GAO Finds Persistent Fraud Risks in Advance Premium Tax Credit Program

The U.S. Government Accountability Office (GAO) presented preliminary findings to the House Committee on the Judiciary regarding persistent fraud risks in the advance premium tax credit (APTC) program under the Affordable Care Act. Despite efforts dating back to 2014, GAO’s covert testing using fictitious applicants revealed that the federal Marketplace continues to approve subsidized insurance for non-existent enrollees for plan years 2024 and 2025. This ongoing vulnerability underscores challenges in preventing fraudulent activity within the program. GAO’s data analyses identified systemic issues including potential misuse of Social Security numbers (SSNs) and unauthorized enrollment alterations by agents or brokers. Notably, over 29,000 SSNs were linked to multiple insurance enrollments in 2023, increasing to nearly 68,000 in 2024, a practice CMS allows to account for identity theft and data errors. Furthermore, GAO discovered tens of thousands of likely unauthorized application changes, which can jeopardize consumer access to coverage and medications. The investigation revealed that the Centers for Medicare & Medicaid Services (CMS), which administers APTC, has not updated its fraud risk assessment since 2018, despite significant program changes and evolving fraud tactics. CMS’s 2018 assessment also failed to align fully with leading risk management practices, notably lacking a comprehensive antifraud strategy. These gaps potentially hinder effective management and preemptive fraud detection. In 2024, CMS paid nearly $124 billion in APTC to approximately 19.5 million enrollees via the federal Marketplace. Recent indictments and about 275,000 consumer complaints about unauthorized enrollments or plan changes further highlight the need for stronger regulatory oversight and fraud controls. CMS implemented a new control in July 2024 aimed at limiting unauthorized enrollment modifications, which GAO is currently reviewing. The GAO’s ongoing work includes covert testing with fictitious identities, analysis of enrollment data cross-referenced with tax and federal death records, and assessment of CMS’s fraud risk management documentation. While GAO’s covert testing results cannot be generalized across the entire population, the findings provide key insights into persistent program vulnerabilities and regulatory challenges. This case study emphasizes the importance of updated fraud risk assessments and robust antifraud strategies in federal health insurance programs. It also indicates a need for continuous monitoring and enforcement to mitigate fraud risks that affect the integrity and financial sustainability of the APTC program under the Affordable Care Act.