Watchdog: ObamaCare 'vulnerable' to fraud

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The administration took a “passive” approach to preventing ObamaCare fraud and the system remains “vulnerable,” according to a report from the nonpartisan Government Accountability Office (GAO).

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The GAO found that 431,000 applicants in 2014, who received about $1.7 billion in subsidies, still had unresolved inconsistencies in their applications as of April 2015, months after the coverage year had ended. Inconsistencies, such as when an applicant’s information does not match federal databases, can involve Social Security numbers or immigration status. 

The GAO found that the Centers for Medicare and Medicaid Services (CMS) “did not have an effective process for resolving inconsistencies.” 

As a result, the GAO found, the government is at risk of paying ObamaCare subsidies to people ineligible to receive them.

The level of actual fraud is unknown, because many data inconsistencies are mistakes with no ill intent. The CMS says they try to balance making it easier for people to enroll and having strict documentation requirements. 

Still, the Department of Health and Human Services (HHS) agreed with the GAO’s recommendations and said that it has been improving processes since the first year of coverage, in 2014. 

The GAO report, though, found that the CMS had not taken any steps to end or adjust subsidies to people with inconsistencies related to their Social Security number or incarceration status. 

The CMS responded that Social Security number issues are usually associated with other problems that are investigated and pointed to problems with the database that shows whether someone is in prison and therefore ineligible. 

The report also found that while there is a process for recovering the tax credits given out under the health law, there is no such process for recouping a different kind of financial assistance known as Cost Sharing Reductions. 

The report also found the CMS had not even taken the “initial step” of conducting a fraud risk assessment to identify vulnerabilities in the system.

In response, HHS pointed out that the tax return process checks to make sure that people are receiving the correct amount of subsidy. It also said that it had already ended coverage for 471,000 people in 2015 who failed to produce enough documentation on their immigration status, and had adjusted subsidy amounts for over one million households. 

Still, HHS concurred with the GAO’s recommendations for improvements. Those recommendations include stepping up enforcement of Social Security number and incarceration inconsistencies, conducting a study on how better to monitor and analyze data and tracking the value of subsidies that are eliminated or reduced so as to identify areas that are at risk. 

Republicans were quick to seize on the report.

“One thing is clear — CMS has been asleep at the wheel with billions of taxpayer dollars at risk,” House Energy and Commerce Chairman Fred Upton (R-Mich.) said in a statement. 

“This laundry list of concerns showcases systemic problems throughout Obamacare, and broad mismanagement at CMS. These complex, massive problems represent what we’ve known all along — Obamacare is full of broken promises.”

This story was updated at 11:14 a.m.