OIG lays out plans for monitoring insurance exchanges

HHS’ watchdog agency will be scrutinizing the Obamacare insurance exchanges over the accuracy of payments to insurers and providers, consumer eligibility for premium subsidies, information technology contracting, and the security and privacy of information.

Kay Daly, the assistant inspector general for the Office of Audit Ser- vices within HHS’ Office of Inspector General, outlined her office’s oversight strategy during a testy hearing last week before the House Energy and Commerce Committee. The hearing focused on inadequacies of the systems used for checking applicant inconsistencies, which were brought to light in an OIG report released earlier this month.

The hearing was convened because of that report, which uncovered 2.9 million inconsistencies between consumers’ insurance applications and their information in federal databases.

For 90% of those inconsistencies, HHS had to resort to a manual resolution system, as opposed to the automatic, IT-enabled system envisioned when the exchanges first started.

Going forward, the OIG will analyze the eligibility functions of the state-based exchanges.

It also is “looking at several aspects of the contracting involved in the development of HealthCare.gov,” Daly said. The OIG should be prepared to report on its findings by year-end or the beginning of 2015, she said.

Republicans at the hearing focused on the potential for the inconsistencies to lead to financial pain for consumers. They asked whether the inconsistencies meant that many applicants had misstated their income and received improper subsidies, and questioned how those subsidies would be recovered.

OIG witnesses replied that income misstatements and improper subsidies were possible, and those subsidies would be recovered through the Internal Revenue Service.

That reply prompted a worried response from committee members. Rep. Leonard Lance (R-N.J.), said that IRS review of incorrect subsidy levels might result in “many unhappy surprises in spring 2015” if consumers found out they owed much more federal tax than expected because of the IRS’ need to recover incorrectly applied subsidies.