Not All of the Federally Facilitated Marketplace's Internal Controls Were Effective in Ensuring That Individuals Were Properly Determined Eligible for Qualified Health Plans and Insurance Affordability Programs

Not all of the Federal marketplace's internal controls were effective in ensuring that individuals were determined eligible for enrollment in qualified health plans (QHPs) and eligible for insurance affordability programs according to Federal requirements. We determined that certain controls were effective, such as the controls for verifying applicants' incarceration status, but that other controls were not effective.

Without properly verifying an applicant's eligibility and properly resolving and expiring inconsistencies in applicant information, the Federal marketplace cannot ensure that the applicant meets eligibility requirements for enrollment in a QHP and for insurance affordability programs and that the amounts of the advance premium tax credit and cost-sharing reductions are determined correctly. ("Expiring" an inconsistency means making a determination about an applicant's eligibility generally on the basis of available data sources when a marketplace is unable to resolve the inconsistency.) However, the presence of an internal control deficiency does not necessarily mean that the marketplace improperly enrolled an applicant in a QHP or improperly determined eligibility for insurance affordability programs.

In addition, we identified procedures related to resolving inconsistencies that could be improved. Specifically, the Federal marketplace (1) resolved inconsistencies related to annual household income on the basis of applicants' responses to income discrepancy questions and using a higher threshold than the threshold used to initially verify income and (2) extended inconsistency periods indefinitely for the calendar year 2014 coverage period on the basis of applicants' good-faith efforts to obtain required documentation.

We recommended that the Centers for Medicare & Medicaid Services (CMS) take action to improve the Federal marketplace's internal controls related to verifying applicants' eligibility and resolving and expiring inconsistencies to address the specific deficiencies we identified; redetermine, if necessary, the eligibility of the sample applicants for whom we determined that verifications of eligibility and resolutions and expirations of inconsistencies were not performed according to Federal requirements; and improve procedures related to resolving inconsistencies.

In written comments on our draft report, CMS concurred with all three of our recommendations and provided information on actions that it had taken or planned to take to address our recommendations.