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 

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.

Red flags in agent-assisted enrollment stats in the ACA marketplace

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CMS to marketplace agents, May 24, 2023

A May 2023 CMS presentation to health insurance agents and brokers selling ACA marketplace plans opens on a celebratory note. Enrollment in the Open Enrollment Period for 2023 was up 19% year-over-year in the 33 states using the federal exchange, HealthCare.gov. CMS implicitly credited brokers for much of the surge, noting:

The Plan Year (PY) 2023 Open Enrollment Period (OEP) was the strongest year yet for agents and brokers assisting consumers through the Marketplace.

CMS noted that agents* assisted 6.8 million active enrollments in HealthCare.gov in PY 2023, which comes to 70% of the active enrollment total (“active enrollment” excludes 2.5 million auto-re-enrollments, for which agents or other assisters are not credited). CMS further noted that 74,100 agents were registered with HealthCare.gov in PY 2023.

Still growing: OEP 2024 in the ACA marketplace

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CMS’s Week 5 snapshot for the 2024 Open Enrollment Period (OEP) in the ACA marketplace shows 7.3 million active enrollments (new enrollments and active re-enrollments) — a stunning 39% year-over-year increase, according to Charles Gaba’s swift compilation. The snapshot is through December 2 for 32 states using HealthCare.gov and through November 25 for 19 state-based marketplaces (SBMs). New enrollment is up 44%, and active re-enrollment is up 37%, per Gaba. (Passive auto re-enrollment is reported at different times by different exchanges, and some SBM auto re-enrollment tallies are included separately in the snapshot.)

For the year-over year comparison, Gaba has helpfully adjusted for an extra day included in the 2023 Week 5 snapshot. His breakdowns for different state groupings — HealthCare.gov states vs. SBMs, and states that have enacted the ACA Medicaid expansion — are below, in simplified format, and followed by a few observations.

    OEP Week 5: 2023 vs. 2024

NJ DOBI responds: No more elder abuse in the ACA marketplace

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My last post spotlighted a form of elder abuse in New Jersey’s ACA marketplace. The state’s Individual Health Program (IHC) allows or requires insurers in the individual market to presume that enrollees who are over age 65 are eligible for Medicare — unless the enrollee provides proof positive otherwise.

If such proof is not furnished (at least one insurer, AmeriHealth, requires a letter from the Social Security Administration, which in turn requires applying for Medicare)— the insurer pays the enrollee’s claims only as a secondary payer, presuming that Medicare will pay the bulk of each claim. That leaves the enrollee on the hook for the bulk of every medical bill she incurs, rendering the insurance policy’s statutory out-of-pocket limit essentially void. NJ DOBI has been allowing insurers to do this since 2016, and in 2023 ratified the practice, stipulating in the standard policy policy form that the insurer “will assume the Covered Person is Eligible for Medicare and pay secondary benefits as set forth in this section unless the Covered Person provides written documentation that proves the Covered Person is not Eligible for Medicare” (p. 126)

CMS guidance issued on May 24, 2023 flatly forbids this practice, as CMS told me in response to a query, adding “CMS has been in contact with the New Jersey Department of Banking and Insurance (NJDOBI) regarding this issue.  We recommend contacting NJDOBI for further information.” The May 24 guidance states that an ACA-compliant individual market insurer “may not limit or exclude coverage based on the theoretical possibility of an individual’s enrollment in other coverage… regardless of whether an individual is (or is presumed) eligible for Medicare.”

NJ DOBI did not respond to my repeated requests for comment on the state insurers’ apparent continuing violation of the CMS guidance — under color of state regulation. But an investigative reporter at NJ.com and the Star-Ledger, Karin Price Mueller, got on the case. And DOBI did respond to Mueller. Thus pushed, they are apparently ending the practice — effective yesterday:

“In light of the possible confusion in the market, the department (Wednesday) issued its own directive to carriers in the individual market — both on and off the marketplace — to ensure they are following the (Medicare guidance), which falls under the `Conformity with Law’ provision of the standard individual health benefits plans,” spokeswoman Dawn Thomas said.

