Health insurance brokers and agents who fraudulently sign up consumers for Affordable Care Act plans would face fines as high as $200,000 along with possible prison time under a bill unveiled by U.S. Sen. Ron Wyden on Wednesday.
The legislation is in response to reports of consumers being surprised with medical bills, stuck with taxes or unable to access care after brokers or agents fraudulently enroll them in health care plans without their consent. Wyden, who chairs the Senate Finance Committee, signaled earlier that a bill was in the works after pressing federal regulators to crack down on deceptive brokers.
“It is critical for these bad actors to be held criminally responsible and implement common sense consumer protections so working families can confidently purchase quality, affordable health insurance that works for them through honest brokers,” Wyden, an Oregon Democrat who chairs the Senate Finance Committee, said in a statement.
Agents and brokers who enroll people or help them switch plans receive a commission. The federal government received more than 208,000 complaints of unauthorized enrollment or plan-switching in just the first six months of 2024.
KFF Health News has reported that some patients have tried to fill a prescription or see a doctor only to be told their coverage has changed. In some cases, consumers are unwittingly enrolled in plans subsidized with tax credits they are not eligible for because their income is too high or they can get insurance through their job. Consumers are left on the hook to pay back the tax credits.
These scenarios have become more common as a record 21.3 million people signed up for coverage through the Affordable Care Act’s online marketplaces for the 2024 open enrollment period. The surging commercial plan enrollment is fueled by Medicaid disenrollments as states resume income eligibility checks, as well as a federal law increasing subsidies to make plans more affordable.
It’s unclear how common the problem is in Oregon, and so far the state has not received any complaints, according to Amy Coven, communications and public engagement analyst for the Oregon Health Insurance Marketplace. Jason Horton, spokesperson for the state Division of Financial Regulation, also wrote in an email that regulators have received few complaints regarding this type of fraud.
Wyden spokesperson Hank Stern told The Lund Report in an email that “it’s certainly possible” Oregonians have been affected considering the scope of the problem.
The bill would give federal authorities the ability to regulate how companies market Affordable Care Act plans, set up regular audits of agents and brokers and toughen penalties.
Brokers and agents would face fines between $10,000 and $50,000 for each false application they submit because of negligence or disregard of the rules. Brokers who willingly put false information in an application would face a stiffer penalty as high as $200,000 along with a prison sentence of up to 10 years.
Additionally, the bill would require federal authorities to set up a process that verifies brokers have the consent of consumers when submitting plan changes or new enrollments. Consumers would also receive notifications of changes to their enrollment, broker or tax subsidies used to help pay for their plan.
Lisa Schneider, president and principal producer of Salem-based Valley Insurance Professionals, told The Lund Report that she and others in the industry are still digesting Wyden’s bill. She called it a step in the right direction but said its additional documentation requirements could be burdensome for some brokers and delay coverage for consumers.
The fraud Wyden’s bill targets is not as common in Oregon as elsewhere because in other states there is greater availability of heavily subsidized plans that do not have a monthly premium, she said.
“What we’re finding is that fraudulent agents will go in and cancel someone’s enrollment and re-enroll them into a zero-dollar premium plan,” she said. “And because there’s no premium associated with it, the consumer isn’t aware.”
Schneider said that a relatively straightforward fix would be requiring consumers to provide another piece of identifying information to authorize changes or use two-factor authentication, a common internet security feature that requires consumers to enter a code sent to their phones or email that grants them online access to banking, health or other sensitive information.
Chiquita Brooks-LaSure, the head of Centers for Medicare & Medicaid Services, wrote in a July 19 letter to Wyden that 200 brokers or agents had been suspended over the last year from being able to enroll consumers because of suspected fraud. She also wrote that brokers and agents are required to conduct a three-way call with the consumer and an agency call center to verify changes to their plan.
Wyden’s bill is co-sponsored by five other Democratic senators and is backed by AHIP, the trade association for insurance companies, as well as individual insurers including Regence BlueCross BlueShield and Centene Corporation. It’s also supported by multiple patient groups such as the American Lung Association, Chronic Disease Coalition, the National Alliance on Mental Illness and others.
The issue has also caught the attention of Republican lawmakers who are advocating a different approach. Last month, the GOP chairs of three House committees wrote in a letter to a government watchdog about the “astonishing level of improper, and potentially fraudulent, behavior” in the Affordable Care Act insurance markets. The lawmakers criticized the increased subsidies and accused the Biden administration of lack of oversight.
The lawmakers cited a a conservative think tank’s report asserting that fraudulent enrollment is a bigger problem in Republican-led states that have not expanded Medicaid coverage as well as those using the federal government’s HealthCare.gov platform instead of their own exchanges.
Oregon currently uses the federal HealthCare.gov online marketplace but is planning to introduce a state-based website by 2027.
Coven wrote in an email that Oregon is soliciting proposals from companies to provide a state-based marketplace. Once a company is selected, state officials will work with the company on security measures, she wrote.
“We do not yet know what those mechanisms will be as we have yet to begin planning the design of the system,” Coven wrote.
