Wyden demands penalties for Obamacare enrollment fraud

Good morning. I’m Julie Appleby, a KFF Health News senior correspondent, and I write about all things insurance. Send tips to jappleby@kff.org. The Health Brief is copying Congress and taking Friday off. We’ll be back in your inboxes Monday morning.

Today’s edition: An industry group representing clinical labs across the country is suing the Food and Drug Administration over its plans to regulate certain medical tests. A super PAC trying to help Democrats regain control of the House is making a historic abortion rights push. But first …

A powerful lawmaker says CMS should already be penalizing unscrupulous Obamacare brokers

Lawmakers and state officials are turning up the heat on federal regulators to stop unscrupulous, commission-hungry insurance agents from enrolling thousands of people in Affordable Care Act plans, or switching their coverage, without their knowledge.

Customers often don’t discover the changes until they’re denied medical coverage or get stuck with a bill for ACA tax credits they have to repay.

Senate Finance Committee Chair Ron Wyden (D-Ore.) said he’ll propose legislation to allow the Centers for Medicare and Medicaid Services to hold fraudulent brokers “criminally responsible” for their actions. The agency, which oversees the ACA exchanges, can fine individuals up to $250,000 for submitting false information in an application for a health plan, but it hasn’t done so, Wyden said.

“I am disappointed these penalties have not yet been used to hold bad actors accountable,” Wyden wrote last week in a sharply worded letter to CMS Chief Chiquita Brooks-LaSure.

Jimmy Patronis, who oversees agencies including insurance regulators as Florida’s chief financial officer, called on Congress to push CMS to require two-factor authentication on healthcare.gov and related platforms that agents use to sign people up for coverage. According to Patronis, the state has opened more than 900 investigations into problem enrollments.

“It’s far easier to prevent fraud from occurring in the first place than it is to ask state regulators to chase down these bad actors after the fact,” Patronis wrote.

The problem appears concentrated among the 32 states using the federal marketplace — healthcare.gov — because, brokers say, it’s too easy for rogue agents to access policyholder information. All they need is a name, date of birth and state.

States that run their own insurance markets generally have additional security requirements.

CMS tallied 90,000 complaints about unauthorized sign-ups or plan switching in just the first quarter of 2024, out of more than 16 million enrollments.

Jeff Wu, acting director of the Center for Consumer Information and Insurance Oversight at CMS, has said his agency is preparing regulatory and technological fixes, investigating brokers and working to restore consumers to chosen plans.

But even with Wyden’s legislation on the way, Congress looks unlikely to act. Lawmakers are in the middle of an election year in which President Biden is trying to win votes for bolstering enrollment in ACA plans while knocking his opponent, former president Donald Trump, for his unsuccessful attempt to repeal the law.

Sabrina Corlette, who follows the ACA market as co-director of the Center on Health Insurance Reforms at Georgetown University, said the feds can do more, including coordinating better with state investigations.

But states like Florida should also regulate the marketplaces, she said.

“If there’s a lot of bad brokers in Florida, then Florida needs to look inward and maybe do a better job of policing brokers,” she said.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — an independent source of health policy research, polling and journalism.

Trade group takes FDA to court over lab-test regulation

An industry trade group is suing to block the FDA from regulating laboratory-developed tests (LDTs), a divisive plan the agency finalized last month amid concerns about their reliability and risks to patients.

The lawsuit, filed yesterday by the American Clinical Laboratory Association and one of its member companies, claims the final rule exceeds the agency’s authority. The group argues that LDTs are “professional health-care services” rather than devices and shouldn’t be regulated in a similar fashion.

  • The complaint urges a Texas federal court to rule that the FDA cannot legally regulate LDTs under the Federal Food, Drug and Cosmetic Act and requests an order vacating the policy.
  • A spokesperson for the FDA said the agency doesn’t comment on ongoing litigation.

In other news from the agencies …

  • The FDA and independent researchers are sounding the alarm over nicotine alternatives in vapes, noting that these synthetic substances may be more potent and addictive than traditional nicotine but can be sold without federal authorization, Emma Rumney reports for Reuters.
  • The federal health department’s inspector general has identified widespread problems with Medicare’s oversight of orthotic brace payments, which consistently have among the highest improper reimbursement rates, according to a new report by the government watchdog.

House Democratic PAC makes abortion rights push

A super PAC trying to help Democrats regain control of the House is launching a $100 million campaign that will focus on abortion rights in swing districts across the country, The Post’s Amy B Wang reports.

The House Majority PAC’s new Reproductive Freedom Accountability Fund will be the “largest independent expenditure on behalf of House Democrats,” according to a memo to donors. The group plans to spend the money on advertising and voter mobilization in races where it sees an opportunity for Democratic candidates to pick up a seat if they focus on reproductive rights.

A closer look: The memo identified Republican lawmakers in blue states who voted against abortion rights as particularly vulnerable, name-checking California Reps. David G. Valadao, Mike Garcia and Michelle Steel, who co-sponsored a bill that defined life as beginning at conception.

  • The PACT also called out Republican lawmakers in New York, California, Washington and New Jersey who had either voted to restrict medication abortion or supported prohibiting military service members from being reimbursed for abortion services.

The advocacy group Americans for Contraception is launching a new advertising campaign highlighting Republican opposition to expanded birth control access ahead of a Senate vote on legislation to create a federal right to contraception, according to the Hill’s Nathaniel Weixel.

The initial wave of the campaign includes two ads running in the D.C. market until the upper chamber’s expected vote on the Right to Contraception Act, tentatively scheduled for next week. After the vote, over $5 million in ads will follow in battleground states nationwide.

  • On tap today: Government officials and senior executives from across the medical sector will gather in Maryland at the Professional Services Council’s annual FedHealth Conference to discuss policy and acquisition priorities in civilian and military health.
  • Sens. Bernie Sanders (I-Vt.) and Wyden are scrutinizing the data analytics firm Multiplan over concerns that the out-of-network payment rates it negotiates on behalf of insurers saddle patients with “sky-high medical bills.”
  • The Pharmaceutical Care Management Association is launching a national advertising campaign highlighting the role of pharmacy benefit managers. This comes amid bipartisan scrutiny on Capitol Hill, where lawmakers allege that the prescription drug middlemen drive up the price of medicine.

Washington prepares for Trump term that could bring cuts to health programs (By Victoria Knight and Peter Sullivan | Politico)

House Republicans’ new 340B bill ‘a pharmaceutical industry wish list,’ hospitals say (By Dave Muoio | Fierce Healthcare)

AI brain map could help demystify Alzheimer’s and autism (By Richard Luscombe | The Guardian)

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