The agency has told all insurance carriers to review the benefits of individuals who are 65 and older and enrolled in plans through GetCoveredNJ “to ensure that the policyholders are receiving the appropriate coverage, and that all coverage is consistent with the applicable Federal Guidance,” she said.

Thomas also said DOBI is reviewing how consumers may have been affected.

“Specifically, it is requiring that all carriers provide information on how the rule was implemented, including any requirements placed on consumers 65+ years of age, and what specific documentation may have been required for both on and off marketplace consumers,” Thomas said.

And, she said, the agency will make sure the language is clear when the 2024 plans roll around.

“If GetCoveredNJ determines a consumer eligible for a marketplace plan, the consumer should remain eligible and get the full benefits of the policy selected,” she said.

If those promises look a little soft to jaded eyes, other language in DOBI’s statement to Mueller, which she shared with me, was less equivocal:

On May 24, 2023, the Centers for Medicare and Medicaid Services (CMS) released guidance to insurers that demonstrated to the department that the IHC board’s rule change was not in compliance with CMS rules. Therefore, in June, the department informed carriers that the CMS guidance will govern the individual market and made clear the department accepted CMS’ position.

Apparently, that June bulletin changed nothing. Now, pending enforcement, this longstanding abuse of the fundamental ACA promise (quality affordable comprehensive coverage) appears to be ended going forward. But “going forward” points to a problem, which Mueller gave me a chance to articulate:

“I’m delighted to learn that DOBI is now acting swiftly to end this abusive practice — allowing Obamacare insurers to strip older plan members of most of the coverage to which they’re entitled,” Sprung said. “Now DOBI needs to dig in and find out whether there are people who have been subject to this practice for years who may have been saddled with provider bills that their insurer should have paid — and if so, to make sure those wrongs are righted.”

DOBI clarified to Mueller that NJ individual market insurers have been allowed to presume over-65 enrollees eligible for Medicare and act as a secondary payer at least since 2016. I have viewed bills from 2022 that reflect that practice. So there is compensatory work to be done. In 2023, almost 9000 enrollees through GetCoveredNJ were over 65. How many have been enrolled, and shorted coverage, in seven or more years?

Why 2016? In that year’s annual Notice of Benefit and Payment Parameters (NBPP) for the ACA marketplace, clarified that a marketplace enrollee who turns 65 during the plan year and enrolls in Medicare can maintain her marketplace plan, though she would lose eligibility for subsidies. A Medicare enrollee can even renew a marketplace plan if that plan does not change, i.e. if a new “contract of insurance” is not required. Why anyone would want to pay full freight for a marketplace plan (at least $800+/month in New Jersey in 2023 for an over-65 enrollee) when they are enrolled in Medicare is hard to fathom, but it can be done.

While finalizing this rule, CMS noted, “Several commenters expressed concerns that individuals enrolled in Medicare and those who are eligible for but not yet covered by Medicare present a significant burden to the single risk pool” (p. 94068). That is very likely the concern that New Jersey’s individual market insurers brought to regulators to get permission to presume elder enrollees eligible for Medicare. Ever since (if not before), in at least some if not virtually all cases, they have been getting full premiums for enrollees over age 65 while paying only what Medicare is presumed not to pay on claims.

Hats off to Karin Mueller, who was able to get what I could not from DOBI.

New Jersey's Department of Banking and Insurance lays a trap for elderly enrollees in the state's ACA marketplace

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Filling out an application for subsidized health insurance in the ACA marketplace can be straightforward — or not so straightforward. If the exchange’s “trusted sources” of information do not readily identify you, uploading proof of identity nd getting it accepted can be a…process (especially in a family with mixed immigration status). If you are self-employed and your income is not obviously reflected in regular monthly payments, documenting your claimed income and having the documentation accepted can also be a multi-stage process.

