Fake applicants kept ObamaCare coverage, watchdog finds

Eleven fictitious people created as part of an undercover watchdog effort were able to automatically re-enroll in ObamaCare coverage, a new report finds. 

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The report, from the nonpartisan Government Accountability Office, follows up on a GAO report last year. That report found that 11 of 12 fictitious people, with fake documents, were able to successfully enroll in ObamaCare coverage through the federal HealthCare.gov marketplace. 

The follow-up report, released by congressional Republicans on Wednesday, finds that those 11 fictitious people were able to maintain their coverage through the end of 2014 and then were automatically re-enrolled for 2015. Some were re-enrolled even though no additional documentation was provided.   

The marketplace later terminated coverage for six of the 11 people. But the GAO was able to reinstate five of the six fictitious applicants by calling the marketplace. 

“The CMS document-verification process is not designed to identify fraudulent applications,” the GAO report states, referring to the Centers for Medicare and Medicaid Services.

The GAO found the contractor that handles ObamaCare application documents is not required to look for fraud, only to inspect to make sure documents have not obviously been altered.

CMS officials told the agency that there has been “no indication of a meaningful level of fraud”; however, the GAO points out that there could be fraud that officials do not know about because the system is not equipped to detect it. 

“Overall, according to CMS officials, the agency has limited ability to respond to attempts at fraud,” the report states. “They told us CMS must balance consumers’ ability to ‘effectively and efficiently’ select Marketplace coverage with ‘program-integrity concerns.’”

The watchdog says CMS officials told it that they plan to conduct an assessment of the application process. 

Aside from the direct question of fraud, the report finds that letters from the ObamaCare marketplace to the consumers were sometimes “unclear” or had “inaccurate guidance.” 

Meaghan Smith, a Department of Health and Human Services spokeswoman, said the marketplace has a verification process to check identity and eligibility that did block the GAO investigators' initial attempts to enroll. She said the department will work with GAO to make more improvements.  

"Over the last year, we have made continuous improvements to our processes and communications for those with a data matching issue as we work to bolster the integrity of the process," she said in a statement. "Independent reviews provide an additional check as we work with an array of stakeholders to make improvements as the Marketplace matures."

She added that applicants must also attest under penalty of perjury that their information is correct. The administration has also ended enrollment for 226,000 people who failed to provide enough documentation of their immigration status, she said. 

Top congressional Republicans had harsh words on the report, ahead of a Senate Finance Committee hearing Thursday on HealthCare.gov.

“That the administration failed to weed out fake applicants one year later is yet another shocking development that, unfortunately, continues the trend of ObamaCare’s gross mismanagement at the expense of hardworking taxpayers,” said Senate Finance Committee Chairman Orrin HatchOrrin Grant HatchKavanaugh accuser agrees to testify next week Judiciary Dems say GOP treating Kavanaugh accuser worse than Anita Hill Dem vows to probe 'why the FBI stood down' on Kavanaugh MORE (R-Utah).

“Last year, this committee warned that weaknesses in HealthCare.gov could put billions of taxpayer dollars at risk, and the GAO undercover review has confirmed our concerns,” said House Ways and Means Committee Chairman Paul RyanPaul Davis RyanHow does the 25th Amendment work? Sinema, Fitzpatrick call for long-term extension of Violence Against Women Act GOP super PAC drops .5 million on Nevada ad campaign MORE (R-Wis.). “One year later, this investigation continues to reveal alarming flaws in the ObamaCare system.”

- Updated at 6:55 p.m.