Patient Protection and Affordable Care Act: Preliminary Results of Undercover Testing of Enrollment Controls for Health Care Coverage and Consumer Subsidies Provided Under the Act
Published: 2014-07-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: PPACA provides for the establishment of health insurance exchanges, or marketplaces, where consumers can compare and select private health insurance plans. The act also expands the availability of subsidized health care coverage. The Congressional Budget Office estimates the net federal cost of coverage provisions at $36 billion for fiscal year 2014, with subsidies and related spending accounting for a large portion. PPACA requires marketplaces to verify application information to determine enrollment eligibility and, if applicable, eligibility for subsidies.
GAO was asked to examine issues related to controls for application and enrollment for coverage through the federal marketplace. This testimony discusses preliminary observations on (1) results of undercover testing in which we obtained health care coverage; (2) additional undercover testing, in which we sought to obtain consumer assistance with our applications; and (3) delays in the development of a system needed to analyze enrollment.
This statement is based on preliminary analysis from GAO's ongoing review for this subcommittee and other congressional requesters. GAO created fictitious identities to make applications through the federally facilitated exchange in several states by telephone, online, and in-person. The number and locations of the target areas are not disclosed because of ongoing testing. The results, while illustrative, cannot be generalized to the overall applicant or enrollment populations. GAO expects to issue a final report next year.
section_title: What GAO Found
paragraphs: Centers for Medicare & Medicaid Services (CMS) officials told us they have internal controls for health care coverage eligibility determinations. GAO's undercover testing addressed processes for identity- and income-verification, with preliminary results revealing questions as follows:
For 12 applicant scenarios, GAO tested "front-end" controls for verifying an applicant's identity or citizenship/immigration status. Marketplace applications require attestations that information provided is neither false nor untrue. In its applications, GAO also stated income at a level to qualify for income-based subsidies to offset premium costs and reduce cost sharing. For 11 of these 12 applications, which were made by phone and online using fictitious identities, GAO obtained subsidized coverage. For one application, the marketplace denied coverage because GAO's fictitious applicant did not provide a Social Security number as part of the test.
The Patient Protection and Affordable Care Act (PPACA) requires the marketplace to provide eligibility while identified inconsistencies between information provided by the applicant and by government sources are being resolved through submission of supplementary documentation from the applicant. For its 11 approved applications, GAO was directed to submit supporting documents, such as proof of income or citizenship; but, GAO found the document submission and review process to be inconsistent among these applications. As of July 2014, GAO had received notification that portions of the fake documentation sent for two enrollees had been verified. According to CMS, its document processing contractor is not required to authenticate documentation; the contractor told us it does not seek to detect fraud and accepts documents as authentic unless there are obvious alterations. As of July 2014, GAO continues to receive subsidized coverage for the 11 applications, including 3 applications where GAO did not provide any requested supporting documents.
For 6 applicant scenarios, GAO sought to test the extent to which, if any, in-person assisters would encourage applicants to misstate income in order to qualify for income-based subsidies. However, GAO was unable to obtain in-person assistance in 5 of the 6 initial undercover attempts. For example, one in-person assister initially said that he provides assistance only after people already have an application in progress. The in-person assister was not able to assist us because HealthCare.gov website was down and did not respond to follow-up phone calls. One in-person assister correctly advised the GAO undercover investigator that the stated income would not qualify for subsidy.
A key factor in analyzing enrollment is to identify approved applicants who put their policies in force by paying premiums. However, CMS officials stated that they do not yet have the electronic capability to identify such enrollees. As a result, CMS must rely on health insurance issuers to self-report enrollment data used to determine how much CMS owes the issuers for the income-based subsidies. Work is underway to implement such a system, according to CMS, but the agency does not have a timeline for completing and deploying it. GAO is continuing to look at these issues and will consider recommendations to address them.

