GAO Identifies Ongoing Fraud Risks in Federal Marketplace APTC Program

Preliminary findings from the Government Accountability Office (GAO) highlight persistent fraud risks within the advance premium tax credit (APTC) system of the federal health insurance Marketplace for plan years 2023 through 2025. Covert testing by GAO using fictitious applicants revealed that nearly all submitted applications were approved for coverage, mirroring results from similar tests conducted between 2014 and 2016. These findings suggest ongoing vulnerabilities in the enrollment process that could facilitate fraudulent premium tax credit claims. GAO's analysis identified potential misuse of Social Security Numbers (SSNs) and unauthorized enrollment modifications by agents or brokers, affecting tens of thousands of applications in the upcoming plan years. Such unauthorized changes not only risk financial discrepancies in APTC disbursements but also may cause direct harm to consumers, including interruptions in access to prescribed medications. The Centers for Medicare & Medicaid Services (CMS) responded by implementing new controls in July 2024 aimed at preventing unauthorized enrollment alterations. Data reviewed by the GAO revealed over $21 billion in APTC for plan year 2023 had no identifiable reconciliation through tax filings, raising concerns about the accuracy and eligibility of subsidy payments. While unreconciled credits do not conclusively indicate overpayments, they represent a significant area for potential financial exposure within the program. GAO also pointed out that CMS has not updated its fraud risk assessment since 2018 and lacks a comprehensive antifraud strategy, which hampers proactive management of evolving fraud risks. The Patient Protection and Affordable Care Act (ACA) authorizes premium tax credits to assist eligible individuals with health insurance costs, disbursed as APTC directly to insurers. For plan year 2024, CMS estimated disbursing nearly $124 billion in APTC to around 19.5 million enrollees. Despite this scale, complaints related to unauthorized plan enrollments and changes have surged, with CMS receiving approximately 275,000 such complaints in 2024 alone, underscoring challenges in oversight and consumer protection. GAO’s ongoing work involves evaluating the effectiveness of recent CMS controls and will inform future recommendations aimed at strengthening fraud risk management and program integrity. These efforts are particularly relevant in light of recent indictments concerning marketplace agents and brokers, highlighting the critical need for enhanced compliance and regulatory scrutiny in federal health insurance exchanges. The GAO continues to monitor these developments and collaborate with CMS to address vulnerabilities that could compromise both taxpayer funds and consumer welfare in the federal Marketplace.