[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






      REVIEWING THE ACCURACY OF MEDICAID AND EXCHANGE ELIGIBILITY 
                             DETERMINATIONS

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 23, 2015

                               __________

                           Serial No. 114-91


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
                         Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
BRETT GUTHRIE, Kentucky              GENE GREEN, Texas
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois               LOIS CAPPS, California
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas            G.K. BUTTERFIELD, North Carolina
MARSHA BLACKBURN, Tennessee          KATHY CASTOR, Florida
CATHY McMORRIS RODGERS, Washington   JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILLY LONG, Missouri                 JOSEPH P. KENNEDY, III, 
RENEE L. ELLMERS, North Carolina         Massachusetts
LARRY BUCSHON, Indiana               TONY CARDENAS, California
SUSAN W. BROOKS, Indiana             FRANK PALLONE, Jr., New Jersey (ex 
CHRIS COLLINS, New York                  officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     2
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................     3
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6

                               Witnesses

Carolyn Yocom, Director, Health Care, Government Accountability 
  Office.........................................................     8
    Prepared statement...........................................    10
    Answers to submitted questions...............................    79
Seto Bagdoyan, Director, Audit Services, Forensic and 
  Investigative Service, Government Accountability Office........    20
    Prepared statement...........................................    22
    Answers to submitted questions...............................    85
 
      REVIEWING THE ACCURACY OF MEDICAID AND EXCHANGE ELIGIBILITY 
                             DETERMINATIONS

                              ----------                              


                        FRIDAY, OCTOBER 23, 2015

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:00 a.m., in 
room 2322, Rayburn House Office Building, Hon. Joseph R. Pitts 
(chairman of the subcommittee) presiding.
    Present: Representatives Pitts, Guthrie, Shimkus, Murphy, 
Blackburn, Lance, Griffith, Bilirakis, Long, Bucshon, Brooks, 
Collins, Green, Engel, Capps, Butterfield, Sarbanes, Matsui, 
Lujan, Schrader, Kennedy, Cardenas, and Pallone (ex officio).
    Staff Present: Clay Alspach, Counsel, Health; Rebecca Card, 
Staff Assistant; Graham Pittman, Legislative Clerk; Michelle 
Rosenberg, GAO Detailee, Health; Chris Sarley, Policy 
Coordinator, Environment and Economy; Heidi Stirrup, Health 
Policy Coordinator; Josh Trent, Professional Staff Member, 
Health; Christine Brennan, Minority Press Secretary; Jeff 
Carroll, Minority Staff Director; Tiffany Guarascio, Minority 
Deputy Staff Director and Chief Health Advisor; Una Lee, Chief 
Oversight Counsel; Rachel Pryor, Minority Health Policy 
Advisor; and Samantha Satchell, Minority Policy Analyst.

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Pitts. The hearing will come to order. The chair will 
recognize himself for an opening statement.
    Today's hearing will review the accuracy of eligibility and 
financing determinations made by the Center of Medicare and 
Medicaid Services, CMS. Both CMS's eligibility determinations 
for Medicaid and subsidies in the Federal and state health 
insurance exchanges, and CMS's oversight of Federal matching 
funds in the Medicaid program.
    As we know, the ACA created taxpayer-funded subsidies for 
healthcare coverage for certain individuals, and also required 
establishment of state-based or federally-facilitated 
exchanges. As of June of this year, more than 9 million 
individuals have had effectuated exchange coverage, including 
more than 8 million individuals who are receiving Federal 
subsidies. The ACA also expanded Medicaid to cover childless 
adults in what was the largest expansion of Medicaid since the 
program's creation in 1965.
    Since October of 2013, more than 13 million individuals 
have been enrolled in Medicaid and CHIP, including at least 7.5 
million newly eligible individuals enrolled in Medicaid. 
Whether or not CMS is making accurate determinations for the 
exchanges in Medicaid not only impacts millions of people, it 
implicates billions of dollars. The Congressional Budget Office 
has estimated that exchange subsidies and related spending, as 
well as the increased Medicaid and CHIP outlays under the law, 
cost Federal taxpayers $77 billion just in 2015 alone. The 
total cost for exchange and Medicaid-related spending next 
year, due to the law, jumps to $116 billion.
    Today's hearing comes at a critical time. Today, we are 
just over a week away from the start of open enrollment for 
federally subsidized exchange coverage under the Affordable 
Care Act.
    So it is important that we examine the administration's 
actions taken, or not taken, to impact the accuracy of Medicaid 
and exchange coverage eligibility determinations and the 
Federal matching rate for State Medicaid expenditures.
    Previous reports in 2014 and earlier this year from the 
nonpartisan Department of Health and Human Services Office of 
Inspector General, the OIG, and the Government Accountability 
Office, the GAO, have raised very serious concerns about the 
systematic and ongoing vulnerabilities of eligibility 
verification systems in place governing the Healthcare.gov and 
state-operated health exchanges. It is important that today we 
not only get an update on the exchange systems, but also 
examine Federal efforts undertaken to ensure the accuracy of 
Medicaid eligibility determinations, and the Federal matching 
rate for state Medicaid expenditures. We will also look at the 
Federal and state procedures to minimize duplicative coverage 
for Medicaid and exchange premium subsidies. Regardless of 
member differences over the ACA, I hope we can all agree that 
good government need not be a partisan issue, and that 
protecting taxpayer dollars is a constitutional responsibility 
we all share.
    Federal officials have a legal and ethical duty to be good 
stewards of Federal dollars and ensure programs operate within 
statutory requirements. If an individual is not eligible for a 
program, taxpayers should not be forced to subsidize that 
individual just because Federal controls are lax.
    Our two witnesses today are from the GAO, and we appreciate 
their presence with us. They will share with us the data-driven 
assessment from the nonpartisan GAO regarding a range of 
challenges related to exchange eligibility controls and the 
Medicaid expansion.
    [The prepared statement of Mr. Pitts follows:]

               Prepared statement of Hon. Joseph R. Pitts

    The Subcommittee will come to order.
    The Chairman will recognize himself for an opening 
statement.
    Today's hearing will review the accuracy of eligibility and 
financing determinations made by the Center of Medicare and 
Medicaid Services (CMS)--both CMS's eligibility determinations 
for Medicaid and subsidies in the federal and state health 
insurance exchanges, and CMS's oversight of federal matching 
funds in the Medicaid program.
    As we know, the ACA created taxpayer funded subsidies for 
health-care coverage for certain individuals and also required 
establishment of state-based or federally facilitated 
exchanges. As of June of this year, more than 9 million 
individuals have had effectuated exchange coverage-including 
more than 8 million individuals who are receiving federal 
subsidies.
    The ACA also expanded Medicaid to cover childless adults, 
in what was the largest expansion of Medicaid since the 
program's creation in 1965. Since October 2013, more than 13 
million individuals have been enrolled in Medicaid and CHIP-
including at least 7.5 million newly-eligible individuals 
enrolled in Medicaid.
    Whether or not CMS is making accurate determinations for 
the Exchanges and Medicaid not only impacts millions of people, 
it implicates billions of dollars. The Congressional Budget 
Office has estimated that Exchange subsidies and related 
spending--as well as the increased Medicaid and CHIP outlays 
under the law--cost federal taxpayers $77 billion just in 2015 
alone. The total cost for Exchange and Medicaid related 
spending next year due to the law jumps to $116 billion 
dollars.
    Today's hearing comes at a critical time. Today, we are 
just over a week away from the start of open enrollment for 
federally-subsidized exchange coverage under the Affordable 
Care Act. So it is important that we examine the 
Administration's actions taken--or not taken--to impact the 
accuracy of Medicaid and exchange coverage eligibility 
determinations and the Federal matching rate for State Medicaid 
expenditures.
    Previous reports in 2014 and earlier this year from the 
non-partisan Department of Health and Human Services' Office of 
Inspector General (OIG) and the Government Accountability 
Office (GAO) have raised very serious concerns about the 
systematic and ongoing vulnerabilities of eligibility 
verification systems in place governing the Healthcare.gov and 
state-operated health exchanges.
    It is important that today we not only get an update on the 
Exchange systems, but also examine Federal efforts undertaken 
to ensure the accuracy of Medicaid eligibility determinations 
and the Federal matching rate for State Medicaid expenditures. 
We will also look at the Federal and State procedures to 
minimize duplicative coverage for Medicaid and exchange premium 
subsidies.
    Regardless of member differences over the ACA, I hope we 
can all agree that good government need not be a partisan issue 
and that protecting taxpayer dollars is a constitutional 
responsibility we all share. Federal officials have a legal and 
ethical duty to be good stewards of federal dollars and ensure 
programs operate within statutory requirements. If an 
individual is not eligible for a program, taxpayers should not 
be forced to subsidize that individual just because federal 
controls are lax.
    Our two witnesses today are from the GAO and we appreciate 
their presence with us. They will share with us the data-driven 
assessment from the non-partisan GAO regarding a range of 
challenges related to exchange eligibility controls and the 
Medicaid expansion.
    I will now yield to the distinguished Member,