section_title: Letter
paragraphs: I am pleased to be here today to discuss enrollment for health care  coverage under the Patient Protection and Affordable Care Act  (PPACA). Among other things, the act provides subsidies to those  eligible to purchase private health insurance plans, and with those  subsidies and other costs, represents a significant, long-term fiscal  commitment for the federal government. According to the Congressional  Budget Office, the estimated net cost of coverage provisions to the  federal government are $36 billion for fiscal year 2014 and $1.4 trillion for  fiscal years 2015–2024, with subsidies and related spending accounting  for a large portion of the total.are contingent on who obtains coverage, enrollment controls that help  ensure only qualified applicants are approved for coverage or subsidies  are a key factor in determining federal expenditures under the act.
Because subsidy costs arising from the act  PPACA, signed into law on March 23, 2010, provides for the  establishment of health insurance exchanges, or marketplaces, to assist  consumers in comparing and selecting among insurance plans offered by  participating private issuers of health care coverage. These marketplaces were intended to provide a single point of access for  individuals to enroll in private health plans, apply for income-based  subsidies to offset the cost of these plans—which are paid directly to  health insurance issuers—and, as applicable, obtain an eligibility  determination for other health coverage programs, such as Medicaid or  the State Children’s Health Insurance Program. The Department of  Health and Human Services’ (HHS) Centers for Medicare & Medicaid  Services (CMS) is responsible for overseeing the establishment of these  online marketplaces. CMS has worked with a variety of contractors to  develop, test, and maintain the federally facilitated marketplace known to  the public as HealthCare.gov. At the time we conducted the work  described in this statement, CMS was operating HealthCare.gov, also  known as the Health Insurance Marketplace (Marketplace), in 36 states.
To be eligible to enroll in a qualified health plan offered through a  marketplace, an individual must be a U.S. citizen or national, or otherwise  lawfully present in the United States; reside in the marketplace service  area; and not be incarcerated (unless jailed while awaiting disposition of  the charges). Marketplaces, in turn, are required by law to take several  steps to verify application information to determine eligibility for  enrollment and, if applicable, determine eligibility for the income-based  subsidies. These verification steps include validating an applicant’s  Social Security number, if one is provided; verifying citizenship, status as  a national, or lawful presence with the Social Security Administration  (SSA) or the Department of Homeland Security; and verifying household  income and family size against tax-return data from the Internal Revenue  Service, as well as data on Social Security benefits from the SSA.
My statement today is based on preliminary results and analysis from  ongoing work we are conducting at the request of the subcommittee and  others. Specifically, today’s statement (1) assesses, by means of  undercover testing in which we obtained health care coverage, the  Marketplace application and enrollment processes, including  opportunities for potential enrollment fraud, during the act’s first open  enrollment period, which ran from October 2013 to April 2014; (2) describes additional undercover testing, in which we sought to obtain  consumer assistance with our applications; and (3) describes delays in  the development of the system needed to analyze enrollment.
To perform our undercover testing of the Marketplace application and  enrollment processes, we created 18 fictitious identities for the purpose of  making applications for individual health care coverage by telephone,  online, and in-person. Because of the federal government’s role in  operating marketplaces in the 36 states, we targeted our work on the  federal Marketplace. We selected several states within the federal  Marketplace for our undercover applications, based on factors including  population size, mixture of population living in rural versus urban areas,  and number of people qualifying for income-based subsidies under the  act. We further selected target areas within each state, based on factors  including community size. Because our testing work is ongoing, we do not  disclose here the number or locations of our target areas. We generally  selected our states and target areas to reflect a range of characteristics.  To maintain independence in our testing, we created our applicant  scenarios without knowledge of specific control procedures that CMS or  other federal agencies may use in accepting or processing applications.  We thus did not create the scenarios with intent to focus on a particular   Because the number of fictitious applications we  control or procedure.made was limited, and the applications do not reflect a sample of actual  applications, the results of our testing, while illustrative, cannot be  generalized to the overall applicant or enrollment population.