That said, once your documentation is accepted and your monthly subsidy is assessed, you are good to go, right?

Not always. Not in New Jersey, anyway, where the insurer can come after you for additional documentation — and potentially reduce your coverage to a shadow.

Can the risk adjustment gravy train for Medicare Advantage be slowed or stopped? A conversation with Richard Kronick

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This past March, as in many Marches previous, MedPAC’s annual report to Congress found that a) the federal government is paying Medicare Advantage plans more than it would pay to cover the same enrollees in traditional, fee-for-service Medicare; b) that excess payment is widening (from 104% in 2022 to 106% this year); c) almost all the excess payment (almost 5 percentage points) stems from a risk adjustment system that enables MA plans inflating their enrollees’ risk scores, and d) the risk score gap between MA enrollees and FFS enrollees is also widening.

Sum it all up, and risk adjustment stands out as the engine by which MA is swallowing FFS Medicare. 2023 is the first year in which more Medicare enrollees are enrolled in MA than in FFS. MedPAC raises the possibility that in some counties at least FFS may no longer serve as a reliable benchmark for CMS’s capitated payment rates to MA plans. Those benchmarks - -which, according to MedPAC, also require adjustment — are the tether that hold MA provider payment rates close to those set by FFS Medicare. That tether is basically the only effective control on provider payment rates.

A modest proposal: Revenue-neutral risk adjustment in MA

MA insurers’ inflation of their enrollees’ risk scores is so obvious and pervasive that CMS is statutorily required to shave a minimum of 5.9% off of MA risk scores. It’s not enough. MedPAC estimates that in 2022 MA risk scores exceeded the scores that MA enrollees would be ascribed in FFS Medicare by 10.8%. In November 2021, Richard Kronick, a former CMS official and current professor at UCSD, and F. Michael Chua, also of UCSD, pegged the MA coding excess at 20% — almost double the MedPAC estimate — and estimated that the resulting overpayments would total $600 billion from 2023 to 2031 if not adjusted.

Too many low-income ACA marketplace enrollees are forgoing high-CSR silver

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Today is the ACA’s 13th birthday, and CMS released its final enrollment report and detailed enrollment data for the 2023 Open Enrollment Period (OEP) in a celebratory vein. The good news: Enrollment nationally overall is up 13% year-over year and 36% since 2021, after two years with premiums subsidies substantially boosted by the American Rescue Plan Act of March 2021. (As I noted here when OEP was mostly completed, enrollment growth is heavily concentrated in the twelve states that had not enacted the ACA Medicaid expansion as of OEP 2023.) New enrollment increased by 21%.

In OEP 2022 — the first OEP in which there was no income cap on subsidy eligibility — enrollment growth was highest at high incomes. In marked contrast, this year it’s concentrated at low incomes. In the 33 states that use HealthCare.gov (which include all of the twelve states that haven’t expanded Medicaid), enrollment at incomes between 100% and 150% of the Federal Poverty Level (FPL) increased from 32% of all enrollment in 2022 to 37% this year, rising 20.4%, from 4,640,092 in OEP 2022 to 5,588,315 million in 2023.

Legislative and administrative love (and its opposite): Health Policy Valentines 2023

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I can’t believe that this my tenth year offering up #HealthPolicyValentines — a tradition kicked off by Emma Sandoe, the country’s leading Medicaid enthusiast, in 2012, when she was a CMS spokesperson. Emma is now a Medicaid official in North Carolina, no doubt deeply invested in a not-so-funny legislative rom-com as the state House and Senate struggle to align not-quite-compatible bills to enact the ACA Medicaid expansion. The NC House may deliver the ultimate #HealthPolicyValentine this week, passing its expansion bill on V-Day itself.

I have no such substantive gifts to offer, but I can celebrate some goodies served up by legislators (federal and state) and administrators in the last year. Let the doggerel begin.

* * *

Roses are red,
Violets are blue.
I got no surprise bills
in 2022.

