GAO Identifies Persistent Fraud Risks in ACA Premium Tax Credit Program

The U.S. Government Accountability Office (GAO) has conducted preliminary investigations into fraud risk management associated with the advance premium tax credit (APTC) under the Affordable Care Act. Recent covert testing revealed persistent fraud risks, with the federal Marketplace approving coverage for nearly all fictitious applicants submitted by GAO for plan years 2024 and 2025. This indicates ongoing vulnerabilities similar to those found in earlier GAO tests conducted between 2014 and 2016. These findings highlight systemic issues in enrollment controls, particularly relating to identity verification and social security number misuse. GAO’s data analyses uncovered significant vulnerabilities in the integrity of enrollment data, identifying potential unauthorized changes in federal Marketplace applications—30,000 cases in plan year 2023 and 160,000 in 2024—likely executed by agents or brokers. Such unauthorized modifications can cause consumer disruptions, including loss of medication access. A control introduced by CMS in July 2024 aimed at preventing unauthorized enrollment changes is under review by GAO to assess its effectiveness. The report also noted that CMS has not updated its fraud risk assessment since 2018 despite evolving program risks and controls. This outdated approach, coupled with the absence of a comprehensive antifraud strategy, limits CMS's ability to proactively address fraud risks within the APTC program. GAO's analysis suggests that CMS's 2018 assessment lacks alignment with leading fraud risk management practices, such as identifying inherent fraud risks and leveraging assessment outcomes to formulate strategic antifraud measures. Financial reconciliation concerns are significant. GAO's preliminary review of tax year 2023 data indicated no evidence of reconciliation for over $21 billion in APTC subsidies tied to social security numbers reported to the federal Marketplace, raising the potential for subsidy overpayments. However, unreconciled subsidies do not necessarily indicate ineligible payments, as some enrollees might still qualify for credits without completing reconciliation. The APTC program, which disbursed approximately $124 billion in subsidies to support 19.5 million enrollees in 2024, operates through both independent consumer enrollment and assisted enrollment by agents or brokers. CMS reported roughly 275,000 complaints in 2024 concerning unauthorized plan enrollments or changes. Recent indictments concerning agent and broker misconduct further underscore compliance and oversight challenges in managing marketplace enrollment integrity. GAO’s ongoing review involves a multi-faceted approach including covert testing with fictitious identities, enrollment data analyses cross-referenced with death and tax records, and evaluation of CMS’s fraud risk management protocols in relation to best practices. Upcoming GAO recommendations will aim to enhance fraud detection, enrollment security, and the overall integrity of premium tax credit administration.