Although CMS oversees the centralized enrollment system, both CMS  and issuers have shared responsibility for enrollment and coverage  functions once individuals apply for coverage:
CMS is responsible for determining an individual’s eligibility for  coverage and income-based federal subsidies, enrolling the  individual, and processing subsequent coverage changes or  terminations. Federal regulations require CMS to reconcile  enrollment information with issuers on at least a monthly basis. For example, enrollees may request changes to their coverage  through the portal if they experience a change in circumstance (such  as needing to enroll under an SEP due to the birth of a child, or to  terminate their coverage if they move to a different state); CMS may  terminate coverage if the agency cannot verify key eligibility  information (such as citizenship status); or issuers may terminate  coverage if enrollees fail to pay their premiums. Just over Half of FFE Enrollees Maintained Continuous Coverage throughout 2015; Length of Coverage Varied by Enrollee Characteristics

Approximately 4.9 million enrollees (53 percent of the 9.2 million FFE  enrollees in 2015) maintained continuous coverage throughout the year— that is, their coverage began between January 1 and March 1, 2015, and  lasted through December 31, 2015. These individuals therefore had 10 or  more months of continuous coverage, with an average length of coverage  of 11.6 months. The remaining 4.3 million enrollees (47 percent of the FFE enrollees in  2015) did not maintain continuous FFE coverage throughout the year, as  defined above. For example:
Enrollment period. CMS Lacks Complete and Transparent Data on Terminations of Enrollee Coverage for Nonpayment of Premiums

CMS’s data on terminations of enrollee coverage due to nonpayment of  premiums are not complete and accurate. CMS officials told us that data on  reasons for termination are not tracked because they are not critical to  ensure the accuracy of APTC payments—which is the main function of  the reconciliation process. We found  that for one large issuer operating in multiple states, the CMS data  indicated that coverage for 18 of the 26 enrollees that we examined had  been terminated for nonpayment of premiums, while the issuer data  indicated that coverage had been terminated for other reasons, in most  cases because it had expired at the end of the year. While issuers can determine from the  monthly reconciliation files whether CMS has updated certain issuer data  for enrollees whose coverage was terminated (for example, the revised  coverage end date), the files do not capture data on reasons for  termination. Therefore, issuers are unable to determine if the CMS FFE  data on termination reason codes matches theirs and make corrections  where necessary. Although CMS’s recent changes may improve its data, they do not ensure  the agency will have complete and transparent data on terminations for  nonpayment of premiums. Without complete and accurate data, CMS may be  allowing enrollees who lost exchange coverage for nonpayment of  premiums to re-enroll under SEPs although, under federal regulations,  these individuals are ineligible to do so. However,  CMS does not have the data needed to determine the extent of these  problems. While CMS has made some efforts to improve the accuracy of  the agency’s data on terminations for nonpayment, it has not indicated  whether the agency will require issuers to consistently and accurately  report these data. Moreover, CMS has no way to ensure the reliability and  transparency of the data, because the existing process—the exchange of  monthly reconciliation files between CMS and issuers—does not have a  place to capture these data. CMS could capitalize on this existing  process, already familiar to issuers, by adding a variable that captures  data on termination reasons to the monthly reconciliation file and tracking  its accuracy. By taking this step, in addition to requiring issuers to report  these data, CMS could help ensure it has reliable and transparent data on  terminations of enrollee coverage for nonpayment of premiums, and it  could use these data to assess the effects of CMS policies and the overall  stability of the exchange. (Recommendation 1)
The Administrator of CMS should provide a transparent process for  issuers and CMS to systematically reconcile discrepancies in their  data on terminations of enrollee coverage for nonpayment of  premiums. HHS also  concurred with our second recommendation to ensure a transparent  process for issuers and CMS to systematically reconcile discrepancies in  their data on terminations of enrollee coverage for nonpayment of  premiums. Table 3 provides the extent  to which enrollees maintained continuous coverage throughout 2015 by  their state of residence.
Why GAO Did This Study