For 12 of the 18 applicant scenarios, we tested “front-end” controls for  verifications related to the identity or citizenship/immigration status of the  applicant.  We made half of these applications online and half by phone. In these tests, we also stated income at a level eligible to obtain both  types of income-based subsidies available under PPACA—a premium tax  credit and cost-sharing reduction. Our tests included fictitious applicants  who provided invalid Social Security numbers, noncitizens claiming to be  lawfully present in the United States, and applicants who did not provide  Social Security numbers. As appropriate, in our applications for coverage  and subsidies, we used publicly available information to construct our  scenarios. We also used publicly available hardware, software, and  materials to produce counterfeit documents, which we submitted, as  appropriate for our testing, when instructed to do so. We then observed  the outcomes of the document submissions, such as any approvals  received or requests received to provide additional supporting  documentation.
For the remaining 6 of our 18 applicant scenarios to examine enrollment  in the Marketplace, we sought to test only income-verification controls.  We randomly selected three “Navigator” and three non-Navigator in- person assisters in our target areas.applicant planned to state income slightly above the maximum amount  allowable for income-based subsidies, while for the others, our applicant  planned to state income slightly below the range eligible for these  subsidies. We sought to test the extent to which, if at all, any of the in- person assisters would encourage applicants to misstate income in order  to qualify for either of the individual PPACA subsidies.
For half of these 6 applications, our  For all three objectives, we also reviewed laws, regulations, and other  policy and related information. In addition, we also interviewed CMS  officials to obtain an understanding of the application data that CMS  maintains and reports.
We are conducting our performance audit in accordance with generally  accepted government auditing standards. Those standards require that  we plan and perform the audit to obtain sufficient, appropriate evidence to  provide a reasonable basis for our findings and conclusions based on our  audit objectives. We believe that the evidence obtained provides a  reasonable basis for our findings and conclusions based on our audit  objectives. We are conducting our related investigative work in  accordance with investigative standards prescribed by the Council of the  Inspectors General on Integrity and Efficiency.
subsections: section_title: We Obtained Coverage in 11 of 12 Applications Made through Undercover Testing
paragraphs: The federal Marketplace approved coverage for 11 of our 12 fictitious  applicants who initially applied online, or by telephone. We later  received notices in 10 of 11 of these cases that failure to submit  documentation needed to verify eligibility could lead to loss of coverage or  subsidies we received. For 1 of the 11 approvals, we initially were  denied coverage, but were successful when we subsequently  reattempted the application. Applicants for coverage are required to attest  that they have not intentionally provided false or untrue information.  Applicants who provide false information are subject to penalties under  federal law, including fines and imprisonment. For each of the approved  applications, we were ultimately directed to submit supporting  documentation to the Marketplace, such as proof of income, identity, or  citizenship.
subsections: section_title: Preliminary Results of Front-End Controls Testing
paragraphs: For each of our 11 approved applications, we paid the required premiums  to put policies into force, and are continuing to pay the premiums. For the  11 applications that were approved for coverage, we obtained the  advance premium tax credit in all cases. The total amount of these  credits for the 11 approved applications is about $2,500 monthly or about  $30,000 annually. We also obtained cost-sharing reduction subsidies,  according to Marketplace representatives, in at least 9 of the 11 cases.  As noted, these advance premium tax credits and cost-sharing reductions  are not paid directly to enrolled consumers; instead, the federal  government pays them to issuers on consumers’ behalf. To receive  advance payment of the premium tax credit, applicants agree that they  will file a tax return for the benefit year, and applicants receiving premium  tax credits during the inconsistency period must indicate their  understanding that premium tax credits are subject to reconciliation on  their federal tax return.
For each of our 6 online applications that were among the total group of  12, we failed to clear an identity checking step during the front end of the  online application process, and thus could not complete the process  online. However, we subsequently were able to obtain coverage for all 6  of these applications begun online by completing them by phone. In 5 of  these 6 cases, the online system directed us to contact a Marketplace  contractor that handles identity checking. The contractor was unable to  resolve the identity issues. According to a CMS public information  website, if the contractor cannot resolve the issue, applicants may be  asked to provide identity documents, by online upload or by mail. In such  cases, according to CMS officials, applications are to be put on hold until  identity proofing is completed. For this group of 5 applications, however,  contractor representatives did not ask us to submit identity documents but  instead directed us to call the Marketplace. We did, and after speaking  with Marketplace representatives as instructed, we were able to  successfully proceed with our applications by phone and obtain coverage  for the 5 applications. In the sixth case, the online system directed us to  call the Marketplace directly, without contacting the contractor. In that  case, too, we proceeded to successfully complete the application by  phone and obtained coverage. According to CMS officials and  executives of the Marketplace’s call center contractor, an identity  discrepancy must be cleared and identity verified before an application  can proceed to completion.
