Stronger actions are needed immediately to thwart insurance brokers who fraudulently enroll or switch people in Affordable Care Act coverage, Sen. Ron Wyden, chairman of the powerful Senate Finance Committee, said Monday.
“We want the Centers for Medicare & Medicaid Services to hold these brokers criminally responsible for ripping people off this way,” he told KFF Health News.
In a sharply worded letter sent to CMS Administrator Chiquita Brooks-LaSure, the Oregon Democrat expressed “outrage” over the practice, which nets unscrupulous agents commission payments while leaving consumers with a potential host of problems, from losing access to their regular doctors or treatments to higher deductibles and even owing taxes.
Noting that tens of thousands of Americans have been victimized, Wyden called on regulators to step up enforcement and be more proactive in notifying potentially affected consumers. He vowed to introduce legislation that would make participating in such schemes subject to criminal penalties.
“CMS must do more and you must do it now,” he wrote in his letter.
Complaints about such unauthorized enrollment schemes have grown in recent months. KFF Health News has reported that unscrupulous brokers or agents can easily access policyholder information to change their coverage through private commercial platforms integrated with the federal Obamacare marketplace, healthcare.gov, which serves 32 states.
The challenge for federal regulators is to thwart the activity without reducing enrollment — a top priority for President Joe Biden’s administration.
CMS, which oversees the federal website, said it’s working on regulatory and technological fixes and can suspend or terminate problem agents’ access to healthcare.gov.
The agency will respond directly to Wyden, said Jeff Wu, acting director of CMS’ Center for Consumer Information & Insurance Oversight, in a written statement. He further noted that the agency is “consistently evaluating opportunities to identify and resolve issues sooner, including through outreach, technical assistance, and compliance actions.”
Ronnell Nolan, president and CEO of Health Agents for America, whose group has been outspoken about the need for regulators to do more, welcomed Wyden’s involvement and the potential for criminal penalties for perpetrators.
“It’s a crime when a person’s insurance is taken from them when they’re in the middle of cancer treatment or on a transplant list and they’re put in a predicament where they might lose their life because of the fraudulent activity,” she said.
After initially declining to quantify the problem, CMS this month issued a statement saying it had received more than 90,000 complaints in the first quarter of 2024 about unauthorized enrollments and plan switches. While the number of complaints represents a small percentage of the more than 16 million enrollments processed through healthcare.gov for this year’s coverage, it may understate the breadth of the problem, as complaints likely don’t reflect the magnitude of cases.
Although Wyden lauded CMS’ efforts to fix problems already encountered by consumers, he said in his letter that the agency needs to be more proactive about preventing them.
He urged regulators to contact potentially affected consumers instead of waiting to investigate only after a policyholder files a complaint, which sometimes doesn’t occur until weeks or months after a plan is switched.
It can be difficult for victims to recognize the changes. Rogue agents don’t obtain their consent, and many are signed up for plans that have no monthly premiums, so they don’t get a bill. Other consumers unknowingly enroll when they respond to misleading marketing promising gift cards, “government subsidies,” or other financial help.
Rather than wait for a consumer to complain, regulators could reach out directly when they see a policy submitted or changed by a broker or agency that has been found to be fraudulently enrolling others, Wyden wrote.
Wyden also said CMS should use its authority to impose civil penalties, up to $250,000, against “brokers who submit fraudulent enrollments.”
“I am disappointed these penalties have not yet been used to hold bad actors accountable,” he wrote.
Finally, he wants the agency to review private-sector platforms used by agents and brokers to enroll consumers in ACA plans. Those private companies are not used by 18 states and the District of Columbia, which run their own ACA marketplaces. The state-run marketplaces impose additional layers of identity-proofing and other security measures and have reported far fewer problems with unauthorized enrollment.
Dozens of private “enhanced direct enrollment” entities are certified by CMS to integrate with healthcare.gov. Their involvement was expanded during the Trump administration, which also sharply reduced funding for nonprofits to help with outreach and enrollment.
The platforms were designed to be simpler to use than healthcare.gov. But they have drawn criticism from agents, who say the private websites make it too easy for unscrupulous brokers or others to access policyholder information and make changes. Currently, more than half of federal marketplace enrollments are assisted by agents or brokers, and most act legitimately, regulators and others say.
