CMS puts ACA agents and agencies on notice: Immediate suspension if fraud is suspected

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Scout's honor won't cut it

Early this month, CMS released its annual proposal to update various rules governing the ACA marketplace, the Notice of Benefit and Payment Priorities (NBPP) for 2026. In one section, CMS proposes to clarify and perhaps expand upon its ability to swiftly suspend health insurance agents, agencies, and web-brokers (commercial enrollment platforms) suspected of fraud.

The proposed rule clarifies the conditions under which CMS will do what it is already doing under existing authority: Seek out and immediately suspend individuals* and entities whose enrollment records suggest a pattern of unauthorized enrollments and plan-switching and/or falsified income or eligibility information. Systemic failure to protect clients’ personally identifiable information is also grounds for immediate suspension.

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In clarifying its authority and intent to act swiftly to shut down agent fraud, CMS acknowledges that such fraud has escalated in the past year:

Since the start of PY 2024 Open Enrollment, we have seen an increase in complaints from enrollees, applicants, and other individuals and entities to the Agent/Broker Help Desk regarding enrollments submitted without enrollee or applicant consent, enrollee or applicant eligibility applications submitted with incorrect information and without enrollee or applicant review or confirmation of the eligibility application information, and changes to enrollee or applicant eligibility applications made without enrollee or applicant consent.

The patterns of fraudulent behavior CMS states it will seek out closely mirror the allegations in the putative class action lawsuit filed (and amended here) against agencies TrueCoverage and Enhance Health and TrueCoverage’s captive web-brokers, BenefitAlign and Inshura, which CMS suspended this past August. (Inshura is simply TrueCoverage’s rebranding of the Enhanced Direct Enrollment platform BenefitAlign.) Indeed, the allegations of fraud patterns in the proposed rule read in part rather like an answer to the suit BenefitAlign filed to force CMS to lift its suspension (CMS’s fourth suspension of TrueCoverage, Inshura and/or BenefitAlign since 2018). Among the suit allegations echoed in the proposed rule changes:

Monitoring web-brokers (EDE platforms)

Past investigations using system monitoring data have borne results that show a connection between potentially noncompliant, fraudulent, or abusive behavior and the trends we monitor. For example, we monitor the number of unsuccessful person searches on approved Classic DE and EDE partner sites because, in our experience, there is often a correlation between a high volume of unsuccessful person searches and noncompliant, fraudulent, or abusive behavior. The person search feature is intended to help agents, brokers, and web-brokers find consumer applications to prevent duplicate enrollments, but in our experience, bad actors use this feature to find applications and make plan changes or NPN changes without consumer knowledge or consent, negatively impacting the consumer and compliant agents, brokers, and web-brokers.

(The recently-suspended BenefitAlign alleges in its suit that it processed 1.6 million enrollment applications in Open Enrollment for PY 2024.)

Monitoring agencies

Discovering agency-wide resources, such as company practices or directives, training manuals, or marketing material that suggests agency endorsement of or involvement in misconduct or noncompliant behavior or activities is another source of information we would use to determine whether to engage in a compliance review or take an enforcement action…

we have seen agency documentation instructing agents and brokers who work at the agency to fabricate enrollee or applicant incomes on eligibility applications submitted to the FFEs or SBE–FPs to ensure the enrollee or applicant has a zero-dollar policy….

Additionally, as part of these investigations and actions, we have reviewed agency procedures and directives instructing agents and brokers who work at the agency to not speak with the enrollee or applicant prior to enrolling them in a plan.

Monitoring agents

A non-exhaustive list of agent or broker data we monitor to identify behaviors or activities that may be indicative of misconduct or noncompliance with applicable HHS Exchange standards or requirements includes: (1) the number of Exchange transactions submitted to the FFEs or SBE–FPs to change enrollee or applicant eligibility application information or plan selections, (2) the volume of person search activities, (3) the number of submitted eligibility applications with missing Social Security Numbers (SSNs), (4) the number of enrollments submitted within a specified timeframe, and (5) the volume of submitted eligibility applications with NPN changes. We also review and consider complaints from enrollees, applicants, and other individuals or entities concerning agent and broker activities.

In elaborating its intent to respond to suspicious activity with immediate suspensions, CMS stresses that it already has the authority to do this. Part of the proposed rule is devoted to affirming CMS’s intent to focus not just on individual agents but also on agencies that employ many agents and exhibit a pattern of encouraging or mandating noncompliant behavior. CMS notes that some 640,000 enrollments record the National Producer Number (NPN) of an agency, rather than an individual agent. In cases where agency-level misconduct is suspected, CMS affirms its intent to direct enforcement action “at the lead agent(s) and any other agent, broker, or web-broker who is discovered to be involved in the misconduct or noncompliant activity.”

While CMS points toward a significant number of enrollments that show an agency’s NPN rather than an individual’s, agents who have had their clients poached complain that when rogue individual agents are identified, there is often nothing to tie them to an agency that may be training and directing them in bad practice. Hence, perhaps, CMS’s emphasis on analyzing EDE data (hello, BenefitAlign) and getting hold of actual agency training materials as well as on including applications with agency NPNs in its analysis.

With regard to imposing immediate suspensions of agents, agencies and web-brokers suspected of fraud or noncompliance, CMS stresses that it already has that authority. Its only proposed change to the existing provision granting that authority, CFR 45 § 155.220 (k)(3), is the addition italicized below:

HHS may immediately suspend the agent's or broker's ability to transact information with the Exchange if HHS discovers circumstances that pose unacceptable risk to the accuracy of the Exchange's eligibility determinations, Exchange operations, applicants, or enrollees, or Exchange information technology systems, including but not limited to risk related to noncompliance with the standards of conduct under paragraph (j)(2)(i), (ii), or (iii) of this section and the privacy and security standards under § 155.260, until the circumstances of the incident, breach, or noncompliance are remedied or sufficiently mitigated to HHS' satisfaction.  