    Mr. Pitts. I now recognize the ranking member of the 
subcommittee, Mr. Green.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman.
    Well, thank you, Mr. Chairman. And I can't agree more than 
what you said about good government is not a partisan issue, 
but I have to admit, the hearing this morning is--I am 
disappointed, because for one thing, our office didn't get the 
GAO report within the 48 hours we should have had to be able to 
properly prepare. And this is a hearing by ambush. It is just 
not the way this subcommittee ought to work. And I have a 
briefing, or I have a list of things of the GAO in their 
report. But again, I don't know if that is a game that was 
being played, because when I asked for it 3 days ago, we didn't 
have it. And then I was told that our staff got to see it, and 
it was taken back. That is not the way this Congress ought to 
legislate, particularly in the Energy and Commerce Committee. I 
have been on the committee since 1997, and I hope this is not 
the standard we are going to be using. And I would like to 
unanimously consent to place my statement in the record. But 
again, I don't think any of our members have had the 
opportunity to look at the GAO. They couldn't release it to us 
because of the request from you all, from the Republican 
majority, and we would expect the courtesy of being able to get 
a report so we can actually prepare questions and a statement 
in response.
    But I will start with saying----
    Mr. Pitts. Will the gentleman yield just a moment?
    The staff informs me that you received the embargoed 
reports on Monday, the same time we did, and testimony on 
Wednesday. We got it at the same time.
    Mr. Green. When did they give us the report on GAO?
    Mr. Pitts. On Monday.
    Mr. Green. Well, from what I heard, last night when we were 
briefed, is that we got a copy of it, but then it was requested 
not to make copies of it and not to give it back. Again, I hope 
our staff doesn't play games like that with what we need to do.
    Mr. Pitts. We will try to make sure you get them in plenty 
of time.
    Mr. Green. Let me talk about some of the concerns I have 
about the findings presented in the hearing in the GAO 
undercover testing is preliminary. They were put in testimony 
form and given to the minority less than 2 days prior to the 
hearing. These findings are not generalized, by GAO's own 
admission. The investigation was based on a small, 
statistically insignificant number of GAO created fictitious 
secret shoppers. These secret shoppers are not representative 
of the average consumer. GAO used the Federal Government's 
resources and knowledge in forging documents. GAO knew all the 
fraud prevention safeguards that were placed in advance and had 
experience getting around these controls.
    Mr. Chairman, I know of no Republican support for the 
Affordable Care Act. Frankly, you couldn't survive a primary if 
you did. But, again, we are legislators, and we shouldn't have 
a hearing where, if you want to go after the ACA, we will be 
glad to battle with you, because I can talk about the success 
it is. 17.6 million uninsured have obtained coverage through 
the lowest uninsured rate on record. In fact, that has been 
reported widely in the newspapers.
    But again, I was hoping we would get past this and we would 
actually be legislating. If there are problems with the 
Affordable Care Act, then let's fix them. Some of the things 
that were in the bill are in the law now, are what the Senate 
put in. And believe me, I would like to change some of those. 
But again, to have a hearing in our Health Subcommittee without 
having adequate notice so we can even prepare for the GAO 
report. And again, I will yield back my time, I would ask 
unanimous consent to be able to place a statement on the record 
later.
    Mr. Pitts. The chair recognizes vice chair of the full 
committee, Mrs. Blackburn, 5 minutes for her opening statement.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman.
    And I want to welcome our witnesses. I am so pleased that 
you are here and that we have got a chance to talk about 
eligibility standards and the eligibility systems for Medicaid. 
And Obamacare has changed a lot of this, and we know that that 
focus that Obamacare has been on bolstering enrollment numbers. 
And it didn't matter what the cost was, it was get the numbers 
up. So they have really thrown the door open for fraud.
    Now, I come from a state that has a track record of working 
through expansions and enrollment. I come from Tennessee, and 
we were the test case with TennCare. We were the test case for 
HillaryCare. You all are familiar with that story, and you know 
what happened in our State. It was rampant with abuse. We 
didn't need secret shoppers. We had people that were coming 
from Kentucky and Alabama and Georgia and North Carolina and 
Arkansas and Mississippi and jumping into the TennCare program. 
And we had a fraud unit. We had to go in. I was a State 
Senator, set up a fraud unit because the fraud was so rampant.
    The reason, it turned out, was there was no verification or 
reverification of the eligibility standards. So people said, 
Hey, this is great. It is a ``come on in, get what you want.'' 
And some of the cases that are there of the fraud that was 
rooted out and found are astounding. People that would enroll a 
spouse with dementia in the program, and then they would be 
driven by ambulance from another state to Tennessee for their 
doctor's appointments, return home, then put in long-term care 
facilities and nursing facilities, and how did they get by with 
it? Because there was no reverification and no checking on 
these eligibility standards. We know that fraud is a problem. I 
find it amazing that HHS responded to the GAO findings.
    And, Mr. Chairman, I just want to read this quote. ``It is 
important to consider whether it is likely that uninsured 
Americans would replicate the next actions the GAO took; 
namely, knowingly and willingly providing false information in 
violation of Federal law, which could subject the individual to 
up to a $250,000 fine.''
    Does anyone realize how totally naive this statement from 
Meaghan Smith from HHS is? If you have someone who is 
terminally ill, and you can skirt the eligibility because you 
know there is no reverification, $250,000? You bet. They are 
going to give it a shot, and see if they don't get caught, and 
if they can get by because there is no verification.
    Mr. Chairman, I appreciate the attention to this issue. I 
appreciate that the GAO has done a report. If you want to go 
back and look at government-managed healthcare programs, you 
see that much of the growth, much of the escalation and the 
cost per enrollee rate comes down to fraud. I yield back.
    Mr. Pitts. The chair thanks the gentlelady, now recognize 
the ranking member of the full committee, Mr. Pallone, for 5 
minutes of his opening statement.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Mr. Chairman, I think we would both agree that 
this committee has a long history of working respectfully 
together even on the most difficult of topics, but 
unfortunately, that did not happen here today with this 
hearing. It seems to me that my colleagues want nothing more 
than a flashy, top-line message to justify their obsession with 
undermining the Affordable Care Act, the result of which is an 
attempt to take away healthcare coverage from millions of 
Americans. I say this partly because I received only one paper 
copy of each of the GAO reports under discussion from the 
majority approximately 72 hours before this hearing, despite 
the fact that my staff had asked for these reports for at least 
a week prior; and my staff had to push multiple times for a 
time briefly from the GAO on this preliminary so-called fake 
shopper undercover work, also the topic of today's hearing.
    Meanwhile, the only documentation available regarding the 
fake shopper investigation was GAO's testimony, which was made 
available to our committee less than 48 hours ago, and this is 
not a positive reflection on this committee.
    Let me also point out that while today's hearing may 
purport to be an honest examination of GAO's work, I question 
GAO's motives and methods. GAO is supposedly a nonpartisan 
body. Its mission is supposedly to help government work more 
effectively and efficiently, but it certainly is not meant to 
go undercover to create headlines and play I gotcha with 
Federal agencies.
    What is GAO's goal here today? Basically trying to take 
coverage away for millions of fellow Americans? That is a 
pretty sad goal and certainly not something that they should be 
proud of. The fact that GAO refuses to provide CMS with the 
information on the fake identities it created so that the 
agency can learn from the GAO's work and fix potential 
vulnerabilities in the system runs counter to their mission. 
That is why I sent a letter this morning to GAO comptroller 
general, Gene Dodaro, outlining these and other growing 
concerns about GAO, and I hope he conducts an investigation of 
the policies of GAO in this case.
    Mr. Chairman, I do not believe that today's hearing is 
about program integrity. It is just another example of 
Republicans' relentless and tone-deaf war on the Affordable 
Care Act. In addition to GAO's fake shopper investigation, we 
are here today about two additional reports. If it were not for 
Republicans' continual mission to undermine the ACA, these 
reports could have provided a good policy discussion. Both 
highlight important areas where the agency could--should 
continue to focus on the ACA's streamline on no-wrong-door 
policy. That policy rightfully allows consumers to apply for 
coverage on either the marketplace, or with their State 
Medicaid agency to ensure appropriate healthcare coverage.
    Importantly, the reports highlight the extent of the amount 
of work the Federal Government and States have done to improve 
these processes. In fact, CMS is already implementing all GAO's 
recommendations. But I cannot say the same for the preliminary 
fake shopper investigation. Let me be clear, Democrats are not 
opposed to program integrity. However, using fake identities 
and fake documents is not a fear or realistic test of the 
accuracy and effectiveness of the eligibility enrollment system 
in the new healthcare marketplace. In fact, no reality exists 
in which a person can financially gain from gaming the system. 
At best, someone would pay an insurance company a monthly 
premium, pay their deductible, all to get well from an illness 
or disease.
    And this is not some charlatan's trick. What is it that the 
GAO is trying to accomplish here? I would like to know to what 
extent. My understanding, and I am going to ask this in my 
question, is that you are Federal employees. You get your 
health insurance through the Federal employee program. There 
are a lot of people that don't get health insurance that easily 
and have to go through the system with the exchange. And it is 
often difficult for them to do that. And I understand that it 
is difficult, and I understand that there are problems. But for 
you to spend your time and your effort, taxpayer money, in 
trying to make it more difficult or somehow highlight the 
difficulties, I just don't understand.
    It is inconceivable to me that some of the most vulnerable 
individuals in this country would have the desire, time, money, 
and expertise to try over and over again to fraudulently gain 
coverage. In fact, I worry that some of our country's neediest 
individuals end up forgoing coverage because the system is so 
confusing to them. And I want to commend HHS for criticizing 
the way GAO went about this, frankly.
    Mr. Chairman, all of GAO's fake shoppers that went through 
the healthcare Web site failed the identity check. They were 
all required under penalty of perjury to submit additional 
documents at which point GAO provided counterfeit information, 
such as fictitious Social Security cards and immigration 
documents. Further, GAO stopped short of filing tax returns for 
the fake shoppers. That makes it clear to me that we have 
important controls in place.
    Republicans have said that Democrats care too much about 
insuring people and access coverage, and that is an accusation 
that I am proud to own. I do believe that priority should be 
first and foremost that people can access the coverage they 
need or are entitled to have, and I am proud to have been the 
chief architect of the law that helps that happen.
    Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman.
    Again, let me just briefly reiterate, the minority received 
the testimony on Wednesday, when we received it. I am told the 
GAO briefed the minority last Friday, and we provided the full 
report on Monday to your office, Mr. Pallone, which I 
understand you distributed to the member offices.
    So we gave the minority more info and lead time than 
required under the rules. And this hearing is about 
accountability, which all of us want.
    So, with that, sorry to have this start on a partisan note, 
but that concludes the members' opening statements. As usual, 
all members' written opening statements will be made part of 
the record, and we will proceed to our panel.
    Our two witnesses today are from the GAO, and we appreciate 
their presence with us. They will share with us the data-driven 
assessment from the nonpartisan GAO regarding a range of 
challenges related to exchange eligibility controls and the 
Medicaid expansion.
    And on our panel we have Ms. Carolyn Yocom, Director, 
Health Care, Government Accountability Office; and Mr. Seto 
Bagdoyan, Director, Audit Services, Forensic and Investigative 
Services, General Accountability Office.
    Thank you for coming today. Your written testimony will be 
made a part of the record. You will each be given 5 minutes to 
summarize your written testimony.
    And, Ms. Yocom, we will start with you. You are recognized 
for 5 minutes for your summary.

STATEMENTS OF CAROLYN YOCOM, DIRECTOR, HEALTH CARE, GOVERNMENT 
   ACCOUNTABILITY OFFICE; AND SETO BAGDOYAN, DIRECTOR, AUDIT 
   SERVICES, FORENSIC AND INVESTIGATIVE SERVICE, GOVERNMENT 
                     ACCOUNTABILITY OFFICE

                   STATEMENT OF CAROLYN YOCOM

    Ms. Yocom. Thank you. Chairman Pitts, Ranking Member Green, 
and members of the subcommittee, I am pleased to be here today 
to discuss issues related to CMS oversight of Medicaid 
eligibility determination, and coordination between Medicaid 
and the health insurance exchanges, which are also referred to 
as marketplaces.
    The Patient Protection and Affordable Care Act has provided 
millions of Americans new options for obtaining health 
insurance by qualifying for Medicaid, or purchasing private 
insurance through a state-based or federally-facilitated 
exchange. Because income volatility occurs for many low-income 
individuals, they are likely to switch between Medicaid and 
subsidized exchange coverage. It has been estimated that 6.9 
million individuals who receive either Medicaid or the 
exchanges will switch between coverage some time during the 
year.
    Due to the likelihood of these transitions, the Act 
requires coordination between Medicaid and the exchanges. 
However, the complexity of designing such coordinated processes 
can raise challenges, and careful CMS oversight is crucial to 
ensure that Medicaid eligibility determinations are 
appropriate, and that the risk of coverage gaps and duplicate 
coverage is minimized. My statement draws from two reports and 
will focus on, first, CMS oversight of enrollment of 
beneficiaries and reporting of expenditures; and, secondly, the 
extent to which CMS and States have policies and procedures in 
place to reduce the potential for coverage gaps and duplicate 
coverage when individuals transition between Medicaid and the 
exchange.
    Regarding Medicaid enrollment, CMS has taken some interim 
steps to review the accuracy of state eligibility determination 
and examine state expenditures for different eligibility 
groups, but more efforts are required. In particular, CMS has 
excluded Federal eligibility determinations from their review. 
This creates a gap in efforts to ensure that only eligible 
individuals are enrolled in Medicaid, and that state 
expenditures are correctly matched by the Federal Government.
    CMS also does not use information from these eligibility 
reviews to better target its oversight of Medicaid expenditures 
for the different eligibility groups. Consequently, CMS cannot 
identify erroneous expenditures due to incorrect eligibility 
determinations.
    To improve its oversight, we recommended, and CMS generally 
agreed, that CMS should review Federal determinations of 
Medicaid eligibility for accuracy and use the information 
obtained from State and Federal eligibility reviews to inform 
its review of expenditures for different eligibility groups.
    With regard to coordination between Medicaid and the 
exchanges, CMS has implemented several policies and procedures, 
and has additional controls planned to minimize the potential 
for coverage gaps and duplicate coverage. However, we found 
weaknesses in internal controls for the Federal exchanges. For 
example, CMS's controls do not provide reasonable assurance 
that electronic records for individuals transitioning from 
Medicaid to exchange coverage are transferred by states in near 
real time, thus putting individuals at greater risk for 
experiencing gaps in coverage. We also found weaknesses in 
CMS's controls for preventing, detecting, and resolving 
duplicate coverage.
    To further minimize the risk of coverage gaps and duplicate 
coverage, we recommended, and CMS agreed, that CMS take three 
actions: First, to routinely monitor the timeliness of account 
transfers from states; secondly, to establish a schedule for 
regular checks of duplicate coverage; and then, thirdly, to 
develop a plan to monitor the effectiveness of these checks. 
CMS did report a number of planned steps to address the risks 
that we identified.
    Chairman Pitts, Ranking Member Green, and members of the 
subcommittee, this concludes my statement, and I would be 
pleased to respond to any questions.
    [The prepared statement of Ms. Yocom follows:]
    
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    Mr. Pitts. The chair thanks the gentlelady, and now 
recognizes Mr. Bagdoyan 5 minutes for his summary.

