Agents and Brokers Accused of Fraudulently enrolling consumers in Health Plans?

I recently read an article “CMS: Signs agents enrolling consumers without permission” by Allison Bell on Benefit’s Pro. When I read the article I knew that people needed to get a balanced view about what could possibly be going on. True in every industry there are some bad apples that can taint the whole industry.

From the beginning of the Affordable Care Act hardworking agents and brokers despite many obstacles, have continued to help consumers enroll in health insurance through the federally facilitated marketplace more commonly known as “Healthcare.gov” or “the Exchange”. Despite the legitimate roll of agents and brokers in the Marketplace there were very few Marketplace based publications directed to the public that emphasized the benefits of using an agent or broker in a fair and balanced way. They were quick to let the public know they could use an agent or broker. Then they were quick to follow up with all of the reasons why doing so may not be in the best interest of the consumer. One of the biggest issues was giving little attention to the benefits of working with agents and brokers. Instead the emphasis has been directed at showing that agents and brokers are biased and will most likely steer the consumer to a plan that paid the most to the agent with little regard to the needs of the consumer. Now agents and brokers are being accused of possible fraud which is a crime.

So the question is, did agents and brokers really enroll consumers into health insurance plans without their permission? Is it possible that a consumer could be enrolled in a health insurance plan under an agent or broker without the agent being actively involved in the enrollment?

To answer the first question, it is possible for an agent or broker to attempt to fraudulently enroll someone in a health insurance plan but the chances of that happening are low. First the majority of agents and brokers who are certified to assist with enrollments through the Marketplace are independent small business owners with no loyalty to any specific company. Their loyalty is to their clients with a goal of building lifetime relationships, many of which were formed long before the Affordable Care Act became the law of the land. Very few are willing to risk their license or their reputation by being dishonest.

Also when an agent signs into a consumers account for the first time they must sign an attestation stating that they are authorized to access the account. They also must add other personal identifiers on the application such as their name, their National Producer Number (NPN) and their FFM (Federally Facilitated Matketplace)ID which is registered with CMS (The Center for Medicare and Medicaid Services). The privacy policy on the Healthcare.gov website also states that they collect IP addresses, location data and other information for people that visit the site which could help them to be easily traced. When the insurer gets the file with the agents information attached they have even more detailed information about the agent or broker that was attached to the file. All of this makes it nearly impossible for an agent legitimately certified with the Federal Marketplace to commit fraud and get away with it.

So is it possible that consumers were enrolled in a health insurance plan against their will under an agent or broker without the agent being actively involved in the enrollment? Yes. Well before and during open enrollment many agents reach out to their clients to assist them with gathering the necessary information they need to prepare for open enrollment. Most consumers respond by giving their agent the necessary information they need. Some consumers do not respond because they failed to inform their agent that their contact information had changed or they simply do not answer. When the consumer fails to respond by the December 15th deadline they are automatically enrolled in a plan by the Marketplace due to inaction on their part. If an agent or broker assisted them the previous year that agents National Producer Number (NPN) will continue to be associated with that consumer’s application when the auto-enrollment is sent to the insurance company.

So why is that a problem? Some consumers may have deliberately ignored their agent’s calls because they had no intention on enrolling in a plan for the upcoming year. Correspondence from the Marketplace often goes unopened leading them to miss any notices that they needed to take action in order to prevent their policy from being auto-renewed. When the consumer failed to act before the deadline their policy was automatically renewed, many times with the NPN number of the agent who submitted their application the previous year. The consumer would then show up on the agent’s book of business showing them as the agent of record. When the consumer is contacted about the unwanted policy they may state they did not sign up for a policy nor authorized anyone else to enroll them for that particular year. When asked who assisted them with their previous enrollment they may state that they used an agent or broker. With the agents NPN still attached to the auto-renewed policy it may look like they personally submitted the policy. For this reason the consumer, who may not fully understand the Marketplace’s auto-enrollment process, may jump to the conclusion that it was the agent who unlawfully enrolled them in a new policy for the current year.

Now the question is are these unauthorized enrollments? Even though the consumer may feel that it is an unauthorized enrollment, when they sign their application they are giving the Marketplace the authority to use their information for any purpose that they “not the consumer” deems is a lawful purpose. Auto-enrollment of consumers that currently have an active Marketplace plan who fail to actively update their application and or choose a plan before the December 15th deadline is now considered a lawful purpose.

This is a copy of a portion of the final disclosure from the Marketplace paper application.

I know that information on this form will be used only to determine eligibility for health coverage, help paying for coverage (if requested), and for lawful purposes of the Marketplace and programs that help pay for coverage. We need this information to check your eligibility for help paying for health coverage if you choose to apply. We’ll check your answers using information in our electronic databases and databases from the Internal Revenue Service (IRS), Social Security, the Department of Homeland Security, and/or a consumer reporting agency. If the information doesn’t match, we may ask you to send us proof. (This is a direct statement from the Marketplace paper application. The online version gives the consumer the option to retain their information for a period of 1–5 years to accomplish the same goal)

Neither the online application nor the paper application clearly states that the information would be used to auto-enroll the consumer into a plan if they fail to act by a certain date. The agent or broker also has no control over applications that are passively auto-enrolled with their NPN number associated with it.

What if an agent or broker becomes aware that a consumer’s contact information has changed by means of undeliverable mail or a disconnected phone? If the agent has no way of contacting the consumer they also would have no way of warning the Marketplace there could possibly be problems if they attempt to auto-renew the account without direct contact with the consumer first. If the agent contacts the Marketplace to alert them to possible issues with the account, and they are not authorized on a consumers account, the Marketplace will not discuss anything about the account with the agent or broker even if he or she is the agent of record. In this case the policy will be auto renewed with the previous contact information which is now incorrect. The agent will still be attached to the application. Is this an unauthorized enrollment by the agent? No. Would the agent be responsible for the incorrect contact information being transferred to the insurance company? No because the agent or broker has no authority to update a client’s information without direct consent from the client. Also because the Marketplace will not speak to agents without a three-way call with the consumer or a previous authorization recorded within the clients Marketplace account.

The last thing that could have attributed to apparent unauthorized Marketplace application submissions is when a consumer contacted their agent or broker close to or slightly after the December 15th deadline to update their application. If the Marketplace already initiated the auto enrollment and then the client soon after request a change to another plan they would have two active plans with two different companies. In both cases the agents NPN will attach them to the applications as the agent of record. Again although one of the plans may appear to be unauthorized by the consumer it would not be considered fraud on the part of their agent or broker because the auto-enrollment process is beyond their control.

In the three previously mentioned scenarios there was no fraud committed on the part of the agent or broker.

Auto-enrollments whether or not they are viewed by the consumer as an unauthorized enrollment by their agent is not fraud. This is a process that is 100% controlled by the Marketplace. The only one that is truly able to prevent an unwanted auto-enrollment is the consumer. They can do this by not waiting until the last minute to update their application whether they choose to enroll in a plan or not.

The final accusation made in the article was that the Advanced Premium Tax Credits (APTC) were falsely adjusted or misstated on the client’s application. If the Marketplace asks the consumer what income they reported on their original application and the amount on the application is different it could be signs of possible fraud because the only way to change income information on the application is to manually open the application to make the change. If the difference is due to a data matching issue with what was stated on the application and what the IRS has on file it would not be a sign of fraud.

The questions that remain are how many fraudulent applications were actually submitted? Was the apparent fraud due to auto-enrollments initiated by the Marketplace? What action will be taken against the agents and brokers suspected of fraudulent applications? Will they be automatically terminated or will they be given a chance to defend themselves?

Only time will tell what will happen.