The first part of the federal code alluded to, paragraph (j)(2)(i), (ii), or (iii) of CFR 45 §155.220, lays out the conditions generally violated by the agent fraud or sloppy practice that’s come into focus recently. These include requirements that the agent provide both the client and the marketplace with accurate information; document that the client has taken positive action to affirm that the information provided to the marketplace is accurate; provide contact information that verifiably belongs to the client; provide an income estimate calculated by the client; and document that the client has taken action to confirm consent for the agent to assist with the application.

As much of the fraud of the past year-plus was at least initially enabled by vague rules concerning the obtaining of client consent, the NBPP also proposes modifying a Model Consent Form created in 2023 as part of the 2024 NBPP. The update would “include a section for documentation of consumer review and confirmation of the accuracy of their Exchange eligibility application information.” Startlingly, CMS confesses, “Until we finalized new requirements related to consumer consent in the 2024 Payment Notice, there was no mandate to document the receipt of consent of the consumer or their authorized representative, or to maintain such documentation.” That was the loophole that the unauthorized plan-switching/unauthorized enrollment gravy train drove through. While the requirement was in place for Plan Year 2024, enforcement lagged behind.

The second section of CFR 45 alluded to above, §155.260, lays out the exchange’s responsibility to protect applicants’ personally identifiable information (PII) and the responsibility of non-exchange entities that gain access to PII to maintain the security of that information. CMS cited failure to protect PII (by sharing it with overseas subsidiaries) in suspending the EDE BenefitAlign.

CMS more or less explicitly states that the purpose of the proposed added language is to send a message:

Though we believe our current authority in § 155.220(k)(3) allows HHS to implement system suspensions broadly based on circumstances that pose unacceptable risk to Exchange operations or Exchange information technology systems, in light of the increasing complaints about unauthorized enrollments, we propose amendments to § 155.220(k)(3) to increase transparency concerning the reach and application of system suspensions and more accurately capture in regulation when HHS may invoke this authority. These proposed amendments would allow HHS to immediately respond to discovered risks to the accuracy of Exchange eligibility determinations, Exchange operations, applicants, or enrollees, or Exchange information technology systems. They would also provide agents and brokers with an increased understanding of our approach to implement system suspensions. The proposed amendments would also better encapsulate the original intent of the § 155.220(k)(3) suspension authority, which included protecting against unacceptable risk to consumer Exchange data.

Agents and agencies are thereby placed on notice: ‘We will shut you down if you can’t document that your clients have attested to the accuracy of information provided on the application and confirmed their permission for you to act on their behalf.’

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* Suspension under the provision in question, CFR 45 §155.220 (k)(3), does not terminate an agent’s registration with the marketplace, and agents can submit evidence that the suspension is unwarranted, or that the flagged conduct has been remedied or mitigated to HHS’ satisfaction. Agents suspended under this provision can continue to assist clients with enrollment, either by phone or “side-by-side” on Healthcare.gov, but not independently on an EDE platform. Suspension under other provisions, §155.220 (f) or (g), in contrast, suspend or terminate the agent’s exchange agreement.

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Photo by Bryce Carithers 

VanceCare without Legislation

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Which risk pool will you land in?

In a recent post, I argued that JD Vance’s rendition of Trump’s “concept of a plan” for healthcare was mainly a sketch of how a second Trump administration would “build on” (tear down) the ACA marketplace administratively, without repeal/replace legislation.

In brief, that would entail 1) rebuilding Trump 1.0’s alternative market of medically underwritten, ACA-noncompliant plans (so-called Short-Term Limited Duration, or STLD, plans), and 2) prompting states to implement measures like the waiver concepts put forward by Trump’s former CMS administrator, Seema Verma. These “concepts” included 1) replacing ACA premium subsidies with a lump-sum health savings account that could be used to pay premiums for any plan; 2) inviting states to restructure the federal premium subsidy as they wished; 3) allowing states to grant premium subsidies for ACA-noncompliant plans; and 4) creating state high risk pools. Options 1 and 3 could effectively convert the ACA-compliant marketplace as we know it into a high risk pool of sorts, and in combination with option 4, could create the multiple stratified risk pools that Vance described in followup comments.

Vance’s comments could also be read as an outline of repeal/replace legislation along the lines of the failed repeal/replace bills of 2017, which a Republican Congress would probably push through under a more authoritarian Trump 2.0 and a more MAGA Republican caucus than that of 2017-18. (In that case, Vance, the MAGA convert, would have to get on board with the massive Medicaid cuts, beginning with repeal of the ACA Medicaid expansion, which he criticized in the 2017 repeal bills.) But a second Trump presidency with Democrats in control of one house of Congress (if Trump 2.0 does not effectively neuter Congress by extra-Constitutional means) is as likely as a Republican trifecta. And should that scenario play out, Republicans in Congress are laying the groundwork for a third plank in an assault on the ACA marketplace as we now know it — that is, undermining a marketplace that provides plans with guaranteed issue, Essential Health Benefits, and no caps on coverage to virtually all enrollees in the individual market.

That third plank is blocking renewal of the marketplace premium subsidy enhancements originally provided by the American Rescue Plan Act (ARPA) in March 2021 and extended through 2025 by the Inflation Reduction Act in August 2022. ARPA not only reduced the percentage of income required to pay for a benchmark (second-cheapest) silver plan at every income level — it also removed the income cap on subsidies, which was 400% of the Federal Poverty Level ($51,040 for a single person and $104,800 for a family of four in 2021, when ARPA was implemented). Prior to ARPA, given the high cost of unsubsidized ACA-compliant insurance, the income cap left a major hole in the ACA’s “affordable care” promise — especially for older prospective enrollees, since premiums rise with age. The unaffordability of insurance for several million people dependent on the individual market was Republicans’ main cudgel against the ACA for years. Prospective enrollees who were subsidy-ineligible were the primary constituents for Trump’s alternative STLD market — a bad solution to a real problem.