                   STATEMENT OF SETO BAGDOYAN

    Mr. Bagdoyan. Thank you. Chairman Pitts, Ranking Member 
Green, and members of the subcommittee, I am pleased to be here 
today to discuss the preliminary results of GAO's undercover 
tests assessing the enrollment controls of the Federal 
marketplace and selected state marketplaces under the ACA for 
coverage year 2015.
    We performed 18 undercover tests through phone or online 
applications. Our tests were designed specifically to identify 
indicators of potential control weaknesses, and inform our 
separate forensic audits of these controls, which cover the 
entire universe of enrollees. I would note that our results, 
while illustrative, cannot be generalized, as pointed out 
earlier, to the entire applicant population. We did discuss 
details of our observations extensively, both with CMS and the 
selected states, to seek their responses to the issues we 
identified.
    CMS and state officials explained, for example, that in the 
applicable instances, the marketplaces and Medicaid agencies 
are only required to inspect application documentation for 
obvious alteration. If there are no signs of alteration, the 
documents won't be questioned for their authenticity.
    In terms of context, health coverage offered through the 
marketplaces is a significant expenditure for the Federal 
Government, as Chairman Pitts pointed out.
    Current levels of coverage involve several million 
enrollees, of whom about 85 percent are receiving subsidies. 
CBO pegs subsidy costs for fiscal year 2016 at about $60 
billion, and a total of $880 billion for fiscal years 2016 to 
2025.
    I would note that while subsidies are paid to insurers and 
not directly to enrollees, they nevertheless represent a 
financial benefit to them. I would also note that a program of 
this scope and scale, millions of enrollees and hundreds of 
billions of dollars in expenditures, is inherently at risk for 
errors, including improper payments and fraudulent activity.
    Accordingly, it is essential that there are effective 
enrollment controls in place to help narrow the window of 
opportunity for such risk, and safeguard the government's 
investment in the program.
    With this as backdrop, I will now discuss our test 
principal results.
    Overall, we first observed no year-on-year improvements in 
the Federal marketplace's controls from our coverage year 2014 
tests. Second, we found similar control vulnerabilities in the 
state marketplaces. And third, following the system's own 
instructions, employed relatively simple workarounds such as 
making phone calls and making self-attestations to circumvent 
the controls we did encounter to obtain coverage.
    More specifically, the Federal and selected state 
marketplaces approved subsidized coverage, either private plans 
or Medicaid, for 17 of our 18 fictitious applicants. The 
subsidies totaled about $41,000 on an annualized basis.
    For 10 applicants, we tested application enrollment into 
subsidized qualified health plans, or QHPs, available through 
the Federal marketplace to include the States of North Dakota 
and New Jersey, and state marketplaces in Kentucky and 
California. These applicants were directed to submit supporting 
documents, such as proof of income or citizenship, and 
submitted fake documents in response. In each instance, the 
Federal or state marketplaces approved coverage. This included 
four applications where we used Social Security numbers that 
could not have been issued by the Social Security 
Administration.
    For the remaining eight applicants, we tested Medicaid 
enrollment through the Federal marketplace as a portal for 
North Dakota and New Jersey, and State marketplaces in 
California and Kentucky.
    For three of eight applications, we were approved for 
Medicaid. In each of these tests, we provided identity 
information that would not match SSA records. Each applicant 
was directed to submit supporting documents. Again, we 
submitted fake documents, and the applications were approved.
    For four of eight applications, we were unable to obtain 
Medicaid approval; however, as a result of this failure, we 
subsequently applied for and were approved for subsidized 
qualified health plans. For the remaining application, we were 
unable to apply for Medicaid coverage in California, because 
the applicant declined to provide a Social Security number, 
citing privacy concerns.
    In closing, our results highlight the need for CMS and the 
states to make program integrity a priority and implement 
effective controls to help reduce the risks for potential 
improper payments and fraud. Otherwise, there is significant 
potential for such risks to be embedded early in a major new 
benefits program such as the ACA. We plan to include a number 
of recommendations to CMS regarding controls in a forthcoming 
report, and we have already discussed these recommendations in 
detail, including with Acting Administrator Slavitt.
    Mr. Chairman, this concludes my statement. I look forward 
to the subcommittee's questions.
    [The prepared statement of Mr. Bagdoyan follows:]
    
