Consumers may be abusing an ACA provision that allows them to re-enroll after their coverage was terminated for nonpayment, a government report says. The practice may undermine the stability of the healthcare insurance exchange.
The Affordable Care Act (ACA) normally allows people to enroll only during open enrollment periods each year, but exceptions are made for consumers who lost their employer coverage or experienced other certain setbacks.
But the Government Accountability Office (GAO) says people may be unfairly taking advantage of the rule and the Centers for Medicare & Medicaid Services (CMS) should collect better data to determine the extent of the abuse.
A GAO report released to the public on April 9 says insurers have expressed concern that some people are misusing the ACA rules by reenrolling after their coverage was terminated for nonpayment of premiums. The law prohibits enrollees from signing up under a special enrollment period citing loss of coverage if the coverage was lost due to nonpayment of premiums.
The GAO's investigation determined that about half (53%) of the 2015 federally facilitated exchange (FFE) enrollees maintained continuous health insurance coverage throughout the year, beginning coverage between January 1 and March 1, 2015, and maintaining it through December 31, 2015. They had an average of 11.6 months of coverage.
The remaining 47% started their coverage later or ended it during the year, averaging five months of coverage.
Enrollees could have voluntarily ended coverage or they could have had it terminated by CMS or the issuers of coverage for valid reasons, including losing eligibility for exchange coverage or for nonpayment of premiums.
CMS does not have reliable data on terminations of coverage for enrollees' nonpayment of premiums, the report notes.
"Officials told us they do not track these data because they are not critical to ensure the accuracy of the federal subsidy amounts—which is the main function of the monthly reconciliation process," the report says.
"Further, CMS lacks a transparent process to ensure the accuracy of these data, as the monthly reconciliation files transmitted between CMS and issuers do not include a place to capture data on termination reasons."
Even when issuers do report termination reason codes, the data often are not accurate.
"Specifically, CMS told us that, historically, issuers may have incorrectly used the nonpayment termination code for other types of terminations, and two issuers we interviewed acknowledged having done so. We compared data on terminations for nonpayment from CMS's centralized enrollment system with data we obtained from three issuers for a small selection of enrollees," the report says.
"We found that for one large issuer operating in multiple states, the CMS data indicated that coverage for 18 of the 26 enrollees that we examined had been terminated for nonpayment of premiums, while the issuer data indicated that coverage had been terminated for other reasons, in most cases because it had expired at the end of the year."
CMS' lack of reliable data on terminations for nonpayment limits its ability to tell whether enrollees applying for coverage under a special enrollment period had lost their coverage for nonpayment of premiums, which would make them ineligible for the special enrollment period, the GAO report says.
"CMS could capitalize on its existing process, already familiar to issuers, by adding a variable that captures data on termination reasons to the monthly reconciliation file," the GAO recommends.
"By taking this step, in addition to requiring issuers to report these data, CMS could help ensure it has reliable and transparent data on terminations of enrollee coverage for nonpayment of premiums, and it could use these data to assess the effects of CMS policies and the overall stability of the exchange."
Gregory A. Freeman is a contributing writer for HealthLeaders.