Roses are expensive,
Dandelions are free.
I'll get no surprise bills
in 2023.

In the U.S., alas,
there’s always an asterisk,
so an ambulance remains
a major financial risk.

* * *

Progress is fragile,
progress is slow,
but the uninsured rate’s
at an all-time low.

Alas, costs keep rising
so we needn't ask why
the underinsured rate's 
at an all-time high.

* * *

Congress showered cash
but states must play their part (um…)
to provide young moms and babes
a year’s coverage postpartum.

* * *

Love to CMS
for reducing the immensity
of Medicare Advantage
coding intensity.

* * *

Love (and its opposite) in the states

In New Mexico, for sure,
but I didn't expect this:
Strict silver loading
enacted in Texas.

* * *

Some states will be cruel,
some states will be kind
when the starting whistle blows
for the Medicaid unwind.

* * *

100% FPL
is the cruelest of gates,
but Obamacare's on fire
in nonexpansion states.

Perhaps those excluded
have grown sick of rejections
and learned to adjust
their income projections.

* * *

In our founding fathers’ house
there’ll be one more mansion
when NC enacts
the Medicaid expansion.

* * *

New Jersey got it done --
that is, built the apparatus
to cover kids regardless
of immigration status.

* * *

New York,
defrosting pork,
and seasoning it well,
will cook the Essential Plan
to 250 FPL

* * *

Glutton for punishment? Browse my Health Policy Valentines archives: Flowers in the graveyard (2022), Institutional edition (2021), But love grows old and waxes cold (2020), The Water is Wide: Health Policy Valentines (2019),  HPV (2018), Love Knows No Repeal (2017),  Love in the Time of Obamacare (2016), love, 2015, and Romance of the Rose, Health Policy Edition (2014).

Healthcare access in the U.S.: 2022 in review

Dear xpostfactoid readers: All subscriptions are now through Substack alone (still free). I will continue to cross-post on this site, but I've cancelled the follow.it feed (it is an excellent free service, but Substack pulls in new subscribers). If you're not subscribed, please visit xpostfactoid on Substack and sign up! 

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It's been a year of crosscurrents in the healthcare industry -- and of reporters exposing those crosscurrents, often with a ten- or twenty-year look-back. We have seen fantastic investigative reporting on hospitals unleashing hellhounds on indebted patients; hospital systems disinvesting in low income neighborhoods and shifting resources to wealthy ones; private equity degrading and pillaging selected healthcare industry segments (1, 2); hospitals prioritizing VIPs in the emergency room; and insurers finding synergies in what used to be conflicts. Provider consolidation continues apace; Medicare Advantage threatens to swallow fee-for-service Medicare, while its profit-maximizing methods are introduced into fee-for-service Medicare; and MA gaming of risk adjustment goes as yet unchecked, or rather inadequately checked. As for our response to Covid (oy), it’s not really my bailiwick, but see the note at bottom.

On the upside, the federal government got its first toehold in negotiating prescription drug prices; a national prohibition on most medical balance-billing went into effect; the FTC under Lina Khan challenged four hospital mergers; with federal prompting, the number of states providing or soon to provide a year of post-partum Medicaid enrollment rose to 34; CMS proposed a rule designed to smooth Medicaid enrollment on multiple fronts, including limiting renewals (and so, disenrollments) to once every twelve months; the ARPA boosts to ACA premium subsidies were extended through 2025, and marketplace enrollment is on track for a second consecutive year of double-digit growth; and the uninsured rate is at an all-time low (though threatened by the pending end of the moratorium on Medicaid disenrollments).

As in past years, xpostfactoid (and my writings elsewhere) focused mainly on the ACA marketplace, with some forays into Medicaid and Medicare, particularly on the causes and impact of Medicare Advantage’s accelerating gains in market share. As always, I closely examined ACA enrollment patterns, with special attention to the complexities that lead enrollees to suboptimal outcomes.

