GAO Report Highlights Persistent ACA Enrollment Fraud Despite 2024 Reforms

Despite new federal regulations introduced in mid-2024 to prevent unauthorized changes to Affordable Care Act (ACA) insurance plans, cases of enrollment fraud and unauthorized plan switching continue to challenge the system. Florida-based insurance agent Jason Fine reports numerous client cases where plans were altered without consent, indicating persistent vulnerabilities. A December 2024 preliminary report from the Government Accountability Office (GAO) highlights longstanding issues that previous administrations have failed to fully address, with more than 275,000 complaints received by the Centers for Medicare & Medicaid Services (CMS) regarding unauthorized ACA enrollments and plan modifications in 2024. The GAO-led investigation revealed that while fraudulent enrollments constitute approximately 1.5% of ACA applications, significant risks remain due to inadequate identity verification and enforcement mechanisms. In response to fraud concerns, CMS implemented three-way call protocols in July 2024, requiring the consumer, marketplace representative, and insurance agent to participate in certain plan changes. However, this safeguard has been criticized for its limited identity verification methods, such as reliance on publicly accessible personal information, which fraudsters can easily circumvent. The report documents examples of widespread misuse, including one Social Security number associated with 125 ACA policies in 2023. Despite CMS suspending around 850 brokers over potential fraud, these suspensions were eventually lifted, illustrating enforcement challenges. Critics argue that current measures, including the three-way call rule, are insufficient and call for stronger authentication procedures similar to two-factor authentication used in banking. Notably, states operating their own ACA marketplaces generally report fewer incidents of unauthorized enrollment, attributed to stricter authentication requirements and independent platform control. This discrepancy underscores the limitations of the federal marketplace's existing fraud prevention infrastructure. Congressional debates continue over extending ACA premium tax subsidies, with some lawmakers linking the subsidies to increased fraud risks. Proposals to introduce criminal penalties for brokers submitting false enrollment information have yet to advance. The GAO's ongoing undercover testing of the federal marketplace involved submitting fraudulent applications, many of which were accepted, resulting in improper subsidy payments estimated at billions of dollars annually. The GAO report indicates that the CMS last updated its fraud risk assessment in 2018 and has not recalibrated its strategies amid rising ACA enrollment volumes. Insurance industry representatives advocate for enhanced measures such as two-factor authentication to better protect consumers and the integrity of the exchange. Persistent fraud concerns have implications for payer/provider networks, regulatory compliance, risk management, and actuarial assumptions affecting premium pricing. Strengthened identity verification and broker oversight remain critical priorities to safeguard enrollment integrity and consumer trust in the ACA marketplace. Overall, this situation highlights ongoing challenges in balancing accessibility and security within federally facilitated health insurance exchanges. Future regulatory evolution and congressional action may be required to mitigate lingering vulnerabilities and support sustainable ACA enrollment practices.