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    Mr. Pitts. The chair thanks the gentleman. Thanks to both 
of you for your testimony.
    We will begin the questioning. I will recognize myself 5 
minutes for that purpose.
    And this question is for both of you. I will start with 
you, Ms. Yocom. Today, we are just over a week away from the 
start of open enrollment for exchange coverage under the 
Affordable Care Act. Do you have any reason to believe that the 
vulnerabilities identified by GAO and reported in your 
testimony have been sufficiently addressed by CMS, or are these 
program gaps in vulnerabilities ongoing?
    Ms. Yocom. There certainly are remaining concerns about the 
need for better oversight of the eligibility determination 
process, and also checking to ensure that the appropriate 
matching rate is or has been used. CMS has taken some actions 
over the course of the summer, but there is more to do.
    Mr. Pitts. Mr. Bagdoyan.
    Mr. Bagdoyan. Yes. Thank you, Mr. Chairman.
    I would echo what Ms. Yocom said in terms of questions and 
concerns that remain. As I mentioned in my opening statement, 
we have not detected any change in the CMS control environment, 
which is the broad set of controls from the front, the middle, 
and the end. In fact, for the end control, which is essentially 
the tax reconciliation process, there have been several reports 
from the Treasury inspector general for tax administration, the 
HHS, OIG, as well as GAO itself, questioning the capability of 
CMS and the IRS to effectively implement that control. So my 
answer would be the vulnerabilities remain based on the 
evidence that we have.
    Mr. Pitts. When did GAO first make CMS aware of the 
vulnerabilities identified? For example, in the undercover work 
specifically, hasn't CMS known about these problems since at 
least last summer?
    Ms. Yocom, or Mr. Bagdoyan?
    Mr. Bagdoyan. Yes, thank you. Yes, we had a hearing before 
the House Ways and Means Committee in July of 2014, and we 
discussed our initial look at the time for coverage year 2014 
with CMS in detail. And so they were aware, at least, of the 
very specific issues that we raised, in terms of control 
vulnerabilities.
    Mr. Pitts. Let's continue, Mr. Bagdoyan. During the first 2 
years, GAO has successfully obtained federally-funded, or 
subsidized coverage, for 28 of 30 of the fictitious applicants, 
each of which should have been denied coverage because they did 
not have or provide sufficient evidence of eligibility 
according to your testimony. That is a 93 percent error rate. 
Does GAO find that acceptable? Is there any other Federal 
Government program with even near as high an error rate?
    Mr. Bagdoyan. Well, I would certainly caution the use of 
that 93 percent. Certainly, the sample we used was not 
generalizable. It was designed to raise concerns and flags 
about specific controls. As you know, the issue of improper 
payments was discussed by the comptroller general recently. The 
trend is up after several years of some modest decline. So that 
is the environment we are looking at, this issue overall. We 
are not trying to specifically target any one individual for 
their health coverage. As I mentioned in my opening statement, 
we have parallel forensic audit work ongoing right now, and 
that is looking at each and every enrollee in the system, and 
we would be subjecting those enrollee databases to various 
types of analyses.
    Mr. Pitts. Now, supporters of the Affordable Care Act like 
to claim--or they are likely to claim that GAO's fictitious 
applications do not represent actual fraud, and question 
whether GAO has identified any real fraud. It is my 
understanding that GAO's undercover work was also supposed to 
be paired with a forensic audit of actual exchange enrollment 
data, but that CMS has stonewalled GAO in providing the data 
necessary to do that work. Can you please describe the delays 
GAO has experienced in obtaining the necessary data from CMS?
    Mr. Bagdoyan. Sure. Yes. First, just to restate the fact 
that the work we did undercover was not designed to detect 
fraud, per se, in the general population. Although when we did 
perform the work, we obviously engaged in fraudulent activity, 
which is consistent with our investigative authority for these 
purposes. And, yes, we do have ongoing forensic audits for 
coverage year 2014. In discussions with staff, we are ready to 
request 2015 information for coverage year 2015 or other----
    Mr. Pitts. And could you just briefly----
    Mr. Bagdoyan. Yes, I will mention that our initial contact 
with CMS to obtain the 2014 data began in April of last year, 
and it was not resolved until recently this year. So it took 
about a year of negotiation to obtain that data set.
    Mr. Pitts. OK. My time has expired. I recognize the ranking 
member, Mr. Green, 5 minutes for questions.
    Mr. Green. Thank you, Mr. Chairman. I thank the witnesses 
for your testimony today.
    Mr. Bagdoyan, I want to ask some of the results, your 
preliminary results of your work on the eligibility of 
enrollment, and hopefully, because I have a lot of questions, 
we can get yes or no.
    First of all, how many fictitious identifies did GAO create 
and attempted to get the coverage from Medicaid or subsidized 
marketplace coverage?
    Mr. Bagdoyan. For coverage year 2015, which is the work I 
am testifying on today, there were 18 separate applications.
    Mr. Green. OK. How many of these applications were made 
online?
    Mr. Bagdoyan. I think most of them actually, began online, 
and then switched to phone application as we encountered the 
identity proofing restriction.
    Mr. Green. So all 18 started online?
    Mr. Bagdoyan. Most of them did.
    Mr. Green. OK. How many of the applicants failed on ID 
proofing? How many of these applications failed on ID proofing?
    Mr. Bagdoyan. I would say the vast majority of them failed 
the online ID proofing step.
    Mr. Green. According to your testimony, ID proofing, 
``served as an enrollment control for those applying online,'' 
is that correct?
    Mr. Bagdoyan. That is correct.
    Mr. Green. And let's see if I understand correctly. Each of 
these applicants were directed to phone the marketplace and 
reply by phone, correct?
    Mr. Bagdoyan. We were directed to call the contractor, 
Experian, who is tasked with performing the identity proofing. 
When they also could not proof for identity, they directed us 
to call the marketplaces, and that is what we did, and we 
considered that a control workaround.
    Mr. Green. Were these applicants informed over the phone 
that there were civil or criminal penalties for providing 
inaccurate, untruthful information to the exchange?
    Mr. Bagdoyan. As I recall, the representatives did read 
them statements to that effect, yes.
    Mr. Green. And are you aware that in addition to criminal 
penalties for perjury, there are significant civil penalties in 
the statute for negligent or knowingly reporting false 
information to the exchanges?
    Mr. Bagdoyan. Yes, I am aware of that.
    Mr. Green. And if I understand your testimony, each of the 
18 applications, all of them resulted in inconsistency?
    Mr. Bagdoyan. The ones that we were successful, which were 
17 of 18, most of those resulted in some sort of inconsistency 
which needed to be cleared, yes.
    Mr. Green. And according to your testimony, if there is an 
inconsistency, the marketplace determines eligibility using the 
applicant's attestations and then requires applicants to 
provide additional documentation to resolve the inconsistency? 
Is that correct?
    Mr. Bagdoyan. That is correct.
    Mr. Green. And this is another control in the eligibility 
enrollment process?
    Mr. Bagdoyan. Well, the submission of documentation, we 
consider that to be more of a middle control. I think the whole 
system essentially relies on self-attestation, which is a 
concern itself in an overall control environment.
    Mr. Green. And GAO submitted forged documentation for each 
of these applications for coverage?
    Mr. Bagdoyan. That is correct.
    Mr. Green. So, for instance, fake Social Security cards, 
fake driver's license, fake immigration documents, and so 
forth?
    Mr. Bagdoyan. That is right.
    Mr. Green. OK. Are you aware that there are significant 
criminal and civil penalties under both state and Federal law 
for creating and using falsified documentation, such as 
driver's license and Federal immigration documents?
    Mr. Bagdoyan. Yes, I am.
    Mr. Green. Did GAO, at any time, contact the Office of 
Inspector General for Health and Human Services?
    Mr. Bagdoyan. We coordinate our work upfront with them, but 
we don't discuss any of our investigative details.
    Mr. Green. OK. Has this report been submitted to the Office 
of Inspector General?
    Mr. Bagdoyan. No, it has not.
    Mr. Green. I want to thank you for your testimony. It makes 
clear that there are multiple layers of eligibility enrollment 
controls in the state and Federal marketplaces. While there is 
always room for improvement, I take issue with assertions of 
some of my colleagues that we have an ideological opposition to 
the ACA to seek to falsify, portray the eligibility enrollment 
system. I think there are some safeguards in it, but, again, we 
have a lot of different groups that can investigate that, 
including the inspector general for the Health and Human 
Services.
    Mr. Chairman, I yield back my time.
    Mr. Pitts. The chair thanks the gentleman, now recognize 
the vice chairman of the full committee, Mrs. Blackburn, 5 
minutes for questions.
    Mrs. Blackburn. Thank you, Mr. Chairman. And just as a 
point of clarification, as we are having this discussion, I 
think that it is important to note that having secret shopper 
programs are standard operating procedures for businesses that 
work in the consumer realm that are in customer service. Secret 
shopper programs are used by restaurants, by hotels, by retail 
establishments. They are used by our chambers of commerce many 
times.
    So to say it is fake, or that it is something that is 
unseemly and stealth, I think it is important to note that this 
is how many organizations go in and do a spot check on how they 
are performing and how they are delivering a service.
    As I said, coming from the state where we have had a little 
bit of a history with this through Medicaid expansion, I 
appreciate the attentiveness to the detail of trying to make 
certain there are fewer vulnerabilities within the system where 
people can come in, fake their eligibility, enroll, and then 
get services that the taxpayers are paying for, services to 
which they are not entitled, and their utilization of those 
services means there is less for those who actually need and 
deserve and qualify for those services.
    Mr. Bagdoyan, I want to start with you and go back to this 
vulnerability where you say that the documentation submitted 
does not appear to have any obvious alterations, it would not 
be questioned in its authenticity. That seems like a very low 
bar to me.
    So did fabricating the documentation requested as part of 
the application process require specialized knowledge or any 
great technical skill?
    Mr. Bagdoyan. Not really.
    Mrs. Blackburn. So this is something that anybody could do 
from a simple home computer or a keyboard?
    Mr. Bagdoyan. Yes. We used commercially available 
computers, software, and paper materials. You just have to have 
a basic knowledge of what these things look like, and those are 
readily available from the Internet.
    Mrs. Blackburn. So in replicating the marketplace in order 
to do your research, you used as many different points of entry 
as options to enter the system?
    Mr. Bagdoyan. Yes. We had no foreknowledge of what the 
controls were that we would encounter. And that goes back to 
our 2014 work. We went, behaving as a typical consumer would, 
encountering the program and the systems it has for the first 
time.
    Mrs. Blackburn. And that is how any smart businessperson 
would do an evaluation of the vulnerabilities and the risks 
embedded in their system, and ascertain as to whether or not 
the proper controls are in place to prevent any type of fraud 
or leakage.
    Let me ask you this: How would you respond to claims that 
the risk of fraud is low, because subsidies are provided 
directly to the insurer as opposed to the enrollees?
    Mr. Bagdoyan. Right. Thank you for your question. In that 
regard, we view the subsidy issue as still being beneficial, 
financially, to an applicant. Essentially, it keeps more money 
in their pocket when they pay the premiums, or if they choose 
to take the subsidy in the form of a tax credit, that reduces 
their tax liability, or it could also result in a refund, which 
does involve getting a check from the government.
    Mrs. Blackburn. OK. Thank you.
    Ms. Yocom, just one question before we move on. The 100 
percent Federal funding for the newly eligible, the states 
obviously have a financial incentive to bulk up that 
enrollment. And what, if any, safeguards did CMS institute to 
ensure that taxpayers were not paying more than their share of 
the state's Medicaid program?
    Ms. Yocom. The primary safeguard that CMS has been using 
has been the eligibility reviews that they have conducted. They 
have asked, first, for states to take samples of applications 
and review them, and then they have reviewed the results of 
those applications.
    Mrs. Blackburn. So the states are following through on the 
verification?
    Ms. Yocom. When errors or problems are identified, then the 
states need to file a corrective action plan with CMS that says 
how they will correct those errors.
    Mrs. Blackburn. Very good. Thank you.
    I yield back.
    Mr. Pitts. The chair thanks the gentlelady, now recognize 
the ranking member of the full committee, Mr. Pallone, 5 
minutes of questions.
    Mr. Pallone. Thank you, Mr. Chairman.
    My questions are for Mr. Bagdoyan. I want you to 
understand, Mr. Bagdoyan, why I am so critical of this fake 
shopper investigation. I just feel that it is very important 
for people to get health insurance. And I know that the GAO is 
spending a lot of money doing this investigation, and it just 
seems to me that it is not a priority. My colleagues on the 
Republican side every year try to cut funding for the IRS. And 
you would think that the people that are cheating the income 
tax would be the ones you would be most concerned about 
defrauding the government, but they keep cutting the 
enforcement dollars for that. So it is always a question of 
priorities.
    Who is it that asked you to do this fake shopper 
investigation?
    Mr. Bagdoyan. Yes. As we reflect in my statement, Mr. 
Pallone, this request originated with the Senate Finance 
Committee, the House Committee on Ways and Means, and the House 
Committee on Energy and Commerce.
    Mr. Pallone. The majority?
    Mr. Bagdoyan. The majority.
    Mr. Pallone. OK. And why did you decide that this was a 
priority? In other words, I know a lot of times in Congress 
committees ask GAO to do investigations, they don't do it. Why 
did you think this was a priority?
    Mr. Bagdoyan. Well, actually, we do respond to each and 
every request.
    Mr. Pallone. You respond, but you don't necessarily do it.
    Mr. Bagdoyan. We prioritize them. And when the term of this 
engagement came, it was fully staffed, and the work began.
    Mr. Pallone. So you just basically do every investigation 
that any congressional committee asks you to do?
    Mr. Bagdoyan. For the most part, yes.
    Mr. Pallone. Well, I haven't found that to be true.
    Let me ask you this: You are a government employee, right?