Below, a few posts from 2022 that went over biggest with…me. I’ve limited selections to the period before I ported xpostfactoid to Substack in late September, as the posts on that site are readily skimmed.

At The American Prospect
How the Texas Legislature Learned to Stop Worrying and Love the ACA Marketplace - 4/21/22
Ground zero for rooted reflexive hostility to the Affordable Care Act is Texas. Or was. While the state still wriggles, writhes and resists expanding Medicaid — which would cut its uninsured rate in half — this year the state legislature unanimously passed legislation that massively boosts subsidies in the ACA marketplace — with the cost borne entirely by the federal government. An amazing tale of bipartisan comity in…Texas.

At healthinsurance.org
Silver, Bronze, or Gold? Choosing a Metal Level in the ACA Marketplace - 4/25/22
The ACA marketplace purports to associate metal level with value. But Cost Sharing Reduction subsidies, which attach only to silver plans, make a hash of purported metal value. So, a guide to marketplace shopping in different income brackets. Relatedly…
Applying for ACA coverage? Know the ropes (between income levels) - 11/28/22
Understanding how small differences in projected income can have a large impact on your health plan costs can be key to obtaining affordable coverage.

At xpostfactoid 

In New Mexico, a Midas Touch has a double edge - 2/9/22
A look at the downside as well as the much bigger upside of a market in which gold plans are cheaper than silver.

In ACA marketplace in 2022, too much underinsurance (bronze plan selection) at low incomes - 3/23/22
In March 2022, the American Rescue Plan made silver plans with strong CSR free-to-low-cost at incomes up to 200% of the Federal Poverty Level. In 2022, too many low income enrollees bought bronze plans.

11 states where high-income marketplace enrollees went for cheap gold plans - 3/28/22
A look at markets where gold plans cost less than benchmark silver

The high-income surge in ACA marketplace enrollment - 4/7/22
ARPA’s removal of the income cap on ACA premium subsidies had its effect.

Is avoiding overpayment of Medicare Advantage plans beyond U.S. government capacity? - 6/3/22
A dive mainly into MedPAC complaints and proposals. See also “To whose advantage is Medicare Advantage? Parts 1 and 2 (here on Substack).

Average weighted actuarial value in the ACA marketplace - 7/20/22
It’s considerably lower than the average in employer-sponsored insurance, and down somewhat from 2016, thanks mainly to silver loading.

U.S. uninsured rate hits an all-time low - 8/3/22
I’d been expecting such a finding for about a year.

Democrats have twelve years of healthcare accomplishment to run on - 8/31/22
They do, really.
——

* Note: On the pandemic front, I am no expert, but I credit those who accuse the U.S. of having failed miserably to institute policies and messaging that would reduce Covid infections and fatalities, make resumption of normal activities safer, protect workers, and ease the stress on healthcare systems. Accordingly the U.S. has the highest Covid deaths per 100,000 ratio among peer nations. I lament failures to mandate paid sick leave and workplace safety measures; facilitate, incentivize, and in some cases mandate vaccine boosters; make rapid tests and N-95 masks widely available and free or close to free; institute widespread indoor air quality control; mandate indoor masking when cases spike; provide effective, unified, up-to-date public health messaging; and facilitate equitable global vaccine distribution. Above all, to my mind, the failure to appropriate fresh funds to fight Covid and prepare for future pandemics is unfathomable. You can blame Republicans for blocking requested funding, but neither Democrats in Congress nor the Biden administration fought hard enough to overcome resistance when they might.

On the plus side, legislation providing economic relief led to a near-miraculous economic recovery from the pandemic’s initial shock and prevented a surge in the uninsured rate. And the swift development of effective vaccines was miraculous. 

ACA marketplace enrollment may be up 45% in the pandemic era

Dear xpostfactoid readers: All subscriptions are now through Substack alone (still free). I will continue to cross-post on this site, but I've cancelled the follow.it feed (it is an excellent free service, but Substack pulls in new subscribers). If you're not subscribed, please visit xpostfactoid on Substack and sign up!

