House Approves Bill To Create Fraud-Detection System for Exchanges

On Thursday, the House voted 235-191 to approve a bill (HR 2775) that would require the federal government to establish a new fraud-detection system for subsidies available through the Affordable Care Act's state-run insurance exchanges, The Hill's "Healthwatch" reports (Kasperowicz, "Healthwatch," The Hill, 9/11).

Background

Under the ACA, individuals with annual incomes between 100% and 400% of the federal poverty level who do not have access to affordable coverage through their employer are eligible for subsidized coverage through the exchanges.

In a final rule published on July 5, HHS said it will roll back requirements for state-run and federally operated exchanges to verify the income and insurance status of people applying for coverage. Prior to the final rule, exchanges were expected to verify applicants' income status and conduct random checks to determine their access to employer-sponsored coverage.

According to the final rule, federally operated exchanges still will verify such information beginning in 2014, but states operating their own exchanges can wait until 2015 to do so. It also states, "For income verification, for the first year of operations, we are providing Exchanges with temporarily expanded discretion to accept an attestation of projected annual household income."

Rep. Diane Black (R-Tenn.), who introduced HR 2775, said an "honor system" to verify applicants could facilitate fraud in the exchanges nationwide, meaning that the Obama administration would be disbursing "billions of dollars in fraudulent payments" (California Healthline, 9/9).

Details of the Bill

During debate on Wednesday on a rule to facilitate the final House vote, Rep. Michael Burgess (R-Texas) said, "Because fraud and abuse have been rampant in just about every program that is administered by [HHS] ... a certified verification system being in place prior to the implementation [of] the [ACA] is critical." During the debate, Democrats declined to defend the final subsidies rule, according to "Healthwatch."

However, CMS officials have insisted that Republicans are overstating the effect of the provision relating to subsidy eligibility. Further, the White House on Tuesday announced in a Statement of Administration Policy that President Obama would veto HR 2775 if it reached his desk and characterized it as another attempt to undermine the ACA. The White House noted that HHS "has already put in place an effective and efficient system for verification of eligibility for premium tax credits and cost sharing reductions" ("Healthwatch," The Hill, 9/11).

ACA Opponents File Motion Against Subsidies

In related news, opponents of the ACA have filed a motion asking a federal court in the District of Columbia to block federal officials from offering the ACA subsidies to eligible residents, arguing that the law's wording prevents residents in 34 states with federally operated exchanges from obtaining the subsidies, CQ HealthBeat reports.

Attorneys from the law firm Jones Day -- who are representing the plaintiff in Halbig v. Sebelius -- have requested a hearing on their motion before Oct. 1 -- when the exchanges begin open enrollments -- and are seeking to expedite the case (Adams, CQ HealthBeat, 9/11).