For our 6 phone applications, we successfully completed the application  process, with the exception of one applicant who declined to provide a  Social Security number and was not allowed to proceed.
In the course of follow-up dealings with the Marketplace, call-center  representatives in at least four cases could not locate our existing  applications and, as a result, began new applications, according to our  conversations with the representatives. According to CMS call-center and  document-processing contractors, multiple electronic applications have  been common.
section_title: Preliminary Results of Back-End Controls Testing
paragraphs: The Marketplace is required to seek postapproval documentation in the  case of certain application “inconsistencies”—instances in which  information an applicant has provided does not match information  contained in data sources that the Marketplace uses for eligibility  verification at time of application, or such information is not available. If  there is an application inconsistency, the Marketplace is to provide  eligibility while the inconsistency is being resolved using “back-end”   Under these controls, applicants will be asked to provide  controls.additional information or documentation for a Marketplace contractor to  review in order to resolve the inconsistency.
Among the 11 of our 12 undercover applications that successfully  obtained coverage, the Marketplace initially directed that we submit  supplementary documentation in 10 cases, with a request for  supplementary documentation in the 11th case coming a few months  after approval of coverage. Among the Marketplace communications were  the following:
The Marketplace asked two of three applicants with inactive Social  Security numbers to submit proof of citizenship, identity, and income,  but it asked a third only for income information.  In four cases, the Marketplace asked for additional documentation a  few months after initial document requests were made.
The Marketplace directed two applicants to log into online accounts  for messages—but these applicants had no such online accounts.
The Marketplace sent unclear reminders to three applicants to file  supplementary documentation, with a cover letter directing applicants  to submit one type of document to resolve a particular inconsistency  (for example, income), but then in an enclosure to be returned to the  Marketplace requesting that another type of document be sent (for  example, citizenship).
As part of our testing and in response to Marketplace requests, we  provided counterfeit follow-up documentation, but varied what we  submitted by application—providing all, none, or only some of the  material requested—in order to note any differences in outcomes.  Specifically, among the 10 applications for which we were directed to  send documentation at the time of approval, we submitted all requested documentation for 3 of the 10 applications, partial documentation for 4 applications, and no documentation for the remaining 3 applications.
In addition, in 2 cases in which we were directed to submit income  information, we reported income substantially higher than the amount we  initially stated on our applications, and at levels that should disqualify our  applications from obtaining subsidies.
CMS officials told us that a CMS contractor evaluates follow-up  documentation on a rolling basis as it receives submissions. If the  contractor deems the information submitted to be complete, a decision on  eligibility is typically made within 1 to 2 days, according to the officials.  Otherwise, applicants may be directed to submit additional information as  deemed necessary. In all cases, CMS officials told us, applicants are to  be notified of the outcome of the review of their submitted documentation.
For the seven applications for which we elected to submit full or partial  follow-up documentation, approximately 3 months have elapsed since we  submitted the requested information. As of July 17, 2014, we had  received notifications indicating the Marketplace had reviewed portions of  the counterfeit documentation sent for two applications. Specifically, the  Marketplace notified both these applicants that their proof of  citizenship/immigration status had been verified and no further action is  necessary. One of them also had identity verified. We are awaiting  notice on other documents filed for these two applicants.
In the time since we filed documents requested at time of approval, we  have received a number of follow-up communications from the  Marketplace, which, as noted earlier, include requests for documentation  not originally requested. In response, we have submitted a second round  of documents, which responds to the requests but also maintains our  testing methodology of submitting all, none, or some of the items  requested. As of July 17, 2014, outcomes were still pending for these  applications. Regardless of the status of any postapproval  communications, our coverage remains in effect for all 11 approved  applications.