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While ACA premiums came in somewhat lower than expected when the market launched in advance of Plan Year 2014, they spiked in 2017 — a major correction triggered in part by expiration of the ACA’s temporary national reinsurance program. Average benchmark premiums rose 20% in 2017 — and then soared another 34% in 2018, in a market roiled by Republicans’ ACA repeal drive and Trump’s threatened cutoff of direct reimbursement of insurers for the Cost Sharing Reduction benefit attached to silver plans for low-income enrollees, which he executed in October 2017. (Starting in 2018, the value of CSR was priced directly into silver plans in most states.) The premium hikes decimated off-exchange and unsubsidized on-exchange enrollment in ACA-compliant plans. According to KFF estimates, unsubsidized enrollment in ACA-compliant plans dropped by essentially half from Q1 2016 to Q1 2019, from 6.7 million to 3.4 million. That created at least a potential market for Trump’s medically underwritten STLD plans — and would again, should the income cap on subsidy eligibility snap back into place (as it will in Plan Year 2026, if Congress does not act).

Premiums stabilized after 2018 — and the Trump administration can take some credit for that, as the administration invited states to establish their own reinsurance programs with partial federal funding (15 states did so by 2020) and, at insurers’ request, tightened the rules by which enrollees could obtain Special Enrollment Periods outside of Open Enrollment. Average benchmark premiums were slightly lower in 2024 ($477) than in 2018 ($481). This year, however, premiums are on course for a substantial increase, averaging about 6%, according to Charles Gaba’s tracking of rate requests. That’s barely noticed in a marketplace where more than 90% of enrollees are subsidized. It would be noticed if the income cap on subsidy eligibility were removed. Substantial increases in 2026 and thereafter would help a second Trump administration sell lightly regulated, medically underwritten alternatives.

Democrats are ramping up calls to extend the ARPA subsidy increases, as the pending expiration of the income tax cuts for individuals in the Republican-created 2017 Tax Cuts and Jobs Act provides some leverage. Prominent House Republicans are digging in against extending the ARPA subsidy boosts, characterizing them as “ massive taxpayer-funded handouts to the wealthy and large health insurance companies.” That’s pretty funny, considering that Republicans relentlessly hammered the ACA in pre-ARPA years for leaving those with incomes over 400% FPL high and dry. In any case, most post-ARPA enrollment growth is in the 100-150% FPL income bracket (which the statement cited above also decries) — and almost three quarters of those 2024 enrollees* would be in Medicaid if ten states (including big enchiladas Texas and Florida) were not still refusing to enact the ACA Medicaid expansion. Since Medicaid is cheaper, Medicaid expansion should be a top priority of purportedly budget-conscious Republicans.

Republican opponents of ARPA subsidy expansion are leaning heavily on a paper by Brian Blase, formerly a special assistant to Trump’s National Economic Counsel, alleging rampant overpayment of subsidies in the ACA marketplace. Blase does have a legitimate complaint in the recent explosion of unauthorized enrollment and plan-switching by unscrupulous ACA brokers. That fraud was stimulated in part by ARPA’s zeroing out of premiums for benchmark coverage for enrollees with income under 150% FPL (currently $21,870 for an individual), in combination with an administrative rule enacted in early 2022 that allows not only year-round enrollment to people below that threshold, but also a monthly Special Enrollment Period (SEP), enabling endless plan-switching. While I agree with Blase that that monthly SEP should be eliminated, and that CMS needs to act aggressively to quell broker fraud (as it appears to be doing), Blase attacks the subsidy enhancements with more dubious claims fraud in ACA enrollees’ income estimates — that is, raising or lowering income estimates to maximize subsidies (or access them at all). To those claims, I responded in detail here. The TLDR:

1) Most of the Post-ARPA enrollment increase in the ACA marketplace, as well as most of the increase at incomes where Blase alleges fraud is concentrated, is in states that have refused to enact the ACA Medicaid expansion, where most adults who estimate their incomes below 100% FPL get no government help at all. If substantial numbers of enrollees do in fact have incomes below 100% FPL, the solution is to…enact the ACA Medicaid expansion. People with income below 100% FPL should not be left with no access to affordable coverage.

2) ACA subsidies are based on an estimate of future income, which is inherently uncertain, especially for people at low incomes, who often work uncertain hours, change jobs, are self-employed, or depend on tips. Mismatches between income reported to the IRS and income projected in ACA applications probably have as much to do with inaccuracies in tax reporting as with inaccurate income projections in the ACA application. As for mismatches between income data based on ACA enrollment and data from the Census Bureau’s consumer surveys, those, like mismatches between IRS data and survey data, are perpetual.

3) Blase misreads CMS figures regarding former Medicaid enrollees, disenrolled in the post-pandemic “Medicaid unwinding,” who enrolled in the ACA marketplace in 2024. In HealthCare.gov states, according to CMS tracking, about a third of Medicaid disenrollees enrolled in the marketplace — not 70%, as Blase claims.

CMS needs to stop the broker fraud; should probably end the monthly SEP (though not year-round first-time enrollment for those with income under 150% FPL); and perhaps ramp up income checks on enrollees who may be underestimating their income (as opposed to overestimating it to get over the 100 % FPL threshold). Killing the ARPA subsidies to quell broker fraud would be throwing the baby out with the bathwater. But of course that baby — affordable insurance for those who lack access to affordable employer-sponsored health insurance — is a perpetual target for Republicans. And killing the ARPA subsidy boosts would further another core Republican goal — undermining the ACA’s protections for people with pre-existing conditions.