    Mr. Bagdoyan. That is correct.
    Mr. Pallone. And how do you get your health insurance?
    Mr. Bagdoyan. Through the government, through the GAO.
    Mr. Pallone. Well, not through the GAO, but through the 
Federal employee program, right?
    Mr. Bagdoyan. Right.
    Mr. Pallone. Why did you decide to investigate the exchange 
marketplaces and not the Federal employee program? Why didn't 
you set up fake shoppers for that?
    Mr. Bagdoyan. Well, that was not my decision. It is a 
response to a request from Congress; we do our best to respond 
to that. And we operate for this work under the premise that 
this is the law on the books, and our work is to make sure that 
it gets done as intended.
    Mr. Pallone. I understand that. But I also understand that 
in order to obtain coverage fraudulently, one would need to be 
extremely motivated, willing to break a number of different 
laws with serious civil and criminal penalties for no direct 
financial gain, and I think that is highly unlikely. And if an 
enrollee did manage to do all that, they would still have to 
pay their share of premiums before their coverage is effective, 
and you never even went so far as to ask for their income 
taxes, which is the final check.
    So I just think that when you make decisions about what you 
are going to prioritize and investigate, you have got to think 
about what the consequences are. You are spending taxpayer 
dollars, and whether or not there is any legitimate reason to 
do this. Have you examined the incidents of fraudulent 
documentation being used in the marketplaces? In other words, 
how big a problem this is in reality? Is that something you 
have looked at as to what extent this is a real problem?
    Mr. Bagdoyan. Sure. Thank you for that question. As I 
mentioned earlier in response to another question along those 
lines, we have parallel forensic audit work that is looking at 
all the enrollees from coverage year 2014, and we are in the 
process of requesting coverage year 2015 data, and we will 
subject those data sets to various sorts of analysis.
    Mr. Pallone. But to this date, we have no information to 
tell us how big this problem is?
    Mr. Bagdoyan. That is correct, yes.
    Mr. Pallone. OK. All right. I just think that it is 
important when--it just disturbs me a great deal to think that 
what you are basically telling me is that anything Congress 
asks you to do, no matter how spurious it might be, no matter 
whether or not you think it is important or not, you are just 
going to do it because Congress asked you to do it. I mean, if 
that were the case, there would be no real-world applicability 
to what you do. And it is shocking to me to think that every 
time someone went up and there was a check in the marketplace 
for someone who was trying to be fraudulent, you had to go and 
make another false identity each time. And then, finally, when 
you got to the point where they would have to submit their tax 
returns, you didn't even bother to do that, which probably 
would have been the ultimate check.
    Why didn't you ask for the tax returns? Why didn't you go 
to that ultimate check?
    Mr. Bagdoyan. This part of the work was designed to take 
our checks or control reviews to the middle part of the 
controls, which essentially ends with the document 
verification.
    Mr. Pallone. So, in other words, is it possible you just 
thought that one would be too difficult for people to 
accomplish?
    Mr. Bagdoyan. No, not at all.
    Mr. Pallone. Well, so it is just because you didn't have 
the time basically? You did the middle part but not the end 
result?
    Mr. Bagdoyan. Each plan stands on its own merit, Mr. 
Pallone.
    Mr. Pallone. It doesn't have any merit in my opinion, Mr. 
Bagdoyan. I am shocked. It seems to me that something has to be 
done about the way GAO proceeds, if they just do these things 
and we have no accountability as to whether it accomplishes 
anything or is useful in the real world. Thank you.
    Mr. Bagdoyan. Thank you.
    Mr. Pitts. The chair thanks the gentleman, now recognize 
the gentleman from Illinois, Mr. Shimkus, 5 minutes for 
questions.
    Mr. Shimkus. Thank you. Thank you, Mr. Chairman.
    Thanks for being here. It is good to follow my friend, the 
ranking member, because the history is also instructive. The 
healthcare law was passed, especially the sidecar, with no 
debate through the committee, no oversight hearings, and 
really, no debate on the floor.
    So that is why we on our side, continue to look and try to 
do our oversight. When we were still in the minority, we asked 
for hearings on how the healthcare law would work; we asked for 
hearings on the rollout; we asked for hearings on the 
eligibility standards; we asked for hearings on fraud; we asked 
for hearings on Medicaid expansion. We never had any 
receptivity to any oversight hearings when we were in the 
minority. So now that we are doing oversight when we are on the 
majority, I am not sure why people should be surprised at that. 
So now I will go to my questions.
    For Mr. Bagdoyan, it is my understanding that CMS asked GAO 
to provide identifying information about its fictitious 
applicants; is that correct?
    Mr. Bagdoyan. That is correct.
    Mr. Shimkus. Has GAO provided such information to other 
agencies in which similar undercover work has been performed?
    Mr. Bagdoyan. Not to my knowledge.
    Mr. Shimkus. What would be the implications of providing 
the identities of the fictitious applicants on GAO's ability to 
conduct future undercover work, whether on the ACA or any 
Federal program?
    Mr. Bagdoyan. Yes, it would essentially compromise our 
sources, methods, and techniques. A lot of this information is 
directly connected to the agents who performed the work, so it 
would expose them to risk, such as identity theft, and overall, 
it could compromise our ability to conduct investigations for 
the current Congress, future Congresses. So those are 
significant implications.
    GAO has been doing this for over 30 years, and it is a 
long-standing capability that we offer, and we pursue them 
according to the applicable investigative standards.
    Mr. Shimkus. And your profession, I guess the frustration 
is--we are actually on the same team, and we have got a law. We 
want it to be applicable in a responsible manner. You have a 
role to help us do that. When I was in the Army and we had the 
IG coming down--they are here to help us. They were a pain in 
the rear end, but they were just to help ensure that we had our 
procedures and our performance standards in line with the 
expectations of the command guidance in the Army. So no one 
likes to have people go through their dirty laundry, I get it. 
But that is your job, and we appreciate it.
    Some of my colleagues on the other side of the aisle may 
question the utility of your findings because of the results of 
18 fictitious applicants are not generalizable. In fact, you 
used that term earlier to another question. I understand that 
GAO's methodology was not intended to provide generalizable 
results; is that correct?
    Mr. Bagdoyan. Yes, that is correct, Mr. Shimkus.
    Mr. Shimkus. And what was GAO's methodology designed to 
show? And given the results, what has GAO concluded?
    Mr. Bagdoyan. Yes. The methodology, as with 2014 and with 
2015, was designed specifically to flag potential control 
vulnerabilities. And in each case, we detected those 
vulnerabilities, and as I mentioned earlier, we have a separate 
report that will be coming out within the near future that will 
be directed to all the requesters with recommendations, 
specifically to CMS, and we have discussed those already at a 
general level with CMS, including the acting administrator.
    Mr. Shimkus. Great. Thank you.
    And for Ms. Yocom, do you find it concerning that at a time 
when states are implementing significant changes to the 
Medicaid eligibility determination process, and the Federal 
Government, for the first time, is determining Medicaid 
eligibility in some states, CMS decided to suspend its 
measurement of the eligibility component of its payment error 
rate measurement program?
    Ms. Yocom. We are concerned about that. The eligibility 
determination rate is not going to be based on the Affordable 
Care Act and the eligibility actions therein. And at this 
point, I believe the latest information is that it will not be 
until 2019 before the error rate is actually applied. CMS is 
doing eligibility reviews, and it is important to do this. We 
do want them to be a little more transparent about what they 
are finding and how they are fixing it.
    Mr. Shimkus. Thank you, Mr. Chairman. I yield back my time. 
Thank you for coming.
    Mr. Pitts. The chair thanks the gentleman, now recognize 
the gentlelady from California, Mrs. Capps, for 5 minutes of 
questions.
    Mrs. Capps. Thank you, Mr. Chairman. I am going to yield a 
few seconds to my ranking member.
    Mr. Green. Mr. Chairman and my colleague and good friend 
from Illinois, you were on the committee when we had exhaustive 
hearings in drafting the Affordable Care Act. In fact, I 
remember some very all-nighters, it seemed like. So our 
committee did do its due diligence in 2009 and 2010, as I 
recall, because I was on the committee in 2003, when we 
expanded the prescription drug plan.
    Mr. Shimkus. Will the gentleman yield?
    Mr. Green. It is not my time.
    Mrs. Capps. It is my time. Certainly.
    Mr. Shimkus. I would ask the public to check the record. I 
will stand by my statement.
    Mrs. Capps. Thank you again, Mr. Chairman. As some of my 
colleagues have pointed out, the forensic work that GAO is 
providing testimony on today is interesting, unfortunately, not 
particularly applicable to the real word. It's highly unlikely 
that people would use fraudulent identities to enroll in a 
qualified health plan. The number of hurdles they would have to 
overcome in order to get coverage, not to mention the number of 
state and Federal laws they would have to break simply are not 
realistic for someone who is just trying to apply for health 
coverage, health coverage that they are going to pay for with 
their own premium dollars, by the way, with any subsidies going 
not to them, but to their insurance company.
    In sharp contrast to GAO, the work of the HHS Office of 
Inspector General has been doing to review real-life cases have 
been far more constructive than finding areas where both the 
Federal- and the state-based marketplaces can improve their 
eligibility and their enrollment processes. For example, the 
Office of Inspector General just released a report on Kentucky 
State-based marketplace, and reviewed a sample of 45 actual 
case files and reviewed staff and contractors and reviewed 
documents.
    Mr. Bagdoyan, are you aware of this report? Yes or no?
    Mr. Bagdoyan. Yes, I am.
    Mrs. Capps. Thank you. The OIG report found that the 
states' controls were generally sufficient but did find some 
issues that occurred primarily due to system errors, such as 
failing to send a notice of inconsistency, flagging that 
something is not right. The State has corrected these errors by 
addressing the problem with the system and also made sure that 
the people and the cases with errors were actually eligible, 
which, in fact, they were, despite the system errors.
    Similarly, a review of the federally-run marketplace in 
August found some issues in how it resolves inconsistency. As 
in Kentucky, CMS confirmed that people in the cases with 
problems are actually eligible, and is making changes to 
improve the process of resolving inconsistency. The OIG 
provides specific information on the errors they find so they 
can be corrected, or otherwise remedied.
    Mr. Bagdoyan, do you plan to make the identifying 
information for the fictitious applications available to CMS 
and to the state-based marketplace in order that these entities 
address the root causes of the errors, yes or no?
    Mr. Bagdoyan. As with our past position, we will not be 
providing that information.
    Mrs. Capps. Why not?
    Mr. Bagdoyan. Because it involves investigative techniques, 
sources, and methods, undercover identities that are directly 
linked to our agents who would then be exposed to risk.
    Mrs. Capps. Well, I find this important. And I must say I 
think this further supports what I have been saying about the 
real-world applicability of GAO's forensic work in this case, 
by looking at actual cases rather than wholly artificial ones, 
the OIG is identifying where there are actual real-life 
problems, and the eligibility enrollment system that needs to 
be corrected. And their investigation gives states like 
California where I live, and the Federal Government, the 
opportunity to actually improve the way the systems work, and 
this benefits consumers and taxpayers.
    In contrast, GAO's work looks at theoretical problems 
involving fictitious applicants who do not actually operate as 
people, operate in the real world, and then refuses to provide 
information sufficient for these agencies to make genuine 
system improvements.
    One last question, Mr. Bagdoyan. You said that the 
documents forged and produced were deemed with readily 
available materials, how much money did you need to spend on 
these materials for computers, printers or other internals?
    Mr. Bagdoyan. Very little to none. They are readily 
available to us as part of our investigative capability.
    Mrs. Capps. How much time did you spend on this project?
    Mr. Bagdoyan. The work has been ongoing since 2014.
    Mrs. Capps. This isn't an area suitable expectation for--
well, I appreciate that information. And again, it is just 
unfortunate. Thank you very much. I yield back the balance of 
my time.
    Mr. Pitts. The chair thanks the gentlelady. I now recognize 
the vice chair of the subcommittee, Mr. Guthrie, for 5 minutes 
for questions.
    Mr. Guthrie. Thank you very much, we have talked about 
Kentucky a lot. Kentucky has been talked about a lot in 
Affordable Care Act, and the one thing that I have always said 
were on the Affordable Care Act are people working for a state 
government made a Web site that worked, that actually operated 
when a lot of places weren't able to do that.
    The problem is that in this study that you moved forward, 
and I understand what Ms. Capps is referring to, but those are 
people who qualified, and there were just mistakes made on 
those applications. My understanding is in your fictitious 
people signing up that weren't qualified for subsidies, and the 
way you set up the scenario that Kentucky had five out of five 
get coverage, even though they should not have gotten coverage, 
so 100 percent.
    I know that is not--five cases, but if somebody told me it 
was two out of five and that is 40 percent, or if it is one out 
of five and that is 20 percent. But five out of five is 100 
percent, so who knows? You can sort of start making some 
extrapolations as a statistics person even with those few 
numbers. There is also 17 out of 18, I understand.
    And so in your statement, your written statement, Mr. 
Bagdoyan, you said, and I quote, that CMS told GAO officials, 
``the eligibility and enrollment system is generally performing 
as designed.''
    Mr. Bagdoyan. That is correct.
    Mr. Guthrie. Working as designed is what they said. What do 
you make of the statement, given that 93 percent, or 17 out of 
18 of your fictitious applicants enrolled in subsidized 
coverage?
    Mr. Bagdoyan. Well, I would answer that question in the 
context of what CMS told us in respect of balancing access to 
coverage with program integrity. So if you look at it that it 
was designed--it is working as intended, that means that access 