CMS announced yesterday that enrollment through December 15 in ACA marketplace plans on HealthCare.gov, the federal exchange serving 33 states, is up 18% year-over year. That’s on top of a 27% year-over-year increase in HealthCare.gov states last year.

Enrollment growth in the pandemic era has been slower in the 18 states (including D.C.) that run their own state-based exchanges (SBEs). Last year, SBE enrollment growth was about 8%, and the all-state total increase (HealthCare.gov + SBEs) was 21%. If the 18% growth rate for HealthCare.gov states holds through the end of the Open Enrollment Period, and the ratio of SBE growth to HealthCare.gov growth matches last year’s, then total enrollment growth as of the end of OEP 2023 will come in at about 13.7%.

That would peg total enrollment as of the end of OEP at about 16.5 million. Charles Gaba, who’s been tracking SBE enrollment tallies as they come in (they lag HealthCare.gov’s), projects a range of 16.4-16.9 million (plus 1.1 million in New York and Minnesota’s Basic Health Programs).

A few notes about this continued strong enrollment growth:

CMS moves to ease choice overload in the ACA marketplace

Meaningful difference?

In its proposed annual set of rule adjustments* for the ACA marketplace for 2024 released yesterday, CMS proposes strong action against one of the marketplace’s most counterproductive current features — the proliferation of plan offerings insurer with all-but-invisible differences between plans.

In many ACA markets, several insurers “spam” the marketplace, as Duke health insurance scholar David Anderson puts it, in this way. In such markets, picking a plan that will minimize your medical expenditures is like trying to pick the most cost-effective choice in your supermarket’s toilet paper aisle.

Here, for example, are the five cheapest Ambetter silver plans available in Chicago. (Quoted premiums** are for a single 40 year-old with an annual income of $40,000.)

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Here are the next five.

I will spare you the next five. That’s right — Ambetter has put up 15 silver plans in the Chicago marketplace.

As a rule, the cheapest insurers offering the narrowest networks are major offenders on this front. (Almost no major hospitals are in-network in Ambetter’s Chicago plans.) In many markets, their near-clone offerings render competitors’ products nearly invisible at the lowest price points. (That’s not quite the case here, as Oscar’s 12 silver plans and BCBS’s seven are interspersed with Ambetter’s at low price points.)

In the 33 states that use the federal exchange, HealthCare.gov, as well as in eleven of the 18 state-based marketplaces, plans with a standardized benefit structure — the same deductibles, copays, annual maximum out-of-pocket limits (MOOP) and services not subject to the deductible — are available at each metal level. Squint at the offerings displayed above and you’ll see that the second one is marked “standard.” But standard plans swim in a sea of non-standard competitors. While their benefit design may be optimal for average (not all!) applicants, they have nothing obvious to recommend them — not the lowest premiums, nor deductibles, nor MOOPs, nor standard copays.

With 137 plans on offer, Chicago is not the most chaotic marketplace in the country. In fact, it’s not too far off average. The average number of plans available to marketplace applicants in 2023 is 114, up from 26 in 2019, as CMS notes in its proposal to reduce this riot of unmeaningful choice. In Miami, the nation’s largest ACA marketplace, 224 plans are on offer.

How was this mass spamming of the marketplace allowed to metastasize? In 2015, CMS established a standard to ensure that that plans offered by the same insurer be “meaningfully” different. But the standard was toothless, as Anderson points out, and in advance of the plan year for 2019 the Trump administration’s CMS administrator, Seema Verma, did away with it entirely. The primary rationale, according to CMS’s account in this year’s proposed rule (pg. 230 here), was that the number of insurers participating in the exchange had shrunk in the Trump years (there was real anxiety about the possibility of “bare” rating areas where no insurers would participate). But it also reflected Verma’s was ideological commitment to proliferating choice in every health insurance market (including the choice of medically underwritten, lightly regulated, ACA-noncompliant plans).

