS OIG found that the federal exchange is failing to verify Social Security numbers, citizenship, and household income of Obamacare applicants. As a result, the exchange is unable to verify whether applicants are properly receiving tax credits. A July 16, 2015 audit by GAO found that 11 of 12 fake 'test' applicants received coverage for the entire 2014 coverage period despite many using fraudulent documents, and others providing no documentation at all. From these 11 applicants alone, Healthcare.gov paid $30,000 in tax credits.A June 16, 2015 report released by the HHS OIG found that $2.8 billion worth of Obamacare subsidies and payments had been made in 2014 without verification.A June 10, 2015 TIGTA report found the IRS failed to properly administer nearly $11 billion in Obamacare tax credits.A May 21, 2015 report by TIGTAfound that the IRS failed to testObamacare processing and verification IT until a week before the filing season began.

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