CMS’s Policies and Procedures Do Not Sufficiently Minimize the Potential for Coverage Gaps and Duplicate Coverage in Federal Exchange States

Information from CMS and selected states and issuers indicates that  individuals transitioning from Medicaid to exchange coverage may  experience coverage gaps, and that duplicate coverage is occurring  under several scenarios. Scenario 1: Individuals who are completing the transition from  subsidized exchange to Medicaid coverage. This transitional  period of duplicate coverage is permitted under the law; that is,  individuals are permitted to be enrolled in both types of coverage  through the end of the month of the Medicaid eligibility  determination. However, evidence  suggests that some states may face challenges identifying exchange  coverage. If the state is not aware of an individual’s exchange coverage, the federal  government could be paying twice—that is, subsidizing exchange  coverage and reimbursing states for Medicaid spending for the same  individual. CMS and States Had Policies and Procedures That Minimize the Potential for Coverage Gaps and Duplicate Coverage, but Additional Controls Are Needed in Federal Exchanges

CMS and our selected states had policies and procedures that minimize  the potential for coverage gaps or duplicate coverage when individuals  transition between Medicaid and the exchanges. Control Weaknesses Related to Coverage Gaps

With regard to coverage gaps, we found that CMS’s controls do not  provide reasonable assurance that the accounts of individuals  transitioning from Medicaid to exchange coverage in FFE states are  transferred by states in near real time, which puts individuals in these  states at greater risk of experiencing such gaps. Specifically, federal  regulations require that state Medicaid agencies should transfer accounts  to CMS promptly and without undue delay. CMS  officials told us that account transfers are not happening in real time, but  their understanding was that states typically send transfers at least  daily. Officials from three of our four selected FFE states reported that  account transfers were occurring at least daily, while officials from the  remaining state reported that transfers were sent to CMS three times per  week. Given the number of steps involved in the transition from Medicaid to  exchange coverage, individuals may be more likely to have gaps in  coverage to the extent account transfers from states to CMS are not  happening in a timely fashion. With regard to duplicate coverage, we found weaknesses in CMS’s  controls for preventing, detecting, and resolving duplicate coverage in  FFE states. As of July  2015, CMS did not have procedures to detect and resolve cases of  duplicate coverage in FFE states. Specifically, CMS has plans to  implement periodic checks for duplicate coverage starting in the summer  of 2015, and CMS officials told us in July 2015 that the first check would  occur later that month. Without such thresholds, it  will be difficult for the agency to provide reasonable assurance that its  procedures are sufficient or whether additional steps are needed. Federal and state Medicaid and  exchange policies and procedures influence the extent to which  individuals are able to seamlessly transition between coverage types,  including whether they are able to transition without a gap in coverage  and whether they end up enrolled in both Medicaid and subsidized  exchange coverage for extended periods of time. However, as per federal internal control  standards, those plans do not sufficiently address the risks. Additionally, CMS has not determined the frequency of its  planned checks for duplicate coverage, a factor that will be critical to their  effectiveness, and does not have a plan—including target levels of  duplicate coverage the agency deems acceptable—for monitoring the  checks and other procedures. Establish a schedule for regular checks for duplicate coverage and  ensure that the checks are carried out according to schedule. Develop a plan, including thresholds for the level of duplicate  coverage it deems acceptable, to routinely monitor the effectiveness  of the checks and other planned procedures to prevent and detect  duplicate coverage, and take additional actions as appropriate. IRS had no comments on the draft report.
Why GAO Did This Study

Due to changes in income and other factors, it is likely that under PPACA many low-income individuals will transition between Medicaid and subsidized exchange coverage. Federal regulations require that state Medicaid agencies and exchanges coordinate to facilitate these transitions, including transferring individuals' accounts to the appropriate form of coverage when eligibility changes occur. However, given the complexity of coordinating policies and procedures for both coverage types, challenges could arise during the transition process resulting in individuals experiencing coverage gaps or duplicate coverage. GAO was asked to review information related to transitions between Medicaid and exchange coverage.
In this report, among other objectives, GAO examines the extent to which the federal government had policies and procedures that minimize the potential for coverage gaps and duplicate coverage. GAO reviewed relevant federal regulations, guidance, FFE documentation, and federal internal controls standards, and interviewed CMS officials. GAO also collected information from eight states selected, among other factors, to include four FFE states.

What GAO Found

CMS's policies and procedures do not sufficiently minimize the potential for coverage gaps and duplicate coverage in federal exchange states. GAO found that individuals transitioning from Medicaid to exchange coverage—that is, private health insurance purchased through the exchanges created under the Patient Protection and Affordable Care Act (PPACA)—may experience coverage gaps, for example, if they lose Medicaid eligibility toward the end of a month. Individuals who experience coverage gaps may decide to forgo necessary care. In addition, GAO found that some individuals had duplicate coverage, that is, were enrolled in Medicaid while also receiving federal subsidies for exchange coverage. While some amount of duplicate coverage may be expected during the transition from exchange to Medicaid coverage and is permissible under federal law, GAO found that duplicate coverage was also occurring under other scenarios. Individuals may be held liable for repaying certain exchange subsidies received during the period of duplicate coverage. Further, the federal government could be paying twice, subsidizing exchange coverage and reimbursing states for Medicaid spending for those enrolled in both.
While the Centers for Medicare & Medicaid Services (CMS), the agency within the Department of Health and Human Services (HHS) that operates a federally facilitated exchange (FFE) in 34 states, has implemented policies and procedures that help minimize the potential for coverage gaps and duplicate coverage, GAO identified weaknesses in CMS's controls for FFE states based on federal internal control standards. Specifically:
GAO found that CMS's controls do not provide reasonable assurance that accounts—that is, records—for individuals transitioning from Medicaid to exchange coverage in FFE states are transferred in near real time. CMS regulations require that such transfers occur promptly to facilitate eligibility determinations and enrollment. However, as of July 2015, CMS was not monitoring the timeliness of transfers. CMS officials told GAO that transfers are not happening in real time, but their understanding was that states typically send transfers at least daily. Officials from three of the four selected FFE states reported that account transfers were occurring at least daily; officials from the remaining state reported that transfers were sent to CMS three times per week. To the extent transfers are not happening in a timely fashion, individuals may be more likely to have gaps in coverage.
GAO found weaknesses in CMS's controls for preventing, detecting, and resolving duplicate coverage in FFE states. For example, as of July 2015, CMS did not have procedures to detect cases of duplicate coverage. According to CMS officials, CMS planned to implement periodic checks for duplicate coverage beginning later that month. However, CMS had not yet determined the frequency of the checks, a key to their effectiveness. In addition, CMS had no specific plan for monitoring the effectiveness of the checks and other planned procedures, making it difficult for the agency to provide reasonable assurance that its procedures are sufficient or whether additional steps are needed to protect the federal government and individuals from duplicative and unnecessary expenditures.

What GAO Recommends

GAO recommends that CMS take three actions, including routinely monitoring the timeliness of account transfers from states, establishing a schedule for regular checks for duplicate coverage, and developing a plan to monitor the effectiveness of the checks. HHS concurred with GAO's recommendations.