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* In 2024, 6.9 million marketplace enrollees reported income in the 100-138% FPL range. In the broader 100-150% FPL category, 9,407,463 enrolled in 2024. The 100-138% FPL bracket was not reported in 2021, the last pre-ARPA year. From 2021 to 2024, enrollment in the 100-150% FPL bracket increased from 3.8 million to 9.4 million. That’s an increase of 5.5 million, more than half of the total increase of 9.4 million from 2021 to 2024. See the Marketplace OEP Public Use Files. To compare all-state totals at 100-150% FPL for 2021 and 2024 I excluded Idaho, which did not provide income breakouts to CMS in 2021.

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Waiting for Vance's Hillbilly ACA elegy

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Does Vance have a Hillbilly ACA Elegy for us?

10/2/24: See post-debate update at bottom.

My last post focused on JD Vance’s sketch of a “concept of a plan” for “building on” the ACA in a second Trump administration. Vance’s remarks on Meet the Press last Sunday seem to promise a more sweeping version of the alternative market of medically underwritten, ACA-noncompliant health plans established by the first Trump administration.

Here I want to focus on a bit of purported family history that Vance injected into his paean to Trump’s alleged improvements to the ACA. This is to encourage political journalists to ask Vance exactly what he’s referring to in the highlighted section below.

In which JD Vance fleshes out Trump's "concept of a plan" for healthcare

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JD Vance is catching a lot of flak for seconding Trump’s debate assertion that when “Obamacare was collapsing…[it wasn’t], he chose to build upon it and make it better” — and for claiming that Trump currently has a healthcare reform plan.

While Vance’s claims are misleading, and the “concepts of a plan” he went on to sketch out would harm the ACA marketplace, not help it, it is in fact true that after Republicans’ drive to substantially repeal the ACA collapsed in 2017, the Trump administration did implement measures that according to conservative precepts would improve markets. A second Trump administration would probably more or less repeat those measures and extend them - -if it fell short of substantially repealing the ACA.

Here is part of what Vance sketched out (via my own near-verbatim transcript):

President Trump’s healthcare plan is actually quite straightforward: you want to make sure pre-existing conditions are covered, make sure people have access to the doctors they need…you also want to implement some deregulatory agenda so people can pick a health plan that suits them. Think: a young American doesn’t have the same health needs as a 65 year-old American. A 65 year-old American in good health has much different healthcare needs than a 65 year old with a chronic condition. We want to make sure everyone is covered, but the best way to do that is to actually promote some more choice in our healthcare system and not have a one-size fits all approach that puts a lot of people into the same insurance pools, the same risk pools — that actually makes it harder for people to make the right choice for their families….

He [Trump] of course has a plan for how to fix American healthcare, but a lot of it goes down to deregulating the insurance markets so that people can choose a plan that actually makes sense for them.

Various healthcare experts, including KFF’s Larry Levitt, have taken this as a proposal to establish high risk pools — a favorite conservative nostrum with a long history of being underfunded and inaccessible to those who need them. That may be true in a sense. But based on the past Trump administration actions that Vance alludes to, the “high risk pool” may be the current ACA marketplace itself — after a second Trump administration gets through with it.

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The Trump administration’s major initiative to “build on” the ACA marketplace after repeal failed was to stand up (by administrative rule in 2018) a parallel market of medically underwritten, lightly regulated plans by extending the allowable duration of already-existing so-called “short-term, limited duration plans” (STLD) to up to one year, renewable twice. The Obama administration had limited STLD duration to three months, though not until 2016. In combination with the Republican Congress’s zeroing out of the tax penalty for failing to obtain ACA-compliant insurance, the STLD market was an alternative for people who were priced out of the regulated ACA marketplace — as several million people were before the Biden administration removed the income cap on subsidy eligibility via the American Rescue Plan Act (ARPA) in March 2021. (The ARPA subsidy enhancements were temporary, and extended by the Inflation Reduction Act only through 2025.)

STLD plans can refuse access to people with pre-existing conditions or exclude coverage for the condition. They do not have to cover the ACA’s Essential Health Benefits and generally offer very limited prescription drug coverage, if any, and no substance abuse coverage. They are not subject to the ACA requirement to spend at least 80% of premiums on members’ medical bills (and on a few allowed other expenses) and have been reported to spend as little as 45% of premiums on claims. They do not have to offer a provider network and can pay providers what they deem appropriate, exposing enrollees to balance billing. They do not have to provide an annual out-of-pocket cost cap on covered benefits, though some do. They are much like the plans offered in the pre-ACA individual market.

[n.b. the rest of this post more or less remixes my discussion of the STLD market under the last subhead in this post].

Taking the short term and limited duration out of Short Term Limited Duration insurance was a bad solution to a real problem. The Affordable Care Act promised to make adequate, affordable insurance available to all, via public program or private insurance, but under-subsidization meant that the program fell far short of that promise. Most acutely, the income cap on subsidy eligibility (400% of the Federal Poverty Level) ensured that minimum essential coverage was unaffordable to several million people (as the ACA’s guaranteed issue and EHB requirements had raised the price of coverage). In the most extreme case, a pair of 64 year-olds in Nebraska with an income of $67,000 — just over the 400% FPL threshold in 2018— would have to pay an average of $2,667 per month for the lowest-cost bronze plan available. That year, the average bronze plan single-person deductible was $6,002. More broadly, in August 2015 Urban Institute scholars Linda Blumberg and John Holahan calculated, in a proposal for ACA reform, that marketplace enrollees in the 400-500% FPL range (just over the subsidy eligibility threshold) would pay 18% of income for marketplace premiums and out-of-pocket costs at the median and 25% of income at the 90th percentile.

The expanded STLD plan market at least potentially degraded ACA marketplace risk pools while saddling some people with illusory insurance that failed them when they needed it, as several news accounts related. Still, not all STLD plans were (or are) terrible. Some have extensive provider networks and out-of-pocket cost caps. For some customers not shut out of coverage for a serious pre-existing condition, they offered better-than-nothing coverage at a price well below ACA marketplace coverage — though ARPA’s removal of the income cap on subsidy eligibility vastly reduced the pool of people for whom this is true (and letting the ARPA subsidy boosts expire is therefore essential to remaking the market along these lines). From a healthcare conservative’s perspective, Trump could be said to have “built on” the ACA — though his measures plainly were designed to undermine the ACA-compliant individual market.