is enabled. I would say that the overall balance would tilt to 
access over program integrity at this point in time.
    Mr. Guthrie. So they are willing to accept that fictitious 
people can register because it is easier for everybody to 
register?
    Mr. Bagdoyan. That would be for CMS to respond to.
    Mr. Guthrie. So in your opening statement, also, you 
indicated that GAO found no improvements in the federally-
facilitated marketplace control environment between plan year 
2014 and plan year 2015. When did GAO first share information 
with CMS about the weaknesses found in the marketplace, 
eligibility determination controls. And are there changes that 
CMS could have made between the 2-year plans to address these 
concerns?
    Mr. Bagdoyan. Sure. We first broached the subject at the 
conclusion of our first round, if you will, of our undercover 
work, which would have occurred in early summer of 2014, right 
before the July hearing, before the House Ways and Means 
Committee.
    Mr. Guthrie. OK.
    Mr. Bagdoyan. And in terms of having information from us, 
we discussed in detail how each scenario unfolded, both in 2014 
and 2015. We explained how we worked around the identity 
proofing control that we encountered, and provided related 
information that they could have used to notice that the ID 
proofing workaround was a problem, and also the fact that the 
documents that we submitted were not really subjected to any 
kind of scrutiny other than did they really look altered to the 
naked eye.
    Mr. Guthrie. OK.
    Mr. Bagdoyan. And I would point out, in terms of providing 
information to others, that we had discussions with Kentucky 
officials in person.
    Mr. Guthrie. It is my understanding they are very receptive 
to try to change----
    Mr. Bagdoyan. They were receptive. Again, we provided 
information. We went to Kentucky to discuss those in person. 
And in response to the statement, those officials let us know 
that they are already taking action in two areas: One is 
training of their representatives, and the second one is to 
improve their system so the ID proofing step or control is not 
so easily over worked around.
    Mr. Guthrie. Thank you for pointing that out. I should have 
pointed that out as well that our State employees were trying 
to make these improvements.
    Mr. Bagdoyan. That is correct. They have been receptive to 
our discussions and already taking action. And they promised to 
provide us with additional details when we finalize this work, 
this 2015 round of undercover work in a final report.
    Mr. Guthrie. I appreciate hearing that.
    And then for Ms. Yocom, I have one quick question. Ten 
States have delegated authority to Medicaid eligibility 
determinations to the Federal Government. What, if anything, 
has CMS done to access the accuracy of Medicaid eligibility 
decisions made by the Federal exchanges in determining 
eligibility error rate?
    Ms. Yocom. When we began our work, the short answer is they 
had not done anything. Our process is pretty interactive with 
CMS. They have reported to us that they have begun looking at 
the FFE, at the Federally Facilitated Exchange, eligibility 
determinations beginning in August. We do not know the results 
of those reviews.
    Mr. Guthrie. OK. So they just began this August and we are 
waiting to hear?
    Ms. Yocom. Yes.
    Mr. Guthrie. OK. It would be interesting to hear when that 
time comes. Well, thank you. I just ran out of time. I yield 
back.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentleman from North Carolina, Judge Butterfield 
for 5 minutes for questions.
    Mr. Butterfield. Thank you, Mr. Chairman, and good morning 
to both of you. I thank you very much for your testimony. And 
in the interest of time, I think most of my questions will be 
directed to the GAO representative, Ms. Yocom, but thank you as 
well, sir, for your participation.
    Mr. Bagdoyan. You are welcome.
    Mr. Butterfield. Mr. Chairman, I think it is important for 
us to remember why we have these systems in place in the first 
place. Democrats on this committee, as you would recall, who 
drafted the Affordable Care Act, envisioned a no-wrong-door 
policy in which individuals could apply either at the state 
Medicaid office, or they could apply through the exchanges and 
would get an eligibility determination for whichever program 
they are eligible for.
    Ms. Yocom, let's start with this: I would like to ask you 
some questions about how the ACA implements this no-wrong-door 
policy and what this really entails?
    Ms. Yocom. Sure. The purpose of the no-wrong-door is that 
an individual can approach a marketplace, they can approach the 
state Medicaid agency, they can go on to the Web site and from 
any of those areas, determine which type of insurance, if any, 
they are eligible for, and then whether they would get a 
subsidy in the event they qualified for exchange coverage.
    Mr. Butterfield. That is what I recall. Is it correct, Ms. 
Yocom, that people can only enroll in a qualified health plan 
during open enrollment, unless there has been a change in 
circumstances, such as losing other coverage?
    Ms. Yocom. That is correct.
    Mr. Guthrie. And coverage on a QHP doesn't start until 
after the enrollment, and after payment of the first premium. 
Is that correct?
    Ms. Yocom. That is correct.
    Mr. Butterfield. I am informed that the general rule is 
that enrollment before the 15th of the month starts coverage in 
the following month, and enrollment after the 15th results in 
coverage starting in the month following the month of 
enrollment. Is that correct?
    Ms. Yocom. I believe so, yes.
    Mr. Butterfield. Yes, that is my recollection as well. If 
individuals had to wait to have their attestations verified 
through review of paper documents, it could result in 
significant delays in coverage, or they could miss the open 
enrollment period altogether. Would you agree with that 
statement?
    Ms. Yocom. Yes, there are delays we have identified as 
potential scenarios.
    Mr. Butterfield. All right. Moving right along. Under the 
ACA eligibility to enroll in coverage through a QHP, and to 
qualify for premium tax credits and cost-sharing reductions is 
determined on a real-time basis, based on the information 
individuals attest to on their application, and I might say, 
under penalty of perjury. Verification occurs in real time 
using electronic data to the fullest extent possible.
    Ms. Yocom, the eligibility determination process, using the 
electronic data through the Federal data hub, is an important 
feature of the marketplace that operates to prevent individuals 
from obtaining fraudulent coverage, coverage that they are not 
eligible for, and even duplicate coverage. Is that close to 
being correct?
    Ms. Yocom. Yes, the one thing I would add is that with the 
Medicaid eligibility determination, the connection between 
exchange coverage and Medicaid is where the difficulty is and 
the potential duplication is likely to occur.
    Mr. Butterfield. Do you know of any other system in Federal 
Government that operates like this in real time and using data 
sources across the Federal Government?
    Ms. Yocom. I don't, but I am not an expert.
    Mr. Butterfield. When eligibility factors can't be verified 
immediately using electronic data sources, people must apply 
paper documents within a set time period to verify their 
eligibility. Am I correct on that?
    Ms. Yocom. That is correct.
    Mr. Butterfield. Do you agree or disagree that this is 
another backstop in the process to ensure that individuals are 
only getting the coverage they are entitled to?
    Ms. Yocom. Yes, getting the documentation as a backup is 
important, yes.
    Mr. Butterfield. Then would you agree that on the back end, 
the Federal Government reconciles the premium tax credits to 
ensure that beneficiaries only get what they are entitled to on 
the back end?
    Ms. Yocom. That is the hope. We have done some work GAO has 
that does look at issues with the IRS and the ability to 
reconcile right now, so----
    Mr. Butterfield. All right. We said in the beginning, years 
ago when we passed the Affordable Care Act, and we continue to 
say today, it is not perfect, but we are going to continue 
until it reaches perfection.
    I thank both of you for your testimony. I yield back.
    Mr. Pitts. The chair thanks the gentleman. I now recognize 
the gentleman from Florida, Mr. Bilirakis, for 5 minutes for 
questions.
    Mr. Bilirakis. Thank you, Mr. Chairman, I appreciate it 
very much. And I thank the panel for their testimony.
    Mr. Bagdoyan, under Federal law, an individual who has 
access to affordable minimal essential coverage through their 
employer is not eligible for the subsidy on the exchange. Based 
on GAO's work, what are the Federal and State exchanges doing 
to assess whether an applicant has access to employer-sponsored 
insurance before providing them a taxpayer-funded subsidy?
    Mr. Bagdoyan. Thank you for your question Mr. Bilirakis. 
For the scenarios we conducted, I believe there were four of 
those instances, we did not detect any activity between the 
exchanges and the employer.
    Mr. Bilirakis. Thank you. Another question for you, sir. 
Are you aware of any actions that the Federal and state 
marketplaces have taken in response to your findings?
    Mr. Bagdoyan. The Federal marketplace has not, to our 
knowledge. As I mentioned, we detected no changes in the 
control environment between 2014 and 2015. At least two states 
we spoke with, as I mentioned to Mr. Guthrie, Kentucky is one 
of them. They gave specific information as to the actions they 
are currently taking, as well as the California State exchange. 
We had an extensive discussion with them, and they provided us 
with an overview of what they are doing, and plan to do, and 
they promised us additional details to include in our final 
report on this----
    Mr. Bilirakis. Those States have been able to make changes 
in response to your findings in just a few months, but CMS has 
not made changes, even though they had more than a year. Is 
that correct?
    Mr. Bagdoyan. That would be one way to characterize it, 
yes.
    Mr. Bilirakis. Thank you. Ms. Yocom, you indicated that 
States raised concerns about the quality of Medicaid 
eligibility assessments and determinations made by Federal 
exchanges. What actions did CMS take to review those 
assessments and determinations?
    Ms. Yocom. The short answer is at the beginning of our 
work, CMS had not taken any actions. CMS did, in response to 
our recommendations, say that they were going to begin 
conducting reviews of the facilitated exchangeability to 
determine Medicaid eligibility, and they have conducted reviews 
in two states so far.
    Mr. Bilirakis. What types of errors were identified and 
what were the causes of those errors?
    Ms. Yocom. Most of the errors were related to income 
verification. There were training issues where the individuals 
who were doing the reviews were not doing them correctly, so 
there was a need to train staff; and then the last issue does 
have to do with transferring the applications and the 
application information between the exchanges and the Medicaid 
programs.
    Mr. Bilirakis. And no corrective action has been taken. Is 
that correct?
    Ms. Yocom. At this point, CMS has taken some actions, but 
none that we would consider sufficient to address the concerns.
    Mr. Bilirakis. OK, thank you very much. I yield back, Mr. 
Chairman.
    Mr. Pitts. The chair thanks the gentleman, and I now 
recognize the gentleman from Oregon, Dr. Schrader, for 5 
minutes for questions.
    Mr. Schrader. Thank you very much, Mr. Chairman. I 
appreciate you all being here. I want to get a little 
perspective, I guess, with the degree of fraud that we are 
worried about. Ms. Yocom, do you have any expertise, or any 
background, in what fraud has been historically in Medicaid or 
Medicare?
    Ms. Yocom. There really isn't a good estimate of fraud. 
There are estimates of improper payments in Medicaid----
    Mr. Schrader. What would those be?
    Ms. Yocom. About 7 percent, if I remember correctly.
    Mr. Schrader. OK. In both programs?
    Ms. Yocom. For Medicaid, yes, I do not know the number for 
Medicare.
    Mr. Schrader. Medicare, it is somewhere about the same, 
between 5 and 10 percent in the literature. And in private 
insurance, which is what we are talking about with regard to 
the QHPs, at the marketplace; your own report refers to 
marketplaces. What is the fraud generally in those?
    Ms. Yocom. That is not known.
    Mr. Schrader. Well, there is actually estimates that we 
have been able to get in the 1 to 1.5 percent range.
    Ms. Yocom. Would that be fraud or improper payments?
    Mr. Schrader. Improper payments. So I am trying to get at 
whether or not--to keep this whole thing in perspective, would 
appear to me, based on the information that is out there, that 
improper payments and fraud is less in the marketplaces, where 
private and price has some incentive obviously to monitor what 
is going on. As has been alluded to here today with the advent 
of the Affordable Care Act, there has been an emphasis on 
access.
    Mr. Bagdoyan, are you surprised at all that CMS would, 
perhaps, lean a little more towards access versus program 
integrity as they roll the program out?
    Mr. Bagdoyan. Well, obviously, Dr. Schrader, that is a 
policy call that CMS has made, and that is a defensible 
position from their perspective. The balance, as I said, 
clearly tilts toward providing access, but we also like to 
emphasize that program integrity, it is very important.
    Mr. Schrader. Certainly that would be your job and I 
appreciate you doing your job. I don't think it is astonishing 
to any of us that access is extremely important to make sure 
these people who haven't had health care in the greatest 
country on Earth, and the most industrialized Nation, should at 
least be able to get a little bit of health care. And there is, 
obviously, personal responsibility because they do have 
programs.
    Contrary to some of what we have heard today, there are 
ways and procedures by which Medicaid does check or recheck 
authentication. Isn't that correct, Ms. Yocom?
    Ms. Yocom. Yes, that is correct.
    Mr. Schrader. Yes. That is quarterly or whatever, as I 
understand?
    Ms. Yocom. Yes, they are doing quarterly reviews right now.
    Mr. Schrader. So there is a way, even though someone could, 
a determined criminal, as we have established, your shoppers 
are very determined, can defraud the system. I think that is 
commonplace in anything in America, unfortunately, but there is 
this way to catch them on the back end. And with the QHPs, 
there is the annual check with the IRS documents; is that 
correct, also, as a way to check on the eligibility?
    Ms. Yocom. That is generally correct.
    Mr. Schrader. So we have got a system that is not perfect, 
but obviously there are some initial checks that the ranking 
member alluded to that, and Mr. Bagdoyan, you responded, so 
there are some initial checks. There is the review down the 
line. So it is not quite as profligate a system as some would 
paint it. Can it be better? I think the answer is absolutely 
yes.
    I am trying to get at the nuts and bolts. The biggest issue 
I see coming forward is the nether land between Medicaid 
program and QHP program, as people move up or down the food 
chain with regard to their wages. Is there currently in place 
an opportunity for program integrity to check into that, 
besides just the year end checks?
    Ms. Yocom. There is. The conducting reviews of eligibility 