Overall, among all applications for the federal Marketplace, about 4.3  million application inconsistencies have been identified, representing  about 3.5 million people, according to the CMS contractor handling  receipt and evaluation of submitted materials. Of the total inconsistencies,  about 2.6 million are for applicants who took the step of selecting health  care plans after completing their applications. As of mid-July 2014, about  650,000 inconsistencies had been cleared. However, according to  contractor executives, due to system limitations, processing of income  and citizenship/immigration status inconsistencies—which together  account for 75 percent of inconsistency volume—began in May and June  2014.cannot be matched to their respective applications, and become  “orphans.” As of mid-July 2014, the contractor said, there had been about  227,000 such documents. According to the contractor executives,  unmatched documents are retained and reconsidered every 21 days to  see if new information is available that can enable a match to be made.
In some cases, according to the CMS contractor, documents  As noted, applicants attest at the time of application that information they  provide is not false or untrue. According to CMS officials, its document  processing contractor is not required under its contract to authenticate  documentation or to conduct forensic analysis. Executives of the  contractor concurred, and told us the review standard the contractor uses  is that it accepts documents as authentic unless there are obvious  alterations. According to the executives, the contractor does not certify  authenticity, does not engage in fraud detection, and does not undertake  investigative activities. Specifically, in the contractor’s standard operating  procedures for its work for CMS, document review workers are directed  under “general verification guidance” to “determine if the document image  is legible and appears unaltered by visually inspecting it.” Further, the  contractor is not equipped to attempt to identify fraud, the contractor  executives told us, and the contractor does not have the means to judge  whether documents submitted might be fraudulent. The standard of  accepting authenticity unless there is obvious alteration originated from  CMS, the executives said.
According to the contractor executives, when consumers send copies of  documents, as directed, rather than originals, there inevitably is a loss of  image quality such that the contractor could not closely examine whether  a document is authentic.thoroughly analyze document authenticity, the CMS contractor executives   Costs would increase by several times to  told us. Even if such an effort was attempted, they said, it would be  difficult to say if anti-fraud measures would be effective, because that is  not the company’s business.
The contractor also does not currently make use of outside data sources  in its document review; instead, it inspects what documents are  received. Overall, the contractor executives told us, the contractor is not  aware of any fraudulent applications and that, based on its practices, it  also is not in a position to know whether fraud is being attempted. CMS  officials similarly told us they did not know the extent of any attempts at  application or enrollment fraud, but said that to date, there is no evidence  of applicants defrauding the federal Marketplace.
In following through on our applications, we also identified a potential  challenge to consumers obtaining information about review of  documentation submitted. In communications we received from the  Marketplace about our document submissions, we were directed to call  the Marketplace with questions. When we called to inquire about the  status of our document filings, representatives could not answer our  questions. They told us they were not able to confirm receipt of requested  documentation and were not able to provide information on whether  requested documentation has been reviewed. The CMS contractors  handling consumer calls and document verification each confirmed to us  that the call centers cannot access document-submission information.  Hence, it is currently not possible for a call-center representative, fielding  an inquiry such as ours, to obtain document status information in order to  provide that information to the consumer.
Overall, CMS officials told us that they have internal controls for the  eligibility-determination process, and that experience has not shown the  need for any changes in that process. They said that thus far, the focus  has been on stabilizing processes being implemented for the first time.
Our work continues on the postapproval verification process. In particular,  we are tracking whether we receive any additional adjudication notices  from the CMS verification contractor, or whether the contractor identifies  supporting documentation we submitted as fictitious or inconsistent with  information submitted at time of application. We will continue to assess  CMS’s management of the application and approval process through our  ongoing work and consider any recommendations needed to address  these issues.
section_title: We Were Unable to Obtain In-Person Assistance in Five of Six Undercover Attempts to Test Income-Verification Controls
paragraphs: We attempted six in-person applications, in order to test income- verification controls only. Specifically, we sought to determine the extent  to which, if any, in-person assisters would encourage our applicants to  misstate income in order to qualify for either of the income-based PPACA  subsidies. According to CMS, in-person assistance is to be available for  those seeking assistance in filing applications.applications, we randomly chose three Navigators and three non- Navigators in the target areas of our selected states. For the in-person  applications, because our sole interest was any potential advice on  reporting income, we did not seek or obtain policies, as we did with our  phone and online applications.