CMS has noted that it is important for enrollees to maintain continuous health insurance coverage to ensure the stability of the FFE. Certain rules allow for enrollment flexibilities—such as special enrollment periods and a 3-month grace period that is allowed before coverage is terminated for recipients of federal income-based subsidies who default on their premiums. However, some issuers have stated that these rules could be misused, resulting in non-continuous coverage. There are little data on the extent to which enrollees maintain continuous coverage during a year and, more specifically, on the extent to which coverage is terminated for nonpayment of premiums.
GAO examined (1) the extent to which FFE enrollees maintained coverage in 2015 and (2) the extent to which CMS has reliable data on termination of enrollees' coverage for nonpayment of premiums. GAO analyzed CMS's 2015 FFE enrollment data (the most recent year of available data); interviewed CMS officials and selected issuers; and reviewed applicable laws and guidance from CMS.

What GAO Found

In 2015, 9.2 million individuals enrolled in the federal health insurance exchange in 37 states. Eligible individuals (e.g., U.S. citizens or those lawfully present in the United States) are able to enroll in health coverage during the annual open enrollment period. Outside of open enrollment, eligible individuals may enroll in coverage or change their coverage selection during special enrollment periods. Individuals may enroll under a special enrollment period if, for example, they lost their coverage from another source, such as Medicaid or an employer, or due to relocation. Under federal regulations, enrollees may not sign up for coverage under a special enrollment period citing loss of coverage if the coverage was lost due to nonpayment of premiums.
About half (53 percent) of the 2015 federally facilitated exchange (FFE) enrollees maintained continuous health insurance coverage throughout the year—that is, they began coverage between January 1 and March 1, 2015, and maintained it through December 31, 2015. These individuals had an average of 11.6 months of coverage. The remaining 47 percent of FFE enrollees started their coverage later or ended it during the year; they averaged 5.0 months of coverage. Enrollees could have voluntarily ended coverage—due to gaining other coverage, for example—or have had it terminated by the Centers for Medicare & Medicaid Services (CMS) or the issuers of coverage for valid reasons, including losing eligibility for exchange coverage or for nonpayment of premiums.
CMS does not have reliable data on issuer-generated terminations of coverage for enrollees' nonpayment of premiums. Although CMS and issuers share data on the terminations each generates and reconcile their data on a monthly basis to ensure data accuracy, the agency does not require issuers to consistently report data on the reasons for terminations. Officials told us they do not track these data because they are not critical to ensure the accuracy of the federal subsidy amounts—which is the main function of the monthly reconciliation process. Further, CMS lacks a transparent process to ensure the accuracy of these data, as the monthly reconciliation files transmitted between CMS and issuers do not include a place to capture data on termination reasons. Issuers said that they are therefore unable to ascertain whether data they provide on the reasons for termination match CMS's data, and thus they cannot make corrections where necessary.
The agency's lack of reliable data on terminations for nonpayment limits its ability to effectively oversee certain federal regulations. For example, because CMS is not systematically tracking these data, it cannot tell whether enrollees applying for coverage under a special enrollment period had lost their coverage for nonpayment of premiums—in which case they would be ineligible for the special enrollment period per federal regulations. CMS could capitalize on its existing process, already familiar to issuers, by adding a variable that captures data on termination reasons to the monthly reconciliation file. By taking this step, in addition to requiring issuers to report these data, CMS could help ensure it has reliable and transparent data on terminations of enrollee coverage for nonpayment of premiums, and it could use these data to assess the effects of CMS policies and the overall stability of the exchange.

What GAO Recommends

GAO recommends that CMS ensures it has (1) complete data on terminations of coverage for nonpayment of premiums; and (2) a transparent process to reconcile discrepancies and ensure the accuracy of these data. The Department of Health and Human Services concurred with both recommendations.