determinations that are made, not just in the states, but also 
in the Federal marketplaces, is a good place. The other really 
key issue is, at this point, CMS is doing eligibility reviews, 
but then they are also doing expenditure reviews and they need 
to connect those two together so that when they do identify 
errors, they can make sure that the matching rate is correct.
    Mr. Schrader. If I were to interpret your comments and 
maybe Mr. Bagdoyan's too, it is the two programs talking to one 
another?
    Ms. Yocom. Correct.
    Mr. Schrader. Medicaid and the QHP programs, for lack of 
better terminology, that we could work on.
    The last comment I guess I would make is, as I understand, 
while the states have been responsive to some of the concerns 
that GAO has come up with. CMS, at least within this last year, 
did not find time or have the interest to perhaps do that. You 
will be monitoring this going into 2016 I assume, and we will 
get a report. From your understanding, CMS is more responsive 
now perhaps, than it was a year ago in terms of some of the 
concerns you have?
    Ms. Yocom. They have been with our recommendations, yes. 
And we have had good conversations with them about, 
specifically, ways they could adjust their processes.
    Mr. Schrader. Well, I look forward to a healthier report 
next time, and appreciate all the access that has been--
recognizes the gentleman from New Jersey, Mr. Lance, for 5 
minutes for questioning.
    Mr. Lance. Thank you, Mr. Chairman, and good morning to the 
panel. As I understand it, CBO estimates that exchange 
subsidies and related spending this year is roughly $77 
billion, and next year the exchange in Medicaid-related 
spending may increase to $116 billion. Given those very large 
amounts of money, even a small sample involves a significant 
amount of money. Would that be accurate, Ms. Yocom?
    Ms. Yocom. Yes.
    Mr. Lance. And so I think that it is relevant in our 
discussion here today that we are investigating, through your 
fine offices, significant amounts of taxpayer funds.
    As you mentioned in your testimony, many low-income 
individuals are likely to switch between exchange coverage and 
Medicaid eligibility due to income volatility. Could you 
explain to us when and how is an enrollee notified that he or 
she is eligible for a different type of coverage? And can you 
walk the subcommittee through the process for an enrollee 
transitioning from one type of coverage to another?
    Ms. Yocom. Sure. At this point, the primary way that a 
change in coverage comes is the enrollee reporting a change in 
circumstance. So an individual who is on the exchange perhaps 
loses their job and no longer has coverage, and then goes to 
apply for Medicaid. We have three scenarios in our report that 
look at the potential for gaps and for duplication. The gaps 
have to do with the timing of the transition between moving 
from Medicaid to the exchange. The duplications have to do with 
the individuals failing to report a change in coverage, or 
their being enrolled in both places at once.
    Mr. Lance. Is this a complicated system for the person 
likely involved in these programs to navigate?
    Ms. Yocom. I would say there is a lot of complication, yes.
    Mr. Lance. Thank you. Mr. Chairman, I yield back the 
balance of my time.
    Mr. Pitts. The chair thanks the gentleman. I now recognize 
the gentlelady from California, Ms. Matsui, for 5 minutes for 
questions.
    Ms. Matsui. Thank you, Mr. Chairman. I want to thank the 
witnesses for coming here today.
    Mr. Bagdoyan, I would like to ask you a question regarding 
the use of self attestation, I think I am pronouncing it right, 
in the marketplace application process. When applying for 
coverage, a consumer may self attest, for example that their 
income is a certain amount under the penalty of perjury. In 
layman's terms, lying on your self attestation is against the 
law and subject to criminal penalties.
    In your testimony, you describe in detail the processes 
that were used to maneuver vague identities through the 
marketplace system. In order to work through the system, the 
agency had to provide an attestation as to the accuracy and 
truthfulness of the application. Is that correct?
    Mr. Bagdoyan. Yes.
    Ms. Matsui. Now, last July, when you testified in front of 
the Senate Finance Committee on a similar secret shopper study, 
you had an interesting exchange with Senator Portman. In that 
exchange, you stated ``We were able to get through via self 
attestation,'' and further went on to say, ``We would view that 
as a control gap.'' For the record, would you acknowledge you 
made that statement?
    Mr. Bagdoyan. Sounds about right.
    Ms. Matsui. Just for the record, I would like to read the 
attestation that the secret shopper signed. ``I am signing this 
application under penalty of perjury, which means I provided 
true answers to all the questions on this form to the best of 
my knowledge. I know that I may be subject to penalties under 
Federal law if I intentionally provide false or untrue 
information.''
    This is attestation that the GAO encountered. Is that 
correct?
    Mr. Bagdoyan. I believe so, yes.
    Ms. Matsui. Mr. Bagdoyan, I am sure you filed income taxes 
in the past. Do you recall signing your name after reading the 
following phrase: ``Under penalties of perjury, I declare that 
I have examined this return and accompanying schedules and 
statements. And to the best of my knowledge and belief, they 
are true, correct and complete''?
    While I understand limitations of a self attestation 
system, it has been proven over time that self attestation tied 
to audits and penalties is the best viable option. In fact, on 
its Web site, the IRS has the original 1040 form on display. 
Interestingly, it was introduced in 1913, and yet over an 
entire century later, the self attestations are essentially 
unchanged.
    While the system isn't perfect, no system ever is, it has 
been proven over time to be the best viable option, and I have 
yet to hear widespread news reports denouncing the use of self 
attestation in the tax system. While I welcome the GAO's 
suggestion on this topic, I respectfully decline to ask any 
additional questions, since the GAO has not yet finished its 
review process, nor have they issued formal recommendations 
yet. And with that, I yield back the balance of my time.
    Mr. Pitts. The chair thanks the gentlelady. I now recognize 
the gentleman from Missouri, Mr. Long, for 5 minutes for 
questions.
    Mr. Long. Thank you, Mr. Chairman, and I will stick with my 
friend's line of questioning on self attestation. I will start 
with you, Mr. Bagdoyan. Based on your written statement, it 
appears that in several instances, the exchanges accept 
applicants' self attestation as sufficient evidence. Can you 
describe the instances where the only evidence provided was 
applicant self attestation?
    Mr. Bagdoyan. Well, I think all the information we provided 
on the applications, on the phone, for example, and then 
confirmed with submitting documents to that effect, to verify 
that the information we provided was, indeed, accurate, would 
be, in the broadest sense, a process of self attestation.
    The marketplace reviews the documents, checks what we said 
on our application against what they have in hand in terms of a 
document. If they don't see an alteration, they accept the self 
attestation as the truth.
    Mr. Long. OK. Do you think that relying on this self 
attestation is sufficient?
    Mr. Bagdoyan. It is probably not sufficient on its own. If 
the document is accepted at face value without any further 
check, that would be a material weakness.
    Mr. Long. And how often do you think that is done?
    Mr. Bagdoyan. I am sorry?
    Mr. Long. How often do you think that is done, where it is 
accepted without any further checking?
    Mr. Bagdoyan. Yes, sure, that is a fair question. In the 
two rounds of undercover that we performed, we are not aware of 
any kind of cross-check between any of the parties, either the 
exchanges or the state-level agencies.
    Mr. Long. OK, 100 percent comes to mind.
    Ms. Yocom, let me ask you: In your report, you noted that 
in July, the CMS was to conduct a data match to identify 
consumers who may be dually enrolled in Medicaid and 
marketplace coverage. Do you know what the results of this data 
match were? And how frequently CMS plans to conduct such 
matching?
    Ms. Yocom. We do not know the results of that data match. 
My current understanding is that CMS is conducting reviews, but 
they are still in the process of determining how frequently 
they will do them.
    Mr. Long. Why do you not know the results?
    Ms. Yocom. They just have not been provided. At that point, 
we had a time period that was earlier than that.
    Mr. Long. What do you mean earlier than that? This is back 
in July.
    Ms. Yocom. Sorry, our coverage period that we were 
investigating did not include July. CMS offered that as 
additional information, but told us they were still analyzing 
the results.
    Mr. Long. OK.
    Ms. Yocom. I don't know if that is helping.
    Mr. Long. Given the financial implications of duplicate 
coverage for both the beneficiary and the American taxpayers, 
what is CMS doing to prevent such duplication from occurring?
    Ms. Yocom. We think there is more to be done, they are 
taking some actions, they are starting to do these reviews, but 
there needs to be more review of the determinations and more 
cross-checking across the exchanges and the Medicaid program.
    Mr. Long. OK. But apparently, it will take more than 90 
days to get the results from what you said here today.
    With that, Mr. Chairman, I yield back.
    Mr. Bagdoyan. If I may, Mr. Chairman, I would like to pick 
up on----
    Mr. Pitts. You may respond.
    Mr. Bagdoyan [continuing]. What Mr. Long asked earlier. One 
instance of an agency actually checking with another entity as 
to the validity of some of the information that was provided, 
there was a State agency approach the Social Security 
Administration to double-check about the validity of a Social 
Security number. The SSA advised the State agency that that 
could not be a valid Social Security number, and the agency, 
nevertheless, proceeded to approve our application. So I just 
wanted to make sure that you had a full picture on that one.
    Mr. Pitts. All right, the gentleman yields back. The chair 
now recognizes the gentleman from Maryland, Mr. Sarbanes, 5 
minutes for questions.
    Mr. Sarbanes. Thank you, Mr. Chairman. I thank the panel. 
It is pretty clear that the process of eligibility verification 
going between the various systems is probably one of the most 
complex that any agency or group of agencies would have to 
manage, so I am impressed that it can be done, for the most 
part, as effectively as it is being done. And I understand that 
CMS is taking steps to respond to some of the recommendations 
and findings of the GAO's report to refine the policies and 
procedures.
    I wanted to ask you, Mr. Bagdoyan, you said that, I think 
there were 18 applications submitted as part of the secret 
shopper?
    Mr. Bagdoyan. Yes, we call them applications or scenarios, 
they are used interchangeably.
    Mr. Sarbanes. And initially, through the first submission 
process, which was largely online, I guess, you said there 
might have been a couple that were conducted by phone----
    Mr. Bagdoyan. That is correct.
    Mr. Sarbanes [continuing]. Initially. The online ones, the 
system of checks and balances did pick up some issues, and 
rejected them at that point, right?
    Mr. Bagdoyan. That is correct, yes. The online application 
process involves an identity proofing step, if you will. And we 
failed that initial step, we were directed to call the 
contractor, which is Experian, whose job it is to----
    Mr. Sarbanes. That is pretty good that you failed at the 
beginning.
    Mr. Bagdoyan. At the beginning, the story gets a little 
more complicated as you move through.
    Mr. Sarbanes. So we give a plus sign to the system for 
failing you at the front end.
    Mr. Bagdoyan. And we failed through the contractor, who 
then directed us----
    Mr. Sarbanes. So you failed twice. So the system called you 
out twice.
    Mr. Bagdoyan. Initially, yes.
    Mr. Sarbanes. Initially. So that is pretty good, because 
you then came back with, I guess, paper submissions.
    Mr. Bagdoyan. In one instance, yes, and then by phone on 
most of the other ones, and that is where the workaround and 
the control weakness occurs is that we used the system's own 
instructions to overcome its initial control.
    Mr. Sarbanes. Right. But you are getting in there pretty 
well versed in where to poke at the system to find these 
potential weaknesses, right? I mean, you have got more, I would 
presume, given your forensic experience, you are going to have 
more knowledge than even a fairly sophisticated person out 
there whose intent on committing fraud is to--where some of the 
weaknesses are, so you can poke at them. And I commend you for 
the heroic efforts which your people apparently undertook to 
explore all of those various weaknesses.
    Mr. Bagdoyan. If I may respond to that. When we started the 
work in 2014 for coverage year 2014, we had no idea what we 
would encounter. We were designed to act as typical consumers 
who got online; did whatever was instructed to do; went through 
the various steps, and when we reached the identity proofing 
step, we were caught, or flagged, if you will, referred to the 
contractor.
    Mr. Sarbanes. Let me interrupt. There is one way in which 
you can't actually behave like the typical consumer, unless you 
are going to tell me that your folks are subject to the perjury 
penalties that apply to somebody who checks that submission box 
after reading the fact--and I presume you have some kind of 
immunity?
    Mr. Bagdoyan. Yes, it is part of our investigative 
authority.
    Mr. Sarbanes. So they are just blowing right through that 
check in terms of the deterrent effect that it might have, 
right? Because they are reading this thing and saying, you are 
subject to penalty of perjury, and they are saying well, 
obviously, the investigator is doing the secret shopping, that 
is not going to affect us at all.
    So actually, one of the most important things that operates 
on the typical applicant to give them pause, particularly if 
they are going through one, two, and three stages of submitting 
false documents is actually not operating in this instance. So 
to draw conclusions about the ability of this system of checks 
and balances actually deter that kind of fraud, I think, from 
this exercise, is a little bit questionable. And with that, I 
would yield back.
    Mr. Pitts. The chair thanks the gentleman, and now 
recognizes the gentleman from Indiana, Dr. Bucshon, for 5 
minutes for questions.
    Mr. Bucshon. Thank you, Mr. Chairman. Thank you for being 
here, and I think, I just want to point out, it is unfortunate 
that some today in the hearing have gone after the messenger 
rather than listening to a message they may or may not want to 
hear, including occasionally discussing your own personal 
lives, which I find unfortunate; because, clearly, you are not 
here to keep people from getting benefits, but to make sure 
that people that are are actually eligible for those, and I 
appreciate that work.
    Mr. Bagdoyan, according to CMS, when an applicant's 
information can not immediately be verified, the system is to 
notify the agency of inconsistency so they can be addressed 
later after eligibility is granted. Presumably, all of your 
fictitious applications should have resulted in generation of 