During our testing, we visited one in-person assister and obtained  information on whether our stated income would qualify for subsidy. In  that case, a Navigator correctly told us that our income would not qualify  for subsidy. However, for the remaining five in-person applications, we  were unable to obtain such assistance. We encountered a variety of  situations that prevented us from testing our planned scenarios, including  the following:
One of the three Navigators required that we make an appointment in  advance by phone. When we were unable to reach the Navigator by  phone, we made an in-person visit. The Navigator declined to provide  assistance, or to schedule an appointment, saying instead we would  need to phone to schedule an appointment to return.
One of the three non-Navigators initially said it provides assistance  only after people already have an application in progress. The non- Navigator did offer to assist us with an application, but the  HealthCare.gov website was down. He directed us to call later for  assistance. After we did so, this non-Navigator did not respond to  three follow-up phone calls.
Another of the three non-Navigators, a health care services company,  told us it only handles applications from those having a medical bill at  its medical facility.
The third non-Navigator did not provide assistance, telling us it  handles only applications for Medicaid.
In two of the five instances in which we were unable to obtain assistance  at our originally selected locations, we proceeded to seek assistance at  other randomly selected locations in our target areas. In these follow-up  attempts, we again encountered difficulty in obtaining assistance for our  applicants, including the following:
For one test, we visited two additional locations beyond the initial  location before finding an in-person assister at a third who correctly  told us our income was insufficient to qualify for subsidy. At the first  two locations, we were told, among other things, that appointments  were necessary.
For another test, which occurred late in the open-enrollment period,  non-Navigator representatives declined to provide help, telling us they  were uncomfortable doing so and planned to take a seminar on  enrollment.
We further pursued, by phone calls to the Marketplace, the applications  for which we could not get explicit in-person guidance on income and  qualification for subsidy. In these calls, we were correctly advised that our  income was outside the range eligible for income-based subsidy.
Figure 1 summarizes our process and results for each of the groups of  applicants—the 12 phone and online applications, and the six in-person  attempts.
section_title: CMS Does Not Yet Have the Capability to Identify Those Who Have Paid for Policies, Limiting Our Ability to Analyze Enrollment
paragraphs: The federal government, in administering the two income-based  subsidies, makes payments to issuers of health insurance on behalf of  eligible consumers who have enrolled in a qualified health plan.  According to CMS officials, individuals are considered to be enrolled in a  plan after they pay the initial premium. Thus, a key factor in analyzing  enrollment in Marketplace coverage—and federal expenditures and  subsidies that follow—is the ability to identify which applicants approved  for coverage have subsequently paid premiums and put policies in force.
According to HHS, more than 8 million people selected a plan for  coverage during the initial open-enrollment period that ended in April.  CMS officials, however, told us they are thus far unable to identify  individuals who have made premium payments. Issuers have reported  this information to CMS, but the agency has not yet created a system to  process the information, according to CMS officials.
In May 2014, CMS officials told us that work is underway to implement  such a system. However, CMS does not have a timeline for completing  and deploying this work. As a result, under current operations, CMS must  rely on health insurance issuers to self-report enrollment data reflecting  individuals for whom CMS owes the issuers the income-based subsidies  arising from obtaining coverage through the Marketplace. We plan to  continue examining this issue, among others, as part of our ongoing work,  and to consider any recommendations needed to address it.
Chairman Boustany, Ranking Member Lewis, and Members of the  subcommittee, this concludes my statement. I would be pleased to  respond to any questions that you may have.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For questions about this statement, please contact Seto Bagdoyan at  (202) 512-6722 or BagdoyanS@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this statement.
