Spotlight Falls on ObamaCare Fraud

A watchdog report on fictitious people signing up for ObamaCare has put renewed attention on the potential for fraud and abuse in the system.

Congressional Republicans, who have long warned about a lack of safeguards in ObamaCare, pounced on Wednesday as the nonpartisan Government Accountability Office (GAO) released the results of an investigation that found 11 of 12 fabricated people were able to enroll in coverage through the federal marketplace.

The fake applicants were able to maintain their coverage through the end of 2014 and then were automatically re-enrolled for 2015. Some were re-enrolled even though no additional documentation was provided.

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

“That the administration failed to weed out fake applicants one year later is yet another shocking development that, unfortunately, continues the trend of ObamaCare’s gross mismanagement at the expense of hardworking taxpayers,” said Senate Finance Committee Chairman Orrin Hatch (R-Utah).

Experts say that in starting up the marketplace, which is less than two years old, the Obama administration and its Centers for Medicare and Medicaid Services (CMS) had to prioritize getting people in the door over fighting fraud.

“There’s been more of a push to get people enrolled and then kind of catch up with the validation and integrity piece of it,” said Louis Saccoccio, CEO of the National Health Care Anti-Fraud Association, a public-private partnership.

“The GAO found some real issues, but this is a young program that will shore up its processes over time,” said Michael Adelberg, who formerly helped oversee the marketplace as a senior CMS official and now is a consultant at FaegreBD.

CMS itself told the GAO that it “must balance consumers’ ability to ‘effectively and efficiently’ select Marketplace coverage with ‘program-integrity concerns,’ ” according to the GAO report.

Still, the watchdog says that its results “while illustrative, cannot be generalized to the population of all applicants or enrollees.”

Experts say it is not known how much fraud there is in ObamaCare. The Congressional Budget Office estimates that $28 billion in subsidies will be paid out under the law in 2015.

The GAO is working on the fraud question, and said it expects to receive information from the administration on millions of enrollees next week.

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

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

It would be more expensive to have the contractor look for fraud.

“The typical government call center representative is not trained to ferret out fraud,” Adelberg said. “That would take a more skilled, higher-paid individual.”

Defenders of ObamaCare argue that in real life, committing fraud is much harder than the GAO report would indicate. Applicants must attest under penalty of perjury that their information is accurate.

“When you actually show up for medical services, it’s a lot harder to fake your way into receiving taxpayer-subsidized care,” Sen. Ron Wyden (Ore.), the top Democrat on the Senate Finance Committee, said at a hearing Thursday. “Often before any services are delivered, providers ask for a photo I.D. with an insurance card. And if you’ve stolen an identity, there’s probably a medical history belonging to somebody else that should set off alarm bells.”

Wyden and the administration also pointed out that the GAO did not file tax returns for its fictitious applicants, which they say are a key step in fighting fraud involving the health law’s tax credits.

Meaghan Smith, a Department of Health and Human Services spokeswoman, said the system has real-time eligibility checks and that the online system initially blocked the fictitious applicants.

GAO says that it was able to enroll the fake applicants after following the instructions to call the marketplace and “self-attest” that the information was correct.

Smith acknowledged that the program is making improvements, as it is relatively new.

“Independent reviews provide an additional check as we work with an array of stakeholders to make improvements as the Marketplace matures,” she said in a statement.

A possible next step could be instituting more stringent checks on a portion of applications.

“Over time, the government may move toward putting program integrity checks in place, even on a sampling basis,” said Adelberg, the former CMS official.

Fraud is certainly not limited to ObamaCare, and experts say it is a much bigger problem in larger programs like Medicare.

A separate GAO report found that Medicare made around $60 billion in improper payments in 2014, or about 13 percent of payments made by the core of the program (Medicare Parts A and B).

Medicare fraud tends to be different in that it is doctors and other providers gaming the system, rather than beneficiaries.

ObamaCare defenders also argue that it is unadvisable to put such strong protections in place that it discourages people from signing up.

“A retiree nearing Medicare age shouldn’t get kicked to the curb because she accidentally submitted an incorrect document,” Wyden said.

Elizabeth Carpenter, a director at Avalere Health, a consulting firm, added: “The more hoops for someone to jump through, the less likely they are to stick with it.”