Biden Administration’s New Rule Aims to Thwart Rogue ACA Sign-Ups

The Biden administration on Friday put in place stringent curbs aimed at thwarting rogue insurance brokers from switching consumers’ Affordable Care Act plans without their consent.

The announcement came in response to mounting complaints from consumers. The Centers for Medicare & Medicaid Services said Friday that, in the first six months of the year, more than 200,000 people reported to the agency that they were either enrolled in Obamacare plans or switched from one plan to another without their permission.

KFF Health News began reporting on Affordable Care Act enrollment schemes this spring.

CMS said insurance agents will be blocked from making changes to any Obamacare enrollments made through the federal marketplace, healthcare.gov, unless the agent is already “associated” with a consumer’s policy.

Additionally, agents who can’t prove an association — which is undefined in the agency directive — will have to take additional steps to make changes even if they have a consumer’s consent.

The changes are effective immediately, an unusually rapid move by the agency that may reflect the urgency of the problem. Republicans have alleged that enhanced subsidies backed by the Biden administration provide incentive for brokers or consumers to fraudulently misstate their incomes to qualify for ACA tax credits, while some Democrats have also been critical of CMS, saying the agency needs to take a tougher stand against rogue brokers who are switching people without their consent in order to gain commissions.

Consumers, meanwhile, can face higher out-of-pocket costs for medical services or unexpected tax bills if they get signed up for subsidized plans they’re not eligible for.

To show they have consumers’ consent for enrollment changes, CMS said, unassociated agents must do three-way calls with the healthcare.gov call center or ask their clients to make changes themselves, either through healthcare.gov or one of the private sector enrollment websites allowed to link with it.

“CMS anticipates these updates will help block unauthorized changes by agents and brokers,” the agency said in a notice posted on its website Friday afternoon.

Ellen Montz, a deputy administrator at CMS and the director of its Center for Consumer Information and Insurance Oversight, in a written statement to KFF Health News, said “CMS will do everything it can to protect consumers from bad actors and will assist consumers who have experienced a change that they didn’t authorize.” She added that the “consumer experience” would not change for people who continue to work with agents who are already associated with their policies.

The rules drew concern as well as some cautious optimism from agents and their professional associations, which have been calling on CMS to act for months.

“On paper, it protects consumers, so that’s a good thing,” said Joshua Brooker, founder of PA Health Advocates in Pennsylvania, who has followed the issue closely. But he and others said the directive raises many questions about how it will work in practice, especially during the busy open enrollment period at the end of the year.

The requirements will be a burden on consumers, predicted Ronnell Nolan, president of the agent trade group Health Agents for America.

“They will be responsible for calling the marketplace call center, which is a nightmare in itself, to change their agent,” Nolan said. “Why is it their responsibility?”

The directive applies only to existing coverage, not brand-new ACA enrollments.

Complaints about unauthorized enrollment or plan-switching are not new but accelerated during the last open enrollment period for the ACA. President Joe Biden has boasted of record enrollment for 2024 ACA plans. More than 21 million people signed up nationally during the most recent open enrollment period.

The agency said Friday it has resolved more than 97% of the reported complaints about enrollment or switching.

For the first time, the agency also reported on enforcement action, saying that between June 21 and July 10 it had suspended 200 agents or brokers “for reasonable suspicion of fraud or abusive conduct related to unauthorized enrollments or unauthorized plan switching.”

The new rules don’t apply to the 18 states, and the District of Columbia, that run their own Obamacare insurance marketplaces. Many of them use security procedures that healthcare.gov does not, including two-factor authentication.

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