Individuals making key contributions to this statement include: Wayne A.  McElrath, Director; Matthew Valenta, Gary Bianchi, and Kristi Peterson,  Assistant Directors; Carrie Davidson; Paul Desaulniers; Sandra George;  Robert Graves; Barbara Lewis; Maria McMullen; George Ogilvie; Shelley  Rao; Ramon Rodriguez; Christopher H. Schmitt; Julie Spetz; Cherié  Starck, Helina Wong; Elizabeth Wood; and Michael Zose.
section_title: Appendix I: Legal Appendix
paragraphs: This appendix provides background on certain requirements related to the  submission of applications and eligibility-verification procedures to enroll  in qualified health plans and qualify for income-based subsidies under the  Patient Protection and Affordable Care Act (hereafter PPACA).
To be eligible to enroll in a qualified health plan offered through a  marketplace established under PPACA, an individual must be a U.S.  citizen or national, or otherwise be lawfully present in the United States;  reside in the marketplace service area; and not be incarcerated (unless  pending disposition of the charges). moderate-income individuals and families may be eligible for income- based subsidies authorized by PPACA to make coverage more  affordable: (1) a refundable tax credit, generally paid on an advance  basis, to reduce premium costs for marketplace coverage (referred to as  premium tax credits) and (2) reductions in cost-sharing associated with  such coverage (known as cost-sharing reductions) for items such as  copayments for physician visits or prescription drugs. To qualify for either  subsidy, an individual must meet applicable income requirements and  must not be eligible for coverage under another qualifying plan or  program, such as affordable employer-sponsored coverage, Medicaid, or  the State Children’s Health Insurance Program. Subsidy payments are  made to the issuer of the qualified health plan to offset the cost of the  plan to the individual.
PPACA, § 1312(f)(1), (3),124 Stat. at 183-184; 45 C.F.R. § 155.305(a). subsidy eligibility. Applicants for coverage are to attest that they have not  intentionally provided false or untrue information. Applicants who provide  false information are subject to penalties under federal law, including  fines and imprisonment.
Marketplaces are required by law to take several steps to verify  application information to assess eligibility for enrollment in a qualified  health plan and, if applicable, to qualify for an income-based subsidy.  These verification steps include validating an applicant’s Social Security  number, if one is provided; verifying an applicant’s citizenship, status as  a national, or lawful presence with the Social Security Administration  (SSA) and/or the Department of Homeland Security; verifying household  income and family size against the most recent tax-return data from the  Internal Revenue Service (IRS), as well as data on Social Security  benefits from the SSA; and verifying whether the applicant is eligible for  health coverage under another qualifying plan or program that would  preclude eligibility for subsidy purposes.
Where the marketplace identifies certain inconsistencies in an application  that it cannot resolve through reasonable effort, the marketplace must  undertake an “inconsistency process,” under which the applicant is given  90 days to present satisfactory evidence to resolve the identified  inconsistencies. For example, the inconsistency process applies when  the marketplace is unable to validate an individual’s Social Security  number or attestation regarding citizenship or immigration status. It also  applies when the marketplace is unable to verify eligibility for income- based subsidies, including, for example, if an applicant indicates a  change in circumstances, such as substantial changes in income  compared with the most recent tax return available, or IRS does not have  recent tax-return data. During the inconsistency period, the marketplace  must allow the applicant to enroll in a qualified health plan and, if  applicable, authorize the advance payment of any premium tax credit or  cost-sharing reduction to the applicant’s issuer on the basis of the  applicant’s attestations.
PPACA authorizes the Department of Health and Human Services to extend the 90-day  period for enrollments occurring during 2014. PPACA, § 1411(e)(4)(A)(ii), 124 Stat. at 228.  CMS regulations also generally permit the marketplaces to extend the 90-day period if the  applicant has made a good faith effort to obtain documentation required to resolve the  inconsistency. 45 C.F.R. § 155.315(f)(3). inconsistency period, an applicant also must attest to understanding that  any advance payments of premium tax credits received during this period  are subject to reconciliation. Marketplaces are required to permit  applicants to receive less than the full amount of advance payments of  the premium tax credits in order to minimize the possibility of having to repay such credits if their actual income for the benefit year is higher.
This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.