While markets had indeed contracted after major premium spikes in 2017 and 2018 (the latter triggered by Republicans’ threatened repeal and the Trump administrtion’s regulatory assault on the marketplace), from 2019 forward ACA markets first stabilized and then expanded, with insurers returning to the marketplace and entering new states. The Biden administration has not reinstated (let alone strengthened) meaningful difference regulations — until now.

For 2024, CMS proposes to take a path forged by some state marketplaces and limit the number of nonstandard plans an insurer can offer in a given market. Specifically, the proposal (as summarized on this fact sheet) is

to limit the number of non-standardized plan options that issuers of QHPs can offer through Marketplaces on the Federal platform (including SBM-FPs) to two non-standardized plan options per product network type and metal level (excluding catastrophic plans), in any service area, for PY2024 and beyond, as a condition of QHP certification.

Theoretically, if an insurer offered three network types (HMO, EPO, PPO) at four metal levels, it could still offer 36 plans in one market. But that will not happen. PPO plans are rare in the marketplace, as are platinum plans. Note in the display above that Ambetter (a Centene brand), probably the most prolific spammer in the country, offers only HMO plans. In fact this regulation, if implemented as proposed, may increase meaningful difference among plans, as insurers seeking to differentiate themselves may be moved to vary their network types.

At present this rule is only “proposed.,” and so subject to a comment period, response, and possible revision or withdrawal. As an alternative, CMS floats a “meaningful difference” standard stronger than the previous one but less restrictive than the main proposal: Requiring that the deductibles offered by one insurer in a given metal level and network type vary by at least $1,000. That’s presumably harder to do than, say, offer a $20 copay for a primary care visit and $10 charge for generic drugs in one plan versus a $25 PCP visit and $5 generic drug charge in an alternative.

The primary proposal would require a major change in business model for some of the largest marketplace insurers — and, I think, a much improved choice architecture for prospective applicants. Here’s hoping that CMS follows through.

Update, 12/14/22: Over on Mastodon, David Anderson warns that considerably more than three network variations per insurer per metal level are conceivably allowable (and in the same exchange, Louise Norris points out that POS (Point of Service) networks are another network type). Putting up multiple networks, however, is much harder (and more substantive) than fine-slicing the odd co-pay to field a new plan. I would speculate, too, that incentivizing insurers to offer more PPOs might in fact be beneficial. Meanwhile, Charles Gaba, also surveying this proposed rule change, deploys the cultural reference that inevitably comes to mind when surveying the proliferation of plans: Robin Williams freaking out in the coffee aisle in Moscow on the Hudson. That’s more fun than my Honey Crisp-to-Mackintosh contrast. Charles also provides useful backstory on meaningful difference regulation, or the lack thereof.

- - -

* The annual rule updates are known as the Notice of Benefit and Payment Parameters. The full proposed rule for 2024 is available here.

** The display is from HealthSherpa, a commercial Direct Enrollment broker that displays all plans in all markets that use HealthCare.gov. 

CMS's invitation to low-income bronze enrollees to switch to silver

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About 620,000 ACA marketplace enrollees with income in the 100-150% FPL range have enrolled in bronze plans. Having just implemented continuous year-round enrollment for people with income up to 150% FPL, CMS is openly -- in fact expressly -- inviting these bronze plan enrollees to switch to silver. I have a post at healthinsurance.org amplifying this invitation:

At incomes up to 250% FPL, Silver plans are enhanced by cost-sharing reduction, which reduces out-of-pocket costs. CSR is particularly strong at incomes up to 150% FPL, where it reduces the average deductible to $146 and the average annual out-of-pocket maximum – the most an enrollee will pay for in-network care – to $1,208. Bronze plans – in prior years usually the only free option – have deductibles averaging $7,051 and OOP maxes usually in the $7,000-8,700 range.

The post further notes that CMS rulemaking is explicitly tailored to steer low-income enrollees into silver plans, quoting the finalization of the rule establishing the year-round enrollment at income up to 150% FPL: