xpostfactoid

Tuesday, September 17, 2024

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.

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.

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

Monday, September 09, 2024

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

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

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?

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?

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.

Friday, July 19, 2024

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

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"?

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

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.

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

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.

What is CMS doing to quell agent/broker fraud in the ACA marketplace?

Sen. Wyden puts the heat on CMS

In response to the explosion of unauthorized ACA plan switching and plan enrollment in by rogue agents in the 32 states using the federal exchange (HealthCare.gov), CMS has vowed not only to step up enforcement but to “add new technological protections to prevent such unauthorized activities from occurring.”

The core “technological” problem is pretty simple, as explained by KFF’s Julie Appleby in her story breaking the news of the escalating fraud. To enter an enrollee’s account and make any changes, such as switching her from one plan to another, an agent registered with HealthCare.gov needs only the enrollee’s name, date of birth, and state of enrollment. As Appleby pointed out, the sixteen state-based marketplaces (SBMs) that license agents (MA and RI don’t) “require more information before the account can be accessed” — usually some form of two-factor authorization — and don’t appear to be suffering from large-scale unauthorized broker activity.

CMS is not moving fast enough for Senator Ron Wyman, who this week sent a letter to CMS administrator Chiquita Brooks-LaSure expressing “outrage with reports that agents are submitting plan changes and enrollments in the Federal marketplace without the consent of the people who rely on these plans” and admonishing, “CMS must do more and you must do it now.”

Can Biden run on controlling healthcare costs?

CMS administrator Chiquita Brooks-LaSure

It’s a common complaint among Biden supporters that in the Biden years the mainstream media has tended to emphasize the dark side of economic news at a time when the U.S. economy is “the envy of the world,” as the Wall Street Journal recently put it — with economic growth double the rate of any other G7 economy, an unemployment rate that started at 6.3% in January 2021 and has now been under 4% for 27 consecutive months, wages up 4-5% in each of the last two years, and post-pandemic inflation well below the levels suffered in other wealthy countries.

Notwithstanding a historically robust economy, more than half of voters believe the economy is “poor,” according to the latest New York Times/Sienna poll, and they rate Trump better able to steer the economy than Biden by astonishing double-digit margins. In a Politico-Morning Consult poll conducted in late April, fewer than half of respondents said they knew “a lot” or “some” about the American Rescue Plan (which showered cash on individuals and families, states and businesses while the pandemic was in full force), the bipartisan infrastructure bill, or the CHIPS and Science Act, while a slight majority, 52% said they knew “a lot” or “some” about the Inflation Reduction Act. The Biden administration was instrumental in the shape and passage of all these bills, which together have sparked investment, building and manufacturing booms. The S&P 500 is up 39% since Biden took office on Jan. 20, 2021.

Media critics complain that coverage of economic conditions has been relentlessly negative, emphasizing inflation and the persistent (inherently perpetual) threat of a recession that hasn’t materialized. The tenor of Biden coverage is piquantly captured on a daily basis by Doug J. Balloon’s “New York Times Pitchbot” on Twitter, which daily or hourly proposes article themes such as

Fitting this category is the framing of a substantively solid and nuanced assessment of how healthcare might play in the presidential election by Axios’s Caitlin Owens, Health costs threaten to overshadow Biden's historic coverage gains

The opener:

President Biden has come closer than any of his Democratic predecessors to reaching the party's long-standing goal of universal health coverage, but unaffordable care costs may overshadow the achievement.

It is absolutely true that healthcare costs rise steadily, and rise faster than inflation, and cause widespread financial stress. It’s also true that Owens gives considerable space to the flip side: that the Biden administration has brought the uninsured rate below 8%; that healthcare costs have risen more slowly since the ACA passed than previously; that Democrats are running on policies that make care more affordable, e.g., extending the ARPA boosts to ACA premium subsidies and the IRA’s capping of insulin costs; and that healthcare is “still a good issue for Democrats” (i.e., voters trust Democrats more than Republicans to protect Medicare, Medicaid and the ACA).

But the framing, again, fits a dominant media pattern. Politics aside, in U.S. healthcare, things are always getting worse — and better. Corruption of medical care by the profit motive gets ever more intense, fueled by hospital system consolidation, vertical integration (by insurers and hospital systems), and private equity ownership. At the same time, some government measures have been effective as curbs, or are starting to be, or show future promise. Democrats and Biden have as strong a case as can reasonably be expected in U.S. politics for voter approval of their healthcare policies.

Let’s take a look at various programs and initiatives created by or altered by the Biden administration and Democrats (or in one case, passed in December 2020 with bipartisan support and implemented in January 2022) that have lowered healthcare costs for various constituencies.

ACA marketplace. It’s true that too many ACA marketplace enrollees are exposed to high out-of-pocket costs. In 2024, 8.6 million on-exchange enrollees, 40%, obtained plans with an actuarial value of 73% or lower — well below the average AV of employer-sponsored plan, which is around 84%. But the subsidy boosts created by the American Rescue Plan, which rendered benchmark silver plans with Cost Sharing Reduction free to enrollees with income up to 150% FPL, triggered a huge influx of low-income enrollees in states that have refused to enact the ACA Medicaid expansion, and most of those enrollees are in plans with 94% or 87% AV — better than the average employer-sponsored plan. In OEP 2024, 9.9 million marketplace enrollees are in plans with 94% or 87% AV, up from 5.3 million in OEP 2021. (Conversely, the proportion of low-income enrollees who obtain that high AV by selecting silver plans has dropped, as I have explored in several posts.)

No Surprises Act. This bill, passed with bipartisan support in December 2020 and enacted in January 2022, provides the greatest check on out-of-pocket costs that no one feels, because the bills not sent to patients would by definition have been surprises — bills from out-of-network providers working at in-network facilities. A survey by insurers (AHIP and BCBS) in early 2024 found that 10 million medical claims were subject to the law — that is, were out-of-network claims submitted to insurers — in the first nine months of 2023, and that the law was enabling insurers to expand their networks. Resolution of disputed OON claims between insurers and providers has been problematic, as conservative courts have struck down the arbitration rules established by HHS to resolve payment disputes between insurers and out-of-network providers, and arbitration awards to providers have been troublingly high. But consumers have been taken out of the equation, and a major scourge inflicting significant debt on a large number of Americans has been mostly removed (in a major exception, ground ambulance rides are not subject to the law). In 2020, according to an HHS brief (citing this KFF infographic), nearly 20 percent of insured adults in the two years prior received a surprise bill because the provider was OON, and two-thirds of adults worried about being able to afford unexpected medical bills. OON prevalence was more than 12% in emergency departments, according to Health Care Cost Institute data cited in the HHS brief.

Prior to NSA passage, patients who scheduled a procedure with an in-network provider were often billed by ancillary providers who were out-of-network — pathologists, anesthesiologists, assistant surgeons, and others. Emergency room patients at in-network hospitals had no way of knowing whether those who treated them were in-network — and many ERs, including every ER in some regions, were staffed entirely by outside practices, often private equity-owned mega-practices that might bill as high as 11 times Medicare rates. Healthcare reporters at Kaiser Health News, the New York Times, Vox and elsewhere spent years documenting egregious OON bills, such as a $117,000 bill from an assistant surgeon. In a real sense, surprise billing rendered virtually all commercial health insurance illusory, as out-of-network “balance bills” sent to patients were not subject to health plans’ out-of-pocket caps, so there was no limit on potential financial exposure. That particular form of patient abuse is mostly ended.

Medicaid: disenrollment moratorium and its “unwinding.” The pandemic emergency moratorium on Medicaid disenrollments enacted through the Families First Act in March 2020 was a major pandemic policy success, as it took effect just in advance of a short-term loss of 20 million jobs nationwide. Despite those job losses, the uninsured rate barely budged in the first years of the pandemic. Unfortunately, the “unwinding” of enrollment following the end of the moratorium in May 2023 has exposed all the dysfunction and in some cases cruelty of state Medicaid administration. In the year since the unwinding began, about 22 million people have been disenrolled from Medicaid, according to the KFF unwinding tracker — more than double the number who would be disenrolled in the course of a normal year, and more than 2/3 of them for “procedural reasons,” i.e. because enrollees did not receive renewal materials or did not fill them out. (An unknown but probably considerable portion of these disenrollees likely did not respond because they have obtained other insurance.) According to a March 2024 KFF survey, 23% of respondents disenrolled during the unwinding said they were uninsured at the time of response — which might suggest at least a short term increase in the uninsured population of 5-6 million. As of January, according to KFF tracking, the net Medicaid enrollment reduction (including the influx of new enrollees and re-enrollments of those wrongly disenrolled) was about 63% of the disenrolled total. If that ratio has held through May, total Medicaid/CHIP enrollment would now stand at about 80.2 million — down from 94 million in May 2023, but still up from 73.8 million in January 2021.

Medicaid: ACA expansion. Meanwhile, during the Biden years, four states that had refused to enact the ACA Medicaid expansion have enacted it: Oklahoma, Missouri, South Dakota and North Carolina. Those expansions have added about a million people to the Medicaid rolls. As of September 2023, 23.2 million people rendered eligible by ACA expansion criteria were enrolled in Medicaid, up from 18.7 million in 2020. The total is probably down considerably thanks to the unwinding. At the same time, North Carolina’s expansion, effective Dec. 1 of last year, has added 447,000 new enrollees.

Medicaid: 12-month postpartum eligibility. Via the American Rescue Plan, Democrats in the Biden years also smoothed the path for states to offer 12 months of postpartum coverage to women who had gained Medicaid through pregnancy, allowing states to make the change via State Plan Amendment (SPA) rather than the previously required Section 1115 waiver. The previous norm in many states was just two months of postpartum coverage. Extended postpartum coverage is a huge boon to maternal — and, by extension, infant — health. The SPA has a quicker application and approval process than a 1115 waiver and, unlike the waiver, does not have to be budget-neutral for the federal government. Originally in effect for 5 years, an omnibus budget bill passed at the end of 2023 made the 12-month SPA process permanent.

Since the federal government pays a higher percentage of the premium for adults rendered eligible for Medicaid via the ACA expansion (income up to 138% FPL) than for those rendered eligible for pregnancy (eligible up to a usually higher income threshold), Biden administration guidance also simplified the process by which a state could transition 12-month postpartum enrollees to the higher reimbursement rate (in effect allowing states to do this in bulk, calculating the proportion of enrollees with income under the 138% FPL threshold). To date, 47 states (including DC) have implemented 12-month postpartum enrollment; two more have SPAs in the works; Wisconsin has proposed a mere 90-day extension; and Arkansas is the sole holdout.

State initiatives reducing costs for ACA plans and equivalents. Also during the Biden years, enrollment has grown in three state programs that provide standardized coverage with low out-of-pocket costs to low income enrollees. New York’s Essential Plan, which provides coverage with actuarial value ranging from 92-99% (higher at lower incomes) at zero premium, now covers 1.4 million people, up from 883,000 in January 2021. New York opened the program at zero premium to enrollees in the 200-250% FPL income range in April, via a waiver approved by CMS; enrollment in that income bracket has more than doubled, from 62,000 in regular marketplace plans as of the end of OEP 2024 to 132,000 in the Essential Plan this month. For OEP 2024, Massachusetts extended eligibility for its high-AV, standardized benefit ConnectorCare program from 300% FPL to 500% FPL, and overall enrollment in the state (in ConnectorCare and regular QHPs) was up by 78,000 this year (fueled partly by the ConnectorCare expansion but probably mainly by the Medicaid unwinding). Enrollment in Minnesota’s BHP, MinnesotaCare, was up modestly this year. During the Biden years, too, California, Colorado, Connecticut and New Mexico have added state subsidies that enrollee reduce cost sharing, while Maryland, New Jersey and Washington have added state premium subsidies.

Medicare Part D revision. The Inflation Reduction Act, passed in August 2022, aims to reduce both federal and enrollee spending in several ways. Enrollees will not feel the effects of the most radical provision, Medicare negotiation of prices for select expensive and highly used drugs, until 2026, though the first ten drugs subject to price negotiation have been named. A second provision, requiring drugmakers to provide rebates for drugs whose prices increase above the inflation rate, went into effect in 2023, as did a $35/month cap on out-of-pocket spending for insulin and zero cost sharing for select vaccines.

A third provision, capping enrollees’ annual out-of-pocket costs, went into effect this year. The hard $2,000 cap that goes into effect in 2025 is better known than this year’s transitional cap, which ends enrollee payments during the so-called “catastrophic phase” of coverage — that is, after about $3,300 in out-of-pocket costs. Until 2024, enrollees paid 5% of the cost of the drugs they used in the catastrophic phase.

According to an HHS brief, in 2022, 1.5 million Part D enrollees who did not qualify for low income subsidies (LIS) reached the catastrophic phase, spending about $3,100 dollars out of pocket on average. A substantial percentage of people similarly situated this year will save significant money by avoiding further costs after hitting the cap. According to the HHS brief, 636,000 Part D enrollees will save more than $1,000 this year, and 1.9 million will reach that threshold when the cap drops to $2,000 next year, with an average savings of $2,500 each. (These totals include a small total of enrollees who will be newly eligible for full instead of partial LIS. The IRA raised the income eligibility threshold for full LIS benefits from 135% FPL to 150% FPL.) The brief also tracks savings from the insulin price cap and free vaccines. Taking all these provisions into account, HHS projects that 1.1 million Part D enrollees will save more than $500 this year and 3.3 million in 2025 as a result of the IRA.

Antitrust scrutiny. Aggressive action to reduce healthcare market concentration on multiple fronts — in hospital systems, between hospital systems and physician practices, in vertical integration by insurers and national pharmacies (buying physicians practices, pharmacy benefit managers, technology vendors), and in private equity rollups (of physician practices in targeted specialties and regions, nursing homes, hospice, and various other types of specialty care) — could ultimately prove the most consequential action taken by the Biden administration to control costs, albeit the slowest to take effect. The Biden FTC and DOJ are the most active in merger challenges and aggressive in regulation in generations. The FTC has issued significantly tightened merger guidelines for all industries. New standards with particular relevance to healthcare include a lower threshold for considering a given market highly concentrated, and increased scrutiny of multiple acquisitions that may individually fall beneath the threshold that acquirers must report.

In March, the FTC, DOJ and HHS launched a public inquiry “into private-equity and other corporations’ increasing control over health care,” issuing a request for information on consolidation in healthcare markets, with particular focus on

transactions in the health care market conducted by private equity funds or other alternative asset managers, health systems, and private payers, especially those transactions that would not be noticed to the Department of Justice and the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act, 15 USC 18(a). These transactions could involve dialysis clinics, nursing homes, hospice providers, primary care providers, hospitals, home health agencies, home- and community-based services providers, behavioral health providers, billing and collections services, revenue cycle management services, support for value-based care, data/analytics services, and other types of health care payers, providers, facilities, Pharmacy Benefit Managers (PBMs), Group Purchasing Organizations (GPOs), or ancillary products or services.

To facilitate this effort the agencies have created a portal for “public reporting of anticompetitive practices in the healthcare sector.” The FTC has also filed suit against private equity firm Welsh Carson and its portfolio company U.S. Anesthesia Partners, a behemoth which executed, in FTC chair Lina Khan’s description, “a multi-year roll-up strategy to buy nearly every large anesthesiology practice in Texas and stomp out independent providers.”

The FTC and DOJ have also boosted cooperation with each other and with state attorneys general to increase antitrust enforcement in healthcare. States in turn are ramping their requirements for state AGs to conduct pre-merger antitrust reviews of healthcare transactions, at dollar value thresholds lower than the federal standard. A number of states have passed new laws ramping up reporting requirements for transactions in the healthcare industry and in some cases increasing state government authority to block transactions.

None of these initiatives refute Axios’s contention that steadily rising healthcare costs may dampen voters’ enthusiasm for the Biden administration’s touted accomplishments in healthcare. Healthcare costs do rise relentlessly; consolidation gallops on; creative new forms of rapine arise all the time. It’s also true that the Medicaid unwinding is “unwinding” some of the coverage gains of recent years and causing considerable pain and harm to millions. Short of a structural overhaul of the behemoth healthcare industry, however — which would require currently unimaginable Democratic majorities and probably, an equally fundamental overhaul of campaign financing — it’s hard to imagine an administration under current political conditions acting more vigorously or effectively to control costs on various fronts. Voters do give Democrats considerable credit for their healthcare stewardship — though admittedly, as Axios emphasizes, the most recent KFF poll indicates that their political advantage in healthcare matters does not extend to the question of cost control (per the bottom question below).

When it comes to trust of the presumptive 2024 presidential candidates, larger shares of voters trust President Joe Biden than former President Donald Trump on several key health care policy issues, but neither candidate has a clear lead when it comes to addressing high health care costs, with similar shares of voters saying they trust Biden (38%) and Trump (36%). Voters are split along party lines in their trust of the presumptive candidates on health care issues, with Democrats largely trusting Biden over Trump and Republicans trusting Trump over Biden.

Saturday, April 20, 2024

Notes on the lawsuit alleging large-scale broker fraud in the ACA marketplace

My health plan is where?

My last post focused on alleged large-scale broker fraud in the ACA marketplace — chiefly via agents and brokers switching enrollees’ health plans without their authorization (or usually even knowledge) after obtaining minimal personal information (name, D.O.B., state) via responses to misleading ads. KHN’s Julie Appleby, who broke that story early this month, followed up this week with news of a lawsuit filed on behalf of individuals and brokers allegedly harmed by such schemes. The suit names as defendants two Florida call centers, a parent company, a marketing company deploying the ads that generate the leads, and two executives, seeking class action status on behalf of enrollee victims, as well as brokerages that allegedly had their clients poached.

The complaint, filed in U.S. District Court for the Southern District of Florida on April 12, alleges a scheme in which “hundreds” of agents deployed by the call center defrauded “hundreds of thousands” of ACA marketplace enrollees. It’s quite a read and sheds light on several points (including one error) touched on in my prior post.

Role of EDE. I noted in my first post that most brokers registered with HealthCare.gov (the federal exchange, serving 32 states) execute their enrollments states via commercial web brokers deploying Direct Enrollment or Enhanced Direct Enrollment (DE or EDE). I concluded that web brokers were not a key factor in the fraud, because a) agents and brokers have the same access to existing enrollees’ accounts through HealthCare.gov itself as they do on the web brokers’ EDE platforms, and b) brokers told me that the web brokers they use flag changes to an enrollee’s designated agent or broker and thus help them detect poaching. The complaint alleges, however, that the two call centers alleged to have engaged in large-scale unauthorized plan-switching (and which allegedly deployed hundreds of downline agents in the fraud) have between them owned and deployed three proprietary EDE web brokers. Broker switches enacted via proprietary EDE would be invisible to other web brokers — e.g., to the dominant web broker, HealthSherpa, which in OEP 2024 accounted for 52% of active enrollments in HealthCare.gov states, or just shy of 7 million (passive auto re-enrollment, which accounted for 22% of 2024 enrollment in HealthCare.gov states, is not credited to web brokers). As EDE enrollment is faster than enrollments executed on HealthCare.gov, proprietary web brokers, if controlled by fraudsters, would indeed facilitate large-scale fraud. The three web brokers allegedly owned by the call centers or (a parent company), Benefitalign, Jet Health Solutions, and Inshura, are all listed among CMS’s approved EDE partners.

Role of Private Equity. According to the complaint, Bain Capital Management provided one of the two call centers central to the scheme with $150 million “to finance its call centers and the commissions of its downline agencies.” That well-funded operation also bought two web brokers, which presumably aren’t cheap. Mitt Romney, call your (former) office.

Scale. The complaint alleges that using fraudulent ads deployed by lead generators enabled the two defendant call centers to achieve enormous scale. It cites the CEO of one of them, Enhance Health, boasting in print: “Enhance Health is the largest enroller of ACA plans in the country — we help hundreds of thousands of Americans find health insurance coverage every year.” Of course, frauds similar to those alleged in this complaint may have been executed by organizations that had no connection with those named in the complaint.

Target market. The complaint adds, “Herman also noted that nearly all of Enhance Health’s clients are low-income Americans, stating ‘97% of our embers pay $0 a month in insurance premiums while obtaining the coverage they need.‘“(p. 33). As I noted in my prior post, large-scale fraud was doubtless enabled both by the subsidy increases enacted in March 2021, which rendered benchmark silver plans free at incomes up to 150% FPL ($21,870 for a single enrollee this year), and by the launch in early 2022 of year-round enrollment for those with incomes up to 150% FPL. The complaint alleges that Enhance Health, founded and funded in late 2021, switched its focus from Medicare Advantage to the marketplace specifically to capitalize on the year-round enrollment for low income applicants. For perspective, enrollment in the 100-150% FPL bracket more than doubled in HealthCare.gov states from OEP 2022 to OEP 2024, from 4.1 million to 8.7 million. Zero-premium bronze plans, moreover, are widely available at incomes well above 150% FPL. The claim that 97% of Enhance customers paid zero premium suggests that zero premium was almost a requirement for Enhance Health. HealthSherpa, which enrolled about 7 million people* during OEP 2024 — almost all of them through brokers and agents — stated that 62% of its enrollees paid zero premium. That seems in line with the income distribution of enrollees in HealthCare.gov states, where 55% had income below 150% FPL.

Serial victims. Appleby reported that some victims had their plans switched multiple times. The report details high-volume switching by named plaintiffs — one of whom allegedly had his plan switched twenty times.

Crime? The complaint alleges that the alleged malfeasance — sharing clients’ Personally Identifiable Information (PII) in violation of multiple ACA requirements, misrepresenting premium tax credits as cash benefits, enrolling or plan-switching targets without their knowledge or consent — is not only fraud, for which the perpetrators should be liable for treble damages, but also “indictable offenses under 18 U.S.C. §§ 1341 and 1343 [mail fraud and wire fraud], in that they directed and carried out a scheme or artifice to defraud or obtain money by means of materially false misrepresentations or omissions” (p. 55).

Ronnell Nolan, president of CEO of Health Agents for America, told me last week that the fraud seems to have emanated from south Florida, where the defendants in this suit are based. Here’s hoping that this suit takes the measure of whatever fraud may be occurring and that there aren’t unrelated actors working at similar scale.

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* While CEO George Kalogeropoulos cited more than 7 million enrollments on January 4, a HealthSherpa executive tells me that the total was pared down post-OEP to account for plan selections that were never effectuated and cancellations prior to the end of OEP.

Wednesday, April 10, 2024

On unauthorized plan-switching in the ACA marketplace

How did this get in my pocket?

Julie Appleby of Kaiser Health News reported last week that health insurance brokers are switching a number of ACA marketplace enrollees in HealthCare.gov states from one plan to another “without their express permission” and often without their knowledge.

Unauthorized enrollment or plan-switching is emerging as a serious challenge for the ACA, also known as Obamacare. Brokers say the ease with which rogue agents can get into policyholder accounts in the 32 states served by the federal marketplace plays a major role in the problem, according to an investigation by KFF Health News.
Indeed, armed with only a person’s name, date of birth, and state, a licensed agent can access a policyholder’s coverage through the federal exchange or its direct enrollment platforms. It’s harder to do through state ACA markets, because they often require additional information.

The story is well-sourced and illustrated, with individuals recounting that they suddenly were unable to use the plans they thought they were enrolled in. In one case, a victim found himself on the hook for months of tax credits after disenrolling because he’d obtained employer-sponsored insurance and then being re-enrolled in another plan by a broker unknown to him. Appleby also cites brokers who claim that hundreds of their clients were poached and re-enrolled in plans other than the ones they’d chosen. Appleby links to key CMS documents, online ads, and insurer advisories.

I spoke to brokers and web brokers to delve further into how the fraud works, how the harms are redressed, and how it might be prevented. A few takeaways below.