To further stimulate the parallel market, CMS administrator Seema Verma proposed loosening the requirements for state “innovation waiver” proposals authorized under ACA Section 1332 and issued a set of “waiver concepts” inviting states to propose schemes that would enable ACA-noncompliant plans to access federal premium subsidies. Georgia was the only state to partially accept the invitation, filing a waiver proposal in late 2020 that, along with establishing a reinsurance program, would eliminate a centralized state-sponsored exchange, establish a “copper” plan level with an actuarial value below the minimum required by the ACA statute, and, in one early iteration, allow plans that did not include all EHBs to be paid for with federal subsidies (that provision was cut from the submitted waiver, as it violates the ACA statute too plainly even for Trump-appointed administrators). While the Trump administration approved the waiver in November 2020, the Biden administration suspended approval of all but the reinsurance program, pending redesign. Georgia has now received CMS approval to open a conventional state-based marketplace, albeit the first to enable Enhanced Direct Enrollment on commercial sites. (Promotion of EDE, which facilitates fast work by brokers, is another Trump administration initiative that can be said to have “built on” the ACA, and was continued by the Biden administration — though EDE has recently proved double-edged, enabling large-scale agent/broker fraud. Weirdly, the pending Georgia exchange has certified for use in November two EDE entities suspended by CMS in August for suspected security breaches and participation in enrollment fraud.)

Failing legislative repeal and “replacement” of the ACA along the lines of the Frankenstein-monster Republican bills of 2017 (the AHCA, the BCRA, and Graham-Cassidy) a second Trump administration could be expected to push Verma’s waiver concepts in directions that clearly violate the ACA statute, e.g. by allowing federal subsidies to fund medically underwritten plans or plans that do not include all of the ACA’s required Essential Health Benefits. On this as on all other fronts, a second Trump administration would likely be less constrained by law than the first one. In combination with sunsetting the ARPA enhanced subsidies, such measures could indeed convert the ACA-compliant into a high risk pool, as former Obama-era acting CMS administrator Andy Slavitt warned that Trump’s STLD market would do. That is, with medically underwritten plans eligible for subsidies, only those with pre-existing conditions might choose ACA-compliant that don’t discriminate on the basis of health.

Takeup of STLD plans appears to have been far more limited than some market watchers feared or CBO predicted in the wake of the Trump rule. That’s in part because more than half of states either limited STLD terms on their own (as the Trump administration rule permitted) or banned them altogether. The Biden administration removed most (not all) of the demand for STLD plans as a full-year coverage option via the ARPA subsidy enhancements, and retracted the Trump administration’s extension of allowable STLD plan terms, limiting them once again to three months. A recent Commonwealth Fund analysis concluded:

A modest number of people — no more than one-fifth of the 1.5 million the CBO projected — are likely to have enrolled in STLDI plans that became available after the Trump administration’s regulatory change. This enrollment mainly appears to have displaced marketplace coverage. There is no evidence that the broader availability of STLDI plans had any meaningful effect on nongroup coverage in general or on uninsurance.

If the ARPA subsidy enhancements are allowed to sunset, however, and the Trump administration encourages state initiatives like Georgia’s, effectively eliminating government-sanctioned exchanges and allowing subsidies for ACA-noncompliant plans, Trump’s “concept of a plan” may take chaotic but recognizable shape.

I should add, too, that fraught and important as political combat over the shape of the individual market for health insurance was, is, and will be, to a large extent this fifteen-year battle obscures the core battleground of ACA-related healthcare policy: funding and eligibility for Medicaid. Virtually all formal Republican healthcare proposals, from ACA repeal bills to Republican Study Group plans, Project 2025, and Trump administration budgets, include massive cuts to Medicaid, including rollback of the ACA expansion of Medicaid eligibility. The ACA extended Medicaid eligibility to all citizens and most legally present noncitiizens with incomes up to 138% of the Federal Poverty Level — an expansion rendered optional for states by the Supreme Court in 2012 and currently implemented by 40 states plus D.C. At most recent count (December 2023), some 22 million Medicaid enrollees are rendered eligible by ACA eligibility criteria. Proposed Republican cuts to Medicaid invariably go far beyond repeal of the ACA eligibility expansion by converting Medicaid funding to block grants or imposing per capita caps on funding, plans. CBO forecast in 2017 that the BCRA, the Senate ACA repeal bill, would cut Medicaid funding compared to then-current law by 26% in the first ten years and 35% in the next ten ($2.1 trillion by CRFB’s estimate). Those plans are core to the Republican agenda, and would do more damage than any disfigurement of the individual market.

Ultimately, the pre-existing condition that matters most, and is shared by most Americans (and indeed most humans), is inability to pay full price for health insurance. For most Americans under age 65, an employer pays the bulk of the premium, typically about three quarters of family coverage or five sixths of individual coverage. In the ACA marketplace, the government fulfills that role for more than 90% of enrollees, paying an average of more than 80% of the premium. In Medicaid, federal and state government pay the entire premium. Republicans want to kick 15-20 million people off Medicaid, sharply cut subsidies in the individual market, and alleviate the cost of those individual market cuts for some by subsidizing medically underwritten, lightly regulated insurance. That’s their concept. That’s their plan.

UPDATE, 9/20/24: As noted at the top, most interpreters of Vance’s comments assume he was proposing the kind of high risk pools that existed — and generally failed to make adequate affordable coverage available to those who needed them — before the ACA. Further Vance comments on Sept. 18 , in which he alluded to allowing “people with similar health situations to be in the same risk pools,” reinforce that impression. Today, however, a statement the Vance campaign provided to the Washington Post’s Dan Diamond and Meryl Kornfield, make me think that I was on the right track in this post:

“Senator Vance was simply talking about the significant improvements President Trump made to the Affordable Care Act through his deregulatory approach, which aimed to bring down the cost of premiums while ensuring coverage for pre-existing conditions,” spokesman William Martin wrote in a text message.

