If enrolled in Medicaid, end marketplace coverage or lose subsidies, HHS warns

The government has run out of patience with individuals enrolled in both Medicaid and private coverage on the marketplaces paid for through federal subsidies established by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). HHS Secretary Burwell authorized the federal exchange to notify consumers with someone in their household receiving duplicate coverage to immediately end coverage with premium tax credits. The existence of impermissible duplicate coverage was uncovered by a Government Accountability Office (GAO) investigation.

GAO investigation

The GAO investigated of the possibility of obtaining duplicate coverage in states that use the federal marketplace, and found that CMS did not appropriately control the risk of coverage gaps and duplicate coverage for those transitioning between Medicaid and marketplace coverage. The GAO identified two specific issues that materially contributed to the problem. The federal exchange is operated by federal officials, but the Medicaid programs are operated by state. The GAO found a vulnerability involving communications between the two, as records for Medicaid enrollees switching to exchange coverage were not transferred as closely to real time as possible. CMS indicated its belief that states transferred records at least daily, but this was not the case for one of the four states investigated out of the 34 that use the federal exchange. Additionally, CMS did not strive to detect duplicate coverage. Although CMS intended to implement periodic checks by the end of July 2015, it had not established the frequency of the checks or a mechanism for monitoring how effective the checks were.

Duplicate coverage situations

The GAO found that three different scenarios involving duplicate coverage were occurring, and only one was authorized by federal law. When individuals transition from exchange coverage to Medicaid coverage, the effective dates of coverage may overlap. Exchange coverage can only be ended with at least 14 days of advance notice, while Medicaid coverage is effective no later than the date an eligibility change is reported. The term of duplicate coverage might be extended in cases where a Medicaid eligibility determination takes a longer period of time than anticipated. Because this type of duplicate coverage is caused by program design, it is allowable.

Two other instances of duplicate coverage were discovered. In one state, the GAO found that 3,500 individuals were covered by both Medicaid and marketplace insurance in a six month period, and that many individuals failed to end subsidized coverage through the exchange after becoming eligible for Medicaid.  The GAO also found that the reverse was true, as Medicaid enrollees also enrolled in subsidized exchange coverage. CMS received recommendations to strengthen its controls.

Notifications

The notification letters indicate that CMS followed the GAO’s recommendations to identify those with duplicate coverage. The New York Times reported that the letters boldly warned that someone in the recipient’s household may lose their exchange subsidy. Anyone in the household that is enrolled in either Medicaid or the Children’s Health Insurance Program (CHIP) is instructed to immediately end subsidized coverage. Failure to do so will result in immediate cessation of any financial assistance for premiums, deductibles, and other costs. By taking these actions, the government is attempting to avoid paying its portion of Medicaid coverage, as well as offering tax credits for marketplace coverage.