Again, the full context was defending Trump’s claim that after ACA repeal failed, he “built on” the program — as well as that he has “concepts of a plan” for new reform.

See also the next post: Did Trumpcare really insure Vance family members for the first time?

UPDATE, 9/23/24: A fresh look at Seema Verma’s waiver concepts for states (11/29/18) reinforces my sense that these concepts plus a revived full-term STLD market (or equivalent) is Vance’s “concept of a plan.” The waivers concepts (abbreviated below) include:

• Account-Based Subsidies: Under this waiver concept, a state can direct public subsidies into a defined-contribution, consumer-directed account that an individual uses to pay for health insurance premiums or other health care expenses [e.g., for a medically underwritten alternative to ACA-compliant plans]

• State-Specific Premium Assistance: A state may design a subsidy structure that meets the unique needs of its population in order to provide more affordable health care options to a wider range of individuals, attract more

  young and healthy consumers into their market, or to address structural issues that create perverse incentives, such as the subsidy cliff.

• Adjusted Plan Options: Under this waiver concept, states would be able to provide financial assistance for different types of health insurance plans, including non-Qualified Health Plans, potentially increasing consumer choice and making coverage more affordable for individuals.

• Risk Stabilization Strategies: To address risk associated with individuals with high health care costs, this waiver concept gives states more flexibility to implement reinsurance programs or high-risk pools. For example, a state can implement a state-operated reinsurance program or high-risk pool by waiving the single risk pool requirement under section 1312(c)(1) of the ACA.

So, high risk pools per se are one option, while drawing the young and healthy voluntarily out of the ACA marketplace, rendering the marketplace a high-risk pool of sorts, is another. These concepts really fit Vance’s sketch to a T

A close look at the amended complaint alleging an ACA agent fraud scheme

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On August 16, the plaintiffs in a putative class action suit alleging large-scale agent fraud in the ACA marketplace filed an amended complaint that considerably elaborates the narrative of how the alleged perpetrators conceived, executed and expanded their scheme of large-scale unauthorized plan-switching, in which agents allegedly assigned themselves as Agent of Record (AOR) on hundreds of thousands of existing accounts and switched enrollees into new plans without the enrollees’ consent, sometimes repeatedly.

Below, I flag some noteworthy new allegations in the amended complaint, as well as questions suggested by those allegations.

CMS cracks down on agent fraud

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In my last post, I recounted that after months of apparent passivity in response to a rising tide of agent fraud in the federal ACA marketplace (HealthCare.gov, used by 32 states), CMS dropped a hammer in July. To quell unauthorized plan-switching by agents assigning existing enrollees to themselves, CMS required agents seeking to act on an existing account with a different Agent Of Record or with no AOR to either conduct a three-way call with the client and the marketplace center, in which the client authorizes the new agent to act on her behalf, or have the client click the final button after an agent makes changes to the account on a commercial Enhanced Direct Enrollment (EDE) platform.

(For background on the plan-switching scandal see the initial KHN coverage. For background on the role of EDE platforms in marketplace enrollment and agent fraud, see this post.)

In practice, the latter option meant using a workaround deployed by HealthSherpa, the dominant EDE platform, whereby an agent would text a link to the new client’s phone number, enabling the client to execute the changes input by the agent. After that procedure had been operative for a few days, however, CMS shut it down, apparently concerned that some agents might be faking the phone number to which the link was sent. Reportedly, a revised HealthSherpa workaround will go live in September, or at least before Open Enrolment begins on November 1, requiring client i.d.-proofing rather than just a client phone number. While CMS had long resisted deploying the relatively simple two-factor authorization required by Covered California and other state-based exchanges before an agent could be newly assigned to an existing account, CMS has now created a system with more intrusive security measures.

Now it appears that enforcement action against agents suspected of fraud or lesser noncompliant practice may be following the same pattern: a long period of passivity followed by a sudden crackdown.

What's driving CMS's sudden clamp-down on agent fraud?

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Unauthorized plan-switching in the ACA marketplace, whereby health insurance agents access an existing enrollee’s account, list themselves as the agent of record (AOR), and switch the enrollee into a different plan without the enrollee’s knowledge or consent (or with nominal, uncomprehending consent), obviously hurts enrollees who try to use their health insurance and find that they’re no longer enrolled because they’ve been switched to a different (often inferior) plan.

The poaching also hurts other agents, who in many cases find their clients poached en masse, often by large call centers engaged in wholesale fraud. Agents and their trade organizations, such Health Agents for America (HAFA) and the National Association of Benefits and Insurance Professionals (NAPIB) have long complained that CMS has not acted vigorously enough to quell the fraud. That changed rather suddenly last month, when CMS dropped a hammer — or a series of hammers — on agents’ access to enrollees’ accounts. Why?

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First, as quickly as possible, some background on the unauthorized plan-switching scandal, news of which Julie Appleby of Kaiser Health News first broke in April (that story is an excellent introduction; see also this from me on gray-area fraud). While agents’ licenses impose professional obligations, and agents must put their name and identifying number on an account to get paid by insurers, unauthorized plan-switching in the 32 states that use the federal exchange, HealthCare.gov, has been mechanically easy for agents via federally approved commercial Enhanced Direct Enrollment (EDE) platforms, which streamline the enrollment process and provide agents with various CRM tools. More than three quarters of enrollments in HealthCare.gov states are agent-assisted, and more than 80% of broker-assisted enrollments are via EDE (none of the 19 state-based marketplaces have as yet enabled EDE enrollment; most have their own agent portals which function similarly). Until last month, agents could locate and act on any existing account armed only with the enrollee’s name, date of birth, and state of enrollment. While agents are legally obligated to obtain and document client consent before acting on an account, that requirement was until recently loosely enforced. Agents engaged in plan-switching obtain their leads through often-unscrupulous ads, which misrepresent premium subsidies as cash that can be used for other expenses. Those ads are often sold to multiple agencies, which then compete for the same respondents to the misleading incentives.

Unauthorized plan-switching and new enrollments received major stimulus from the enhancements to marketplace premium subsidies created by the American Rescue Plan and implemented in March 2021, which rendered benchmark silver plans free to enrollees with incomes up to 150% of the Federal Poverty Level (FPL). Plan-switching received further stimulus from a rule implemented in early 2022 that provided applicants in states using the federal exchange with income below 150% FPL (the threshold for free silver coverage) with access to a Special Enrollment Period (SEP) in any month of the year — that is, they can enroll year-round, and change plans monthly. (16 of the 19 state-based marketplaces (SBMs) have implemented this SEP as well.)

In a very real sense, there is no off-season in HealthCare.gov states, though Open Enrollment Period (OEP) only runs from Nov. 1 to Jan. 15.In HealthCare.gov states, 55% of all enrollees in 2024 (just shy of 9 million) claimed incomes below 150% FPL. The vast majority of them — 87% — were in the 10 states that have refused to enact the ACA Medicaid expansion (they include behemoths Florida and Texas). In those states, eligibility for marketplace premium subsidies begins at 100% FPL, compared to 138% FPL in expansion states, where people with income below that threshold are eligible for Medicaid. Nearly all of these enrollees qualify for free benchmark silver coverage, and millions more with higher incomes qualify for free bronze coverage. The dramatic ACA enrollment growth of the past three years is concentrated in those states — as is the agent fraud.

In July, CMS changed gears

As fraud escalated through 2023 and 2024, agents and their trade groups have urged CMS to take preventive measures. Most of the SBMs require some form of two-factor authorization from the client before an agent can act on an existing account that has a prior AOR, or no AOR. CMS has rather gloried in the near-100% enrollment growth in enrollments in the federal exchange from 2021-2024. Much of that growth is attributable to increased agent engagement: the ranks of agents registered with the federal marketplace increased from 49,000 in 2018 to 83,000 in 2024. The growth is concentrated among low-income enrollees who often can be hard to reach and may have difficulty with two-factor authorization. CMS seemed reluctant to implement measures similar to those deployed by SBMs, where enrollment growth has been much slower. In May, Ronnell Nolan, president and CEO of HAFA, told KHN’s Julie Appleby about CMS, “We’ve given them a whole host of ideas…They say, ‘Be careful what you wish for.’”

Then, on July 19, CMS gave agents perhaps more than they had wished for, announcing System Changes to Stop Unauthorized Agent and Broker Marketplace Activity. From that point forward, agents seeking to act on an existing account with a different AOR or with no AOR would have to conduct a three-way call with the client and the marketplace center “or to direct the consumer to submit the change themselves through HealthCare.gov or via an approved Classic Direct Enrollment or Enhanced Direct Enrollment partner website with a consumer pathway.”

To unpack the latter option as implemented (briefly —see below) by HealthSherpa, the dominant EDE: An agent could make changes on a new client’s existing account but, prior to execution, would receive an error message to be forwarded to the client, with a link that the client could click on to complete and execute the application.

On message boards, agents commenting on the three-way calls worried that the lines would seriously back up during the upcoming Open Enrollment Period, but most who did the calls reported that they went pretty smoothly (although, in accord with existing policy, the call center agents are obligated to read through the entire application before enabling a change). HealthSherpa’s faster workaround appeared to be working with minimal friction.

But then, on August 2, CMS paused the HealthSherpa procedure , apparently worried that some agents might be faking the address or phone number to which the link was sent. HealthSherpa has submitted a request to CMS to reactivate the procedure with ID proofing instead of 2-factor authentication. I.D. proofing in the marketplace is based on information provided by Experian. To complete changes to an application made by an agent newly attaching to the account, an enrollee would have to provide her Social Security number and other personally identifiable information, then answer a series of questions, such as whether they ever lived at a given address.

HealthSherpa’s Adam Van Fossen pointed out to me that i.d. proofing requires a credit history, which many low-income people, particularly immigrants, don’t have. Requiring i.d. proofing introduces more friction than two-factor authorization, which CMS had previously seemed reluctant to introduce. 2FA appears to be effective in the SBMs, where agent fraud does not appear to be an acute problem — though that is partly because all of the 19 SBM markets (18 states and DC) have expanded Medicaid, which vastly reduces the target market of low-income enrollees eligible for zero-premium coverage (who are less likely to notice unauthorized plan switches, as they do not pay their insurers monthly). Van Fossen said that the two-factor process HealthSherpa deployed was not generating widespread fraud (e.g., by agents attributing a phone number of their own to the client), and that the company was putting further controls into place before CMS shut the process down.

CMS also seems to be expressing a new leeriness about agent-assisted enrollment generally, after years of cheerleading growing agent engagement (beginning in the private market-friendly Trump administration but very much continued by Biden’s team. In an Aug. 13 email bulletin asking recipients to “help CMS spread the word about marketplace fraud prevention” promotes this message to consumers: “For free, non-biased personal help, call the Marketplace Call Center at 1-800-318-2596… Marketplace Call Center representatives don’t get any incentives for signing you up” (my emphasis).

CMS has also started to ramp up suspensions of agents suspected of fraud or bad practice — though HAFA’s Ronnell Nolan complained as recently as late July that the 200 agents CMS had reported suspending as of July 19 was a “very low” total.

Something or someone seems to have lit a fire under CMS. Who and why?

One might infer that political pressure kicked in. Republicans have seized on the reports of widespread agent fraud (which hit mainstream news this past April) to deploy arguments against extending the life of the premium subsidy enhancements, currently funded only through 2025 (widespread free coverage, they argue, has stimulated widespread fraud). On the Democratic side, Senate Finance Committee Chair Ron Wyden and five colleagues have introduced legislation that would impose stiff fines on agents for submitting incorrect information, subjecting them to criminal liability for outright fraud, and “establish a consent verification process for new enrollments and coverage changes that includes notifying individuals when there has been a change in their enrollment, agent of record, or tax subsidy.”

In a high-stakes election season, shutting down fraud seems to have trumped juicing enrollment as a priority. Perhaps the pressure has emanated from the White House, or from the Harris campaign. Speculation, but the change in CMS’s approach does seem abrupt.

A sticky ACA marketplace: Effectuated enrollment (early 2024) and Average Monthly Enrollment (2023)

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zero premium is quite the adhesive

Early this month CMS released its annual report showing “early effectuated enrollment” in the ACA marketplace — that is, enrollment by state as of February, the first month after Open Enrollment ends for the current year (2024) in the federal marketplace, HealthCare.gov. The report also shows Average Monthly Enrollment and month-by-month enrollment for 2023.

In era where, thanks to the subsidy enhancements enacted in the American Rescue Plan Act in March 2021, almost half of all enrollees are eligible for free benchmark silver coverage, the percentage of those who select plans during OEP but never effectuate coverage (e.g., by paying a premium, if one is due) continues to drop. Of those who selected plans during the Open Enrollment Period for 2024, 97% had effectuated coverage as of February.

And in an era where, as of early 2022, prospective enrollees who report income below 150% of the Federal Poverty Level (46% of enrollees in OEP 2024) can enroll year-round, Average Monthly Enrollment as a percentage of initial enrollment during OEP continues to rise. In 2016 — the year of peak OEP enrollment before the ARPA subsidies kicked in for OEP 2022 — enrollment in December was 84.2% of enrollment as of March, the first month after OEP ended that year. In 2020, the last year before mass enrollment was enabled after OEP (thanks to a pandemic emergency Special Enrollment Period in 2021), December enrollment was 94.3% of enrollment in February the first month after OEP. In 2023, December enrollment was 113.5% of enrollment in February.

The upshot: enrollment growth in the post-ARPA era is far higher when measured in terms of Average Monthly Enrollment or Early Effectuated Enrollment as opposed to OEP plan selections. The two tables below illustrate. I’ve emphasized enrollment growth since 2016, the peak year for OEP on-exchange enrollment until 2022.

Sources: Marketplace Open Enrollment Public Use Files and Full-Year and February Effectuated Enrollment tables*, available via the 2024 Early Effectuated Enrollment Snapshot (links at FN 2).

Do income estimates on ACA marketplace applications indicate large-scale "fraud"?

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 Brian Blase, a conservative healthcare scholar at the Paragon Institute, is out with an analysis of 2024 ACA marketplace enrollment (summarized in this WSJ op-ed) claiming that millions of enrollees have mis-estimated their incomes to claim benefits to which they are “not entitled.” Here are the core claims:

In nine states (Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Texas, and Utah), the number of sign-ups reporting income between 100 percent and 150 percent FPL exceed the number of potential enrollees. The problem is particularly acute in Florida, where we estimate there are four times as many enrollees reporting income in that range as meet legal requirements.

The problem of fraudulent exchange enrollment is much more severe in states that have not adopted the ACA’s Medicaid expansion as well as in states that use the federal exchange (HealthCare.gov). In states that use HealthCare.gov, 8.7 million sign-ups reported enrollment between 100 percent and 150 percent FPL compared to only 5.1 million people likely eligible for such coverage, or 1.7 sign-ups for every eligible person….

Unscrupulous brokers are certainly contributing to fraudulent enrollment and the enhanced direct enrollment feature of HealthCare.gov appears to be a problem. Brokers just need a person’s name, date of birth, and address to enroll them in coverage, and reports indicate that many people have been recently removed from their plan and enrolled in another plan by brokers who earn commissions by doing so.

Blase’s core conclusions — that benefits generous enough to induce the uninsured to access them should be scaled back, and that efforts to streamline enrollment should be broadly rejected — are unwarranted, as argued below. His use of the term “fraud” is overbroad. But he does point to weaknesses in enrollment security and incentives to agent malfeasance that are reflected in enrollment data and need to be addressed.

Egregious fraud, quasi-fraud, and not-quite-fraud in ACA marketplace brokerage

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Do they print $6,400 bills?

The outbreak of large-scale agent fraud in the ACA marketplace, in which agents have switched marketplace enrollees from one plan to another without their authorization or in some cases their knowledge, or have newly enrolled people without their consent or knowledge, has agents and the trade groups that represent them up in arms. There are multiple good reasons for this: their clients are harmed (as the plans they think they’re enrolled in are cancelled), the integrity of the marketplace as a whole is compromised — and their own incomes are denuded, as their commissions are terminated in favor of a new agent of record.

Much of the unauthorized (or inadequately authorized) plan-switching and enrollment appears to be straight-out fraud, along the lines alleged in a putative class action (Conswallo Turner et al. v. Enhance Health, LLC et al.): Leads generated by ads that misrepresent marketplace premium subsidies as cash benefits, fed to agents in call centers who obtain the minimal personal information needed (name, D.O.B. and state*) to switch the enrollee’s plan (or newly enroll her) with a new agent listed as the Agent of Record, without the enrollee’s understanding or consent. (CMS requires agents to obtain consent before acting on an account, and recently clarified that mere check-box consent is “likely not be sufficient to meet…new requirements,” but that soft prohibition seems to have been honored largely in the breach.)

Egregious fraud is happening. But the ease with which agents can alter or create an account on an EDE and collect a commission, coupled with the millions of people eligible for multiple zero-premium plans, further coupled with ads that are misleading to varying degrees, suggests a broader gray area in which some agents may be misleading marketplace enrollees to varying degrees.