inconsistency notifications. Did the marketplaces follow up 
with your applicants to rectify these inconsistencies?
    Mr. Bagdoyan. We received extensive communication that our 
documents were submitted, and that they appeared to be correct, 
and that the inconsistency was resolved. There were some 
instances where the back and forth was more extensive than 
others. But in general, our coverage was sustained over time, 
yes.
    Mr. Bucshon. So also on your statement, you indicate, and 
some of this has been kind of answered, but four of eight 
applicants who applied for Medicaid coverage were not ruled in 
Medicaid, but were able to obtain subsidized exchange coverage. 
And while this can be seen as a positive sign that Medicaid 
eligibility determinations are working, it could mean that at 
least some of the applicants were unable to get Medicaid 
coverage, not because they were deemed ineligible, but because 
coordination problems between the Federal exchange and 
Medicaid. Is that correct?
    Mr. Bagdoyan. Yes, that would be the top line story there, 
the coordination involves exchange of information, exchange of 
data files, and that sort of thing that without knowing what 
was going on on the other side, we can only surmise that the 
failure to exchange information, at least at an adequate level, 
prevented us from getting a determination. And since we were 
pursuing the coverage, we decided to represent ourselves as 
having failed to obtain Medicaid and subsequently qualified for 
a QHP.
    Mr. Bucshon. Ms. Yocom, do you have anything to add to that 
that you haven't already talked about?
    Ms. Yocom. No.
    Mr. Bucshon. OK. I don't have any more questions, but I 
would just like to say that whatever the level of fraud is, the 
people that I represent want to make sure we are not wasting 
their hard-earned taxpayer dollars. So I think that some of the 
implication that this may be a minor problem that shouldn't be 
looked into because the dollar amounts or the level of fraud 
may be low, but when I talk to the people that I represent, I 
am sure they don't want their taxpayer dollars going for any 
fraud in the system, and I recognize there are challenges, and 
there are some things that you don't have the staff or the time 
to investigate. But I think your work is very important. I 
think any level of waste of the taxpayer dollars is important, 
and I appreciate your work. I yield back.
    Mr. Bagdoyan. Thank you.
    Mr. Pitts. The chair thanks the gentleman. I now recognize 
Mr. Lujan 5 minutes for questions.
    Mr. Lujan. Thank you very much, Mr. Chairman. I want to 
pick up a little bit where my colleague from Maryland left off, 
just as I understand this. But before I do so, Mr. Bagdoyan, 
when were your findings presented to the committee?
    Mr. Bagdoyan. I am sorry?
    Mr. Lujan. When did GAO send your findings to the 
committee, to the majority, to the minority?
    Mr. Bagdoyan. The statement was provided, I believe, mid-
morning on Wednesday.
    Mr. Lujan. Your testimony was provided?
    Mr. Bagdoyan. Testimony, yes. And we briefed staff the week 
before.
    Mr. Lujan. You briefed staff the week before?
    Mr. Bagdoyan. That is correct, at their request.
    Mr. Lujan. Were there any other documents before your 
testimony was submitted to the committee on Wednesday, were 
there any other documents submitted to the committee before you 
met a week ago?
    Mr. Bagdoyan. No. This was an extensive oral briefing, and 
I assume notes were taken.
    Mr. Lujan. And so when you worked with your staff, Mr. 
Bagdoyan, to prepare for interviews with other individuals, 
would you say that more time or less time is better for you to 
be able to review documents before we get a chance to question?
    Mr. Bagdoyan. In general, I would say more time.
    Mr. Lujan. Would it surprise you that the committee didn't 
receive information--the minority didn't receive information 
until 2 days prior to the hearing?
    Mr. Bagdoyan. That is a good question, Mr. Lujan, but I 
followed the committee's rules as presented to me.
    Mr. Lujan. I appreciate you doing that, but maybe we can 
all make sure we get the information to spread around so we can 
better prepare. I appreciate that, sir.
    Mr. Bagdoyan, so the way that I understand it, GAO used the 
Federal Government--so you used your knowledge about documents 
with fraud prevention safeguards that were put in place, to be 
able to look into this process with Medicaid coverage and into 
the marketplace, correct?
    Mr. Bagdoyan. Yes, we had some knowledge, but again, we 
didn't know about the specific controls that were involved that 
we would likely encounter.
    Mr. Lujan. And so through your investigation, GAO falsified 
identities to get coverage?
    Mr. Bagdoyan. That is correct.
    Mr. Lujan. Did GAO, with each false identity, did you 
enroll into multiple marketplaces at once?
    Mr. Bagdoyan. There was one instance where we obtained 
coverage in additional----
    Mr. Lujan. Not obtain, did you apply?
    Mr. Bagdoyan. Apply and obtained, yes.
    Mr. Lujan. And did GAO pay multiple premiums for coverage 
as this was going through the process?
    Mr. Bagdoyan. Yes, that is part of the investigation.
    Mr. Lujan. Do you think that an everyday person would pay 
multiple premiums to try to get coverage?
    Mr. Bagdoyan. I can't speculate on that, sorry.
    Mr. Lujan. I think it would be challenging for an 
individual maybe to pay multiple premiums in multiple areas.
    Mr. Bagdoyan. That is an excellent question if I may 
clarify. That particular scenario was designed to see whether 
the issue of identity theft would come in. So that is a 
specific scenario.
    Mr. Lujan. Let's talk about identity theft. So under 
penalty of perjury, these documents were submitted?
    Mr. Bagdoyan. That is the up-front penalty, yes.
    Mr. Lujan. But GAO is exempted from that, as we found out 
from----
    Mr. Bagdoyan. Investigative authority, that is correct.
    Mr. Lujan. So an everyday person, in this case, would, I 
guess assumption would be made, that if they paid multiple 
premiums for coverage, that they would still waive the penalty 
of perjury, and be subject to between $25- and $250,000 in 
fines. Is that correct?
    Mr. Bagdoyan. That is the case, yes.
    Mr. Lujan. Does GAO assist in any investigations to go 
after perpetrators of fraud with any of our agencies?
    Mr. Bagdoyan. Yes, it is an excellent question. We do, as a 
matter of course, whether it is an investigation or an audit. 
We do make referrals to the appropriate Office of Inspector 
General, or as appropriate to the Department of Justice, or 
both.
    Mr. Lujan. During this investigation, did you identify any 
fraud?
    Mr. Bagdoyan. Not on real individuals, no.
    Mr. Lujan. Not on real individuals?
    Mr. Bagdoyan. That was not designed as such in the 
beginning.
    Mr. Lujan. I appreciate that answer.
    Mr. Bagdoyan. Sure.
    Mr. Lujan. It was, in fact--the 14 secret shoppers that 
went through the online parameters were stopped, it worked.
    Mr. Bagdoyan. The initial ID proofing, as I told Mr. 
Sarbanes, yes. But eventually we found a workaround without 
having foreknowledge.
    Mr. Lujan. And did the workaround include ignoring the 
filing under penalty of perjury?
    Mr. Bagdoyan. Yes.
    Mr. Lujan. No one that submitted these false documents will 
go to jail?
    Mr. Bagdoyan. Right.
    Mr. Lujan. Because there is an exemption?
    Mr. Bagdoyan. That is right.
    Mr. Lujan. If a normal person, outside of being exempted 
under GAO, would submit these documents and they got caught, 
what would happen to them?
    Mr. Bagdoyan. They would probably be subject to the terms 
of whatever--whether it is the fine or----
    Mr. Lujan. Twenty-five to $250,000 in fines and jail time, 
potentially. Mr Chairman, I appreciate this hearing, but I hope 
that we get all of the facts put on the table. But that we also 
get the recommendations that GAO has made to CMS, and to others 
presented to us, that way we can work on those together. And I 
am hopeful, Mr. Chairman, that as we do this, there is 
agreement with all of our colleagues to make sure we improve 
this process, as opposed to trying to find a way to try to kick 
everyone off the rolls, including the 423,000 individuals who 
were caught, whether it was for mistakes or whatever may be 
done through this process, that were removed from getting 
coverage in the marketplace.
    I thank you very much, Mr. Chairman. I yield back my time.
    Mr. Pitts. The chair thanks the gentleman. I now recognize 
the gentleman from Virginia, Mr. Griffith, for 5 minutes of 
questions.
    Mr. Griffith. Thank you very much. I find this discussion 
interesting. I would say, Mr. Bagdoyan--I hope I said that 
correctly.
    Mr. Bagdoyan. Yes.
    Mr. Griffith. I would say I kind of wish you had brought up 
earlier, I do appreciate Mr. Sarbanes and others for bringing 
up that you all have immunity, but the first couple of times it 
came up, was this done knowing there that was penalty of 
perjury? It sounded like you all were engaged in criminal 
conduct, so I am glad that we got that clarified, and 
obviously, in order to do an investigation, you would need such 
immunity from prosecution for doing that.
    Now my background, which you probably don't know, is that 
for 28 years, I practiced small town law, the great 
predominance of that over the years was in the criminal defense 
field. Having represented a number of criminal defendants, I 
can assure you, and you are probably aware as well, that there 
are numerous people who ignore the perjury clause on all kinds 
of Federal documents, including IRS documents. Wouldn't you 
agree that those people who are larcenous in nature are likely 
not to pay much attention to the perspective penalties?
    Mr. Bagdoyan. Yes, I would say if they have intent, they 
would probably just ignore that.
    Mr. Griffith. They would probably disregard that. So when 
folks say, yes, but they had to sign off on the statement that 
you didn't have to worry about, or your secret shopper, so to 
speak, didn't have to worry about, that does not, in my 
experience, bode as a great impediment to going forward if you 
have a larcenous intent.
    Likewise, they have not previously been involved in the 
criminal justice system while the maximum penalty is jail time 
and up to, I think, $250,000 fine, it may sound fairly stiff, a 
first-time offender is not likely to get anywhere near the 
maximum, and is unlikely, in a crime of this nature, to receive 
jail time. Would you not agree?
    Mr. Bagdoyan. I don't really have an opinion on whether 
that would happen or not.
    Mr. Griffith. I did find it interesting that they wanted to 
point out that there were places that there was a stop, but it 
was a temporary stop, and you were very good to point out that, 
yes, but on other tries, or workarounds, there were ways do it. 
I noted with some interest in the document, which, by the way, 
does not appear to be all that long. I have heard folks 
complaining about how they didn't get it in time. I have read 
it while I have been sitting here this morning. But I noted 
that in one spot, in particular interest, that you all gave 
Social Security numbers that were impossible Social Security 
numbers.
    Mr. Bagdoyan. That is correct.
    Mr. Griffith. They didn't match up with anything that would 
possibly be used.
    Mr. Bagdoyan. They had not been issued ever by the Social 
Security Administration.
    Mr. Griffith. And for the 10 undercover applications that 
used these numbers that would not possibly have been involved, 
only one picked up as a trigger and, that was in the State of 
Kentucky. And yet, even though--I went through the material--
even though Kentucky picked it up, they did give them coverage 
anyway.
    Mr. Bagdoyan. That is correct.
    Mr. Griffith. And so help us figure out this impossible 
Social Security number, but we will give you coverage in the 
meantime. Is that accurate?
    Mr. Bagdoyan. That is correct. And they did contact SSA, 
and SSA said that is not a good number and whoever the 
representative or the specialist was overrode that advisory and 
provided coverage.
    Mr. Griffith. And provided coverage anyway. And also, when 
the fictitious applicants, I think there were four of those who 
said that their employer did not provide the minimum essential 
coverage, there was no check back to see with their employer if 
they, in fact, did qualify for an employer who did not provide 
the minimal essential coverage. Is that also accurate?
    Mr. Bagdoyan. That is correct. We set up a fictitious 
company for that purpose with contact information and we got no 
hits.
    Mr. Griffith. That is the kind of thing that this hearing 
is about and is troubling to a lot of us. Whether you like the 
program or don't like the program is not the issue. The issue 
is, if we are going to go have a program at the Federal 
Government level, let's at least have some tests out there and 
some checks back over time to make sure that people are still 
eligible.
    I appreciate the work that you all do. I appreciate you 
being here this morning. And with that, Mr. Chairman, I yield 
back.
    Mr. Bagdoyan. Thank you.
    Mr. Pitts. The chair thanks the gentleman. I now recognize 
the gentleman form Massachusetts, Mr. Kennedy, for 5 minutes of 
questions.
    Mr. Kennedy. Thank you, Mr. Chairman. I want to thank the 
witness for their work and the work they do. I think I can say, 
I echo the comments of all my colleagues when I say that 
program integrity is absolutely critically important. We want 
to make sure that in a program such as this, that beneficiaries 
that are in need of these benefits and services are getting the 
services that they need, particularly when it comes to 
something like access to health care.
    I want to build off an exchange of a couple of my 
colleagues, but first, Mr. Bagdoyan, I just want to make sure 
that I have your testimony clear in my head. We have talked 
through a number of front-end procedures, identity proofing and 
document requests already to reiterate online applications for 
the secret shoppers were caught and flagged. But let's not go 
out the back-end side, if you can.
    So for the fake applications that were created and received 
initial QHP coverage, a tax return was not filed, right?
    Mr. Bagdoyan. That is correct.
    Mr. Kennedy. So there is an additional check about making 
sure that those who do get coverage end up getting those 
records squared with tax attorneys, and that last check not 
done, right?
    Mr. Bagdoyan. That is correct.
    Mr. Kennedy. So did you know that any discrepancy will have 
to be repaid in full if there is a discrepancy paid by the 
beneficiary back to the Federal Government?
    Mr. Bagdoyan. Yes, we had that awareness.
    Mr. Kennedy. And were you aware that state Medicaid 
programs are required to also go through extensive eligibility 
redetermination process annually as well?
    Mr. Bagdoyan. In general terms, yes.
    Mr. Kennedy. So the process actually works sometimes too 
well, and we unintentionally disenroll eligible beneficiaries. 
I can also tell you that from my own State of Massachusetts, 
that it definitely works to check as an additional protocol, an 
additional control.
    I want to touch base a little bit on the documents that you 
talked about earlier with response to some of the questions my 
colleagues asked. You said that your team was able to produce 
those documents with supplies and equipment that is readily 
dealt with. Is that right?
    Mr. Bagdoyan. That is correct.
    Mr. Kennedy. And you mentioned that you had a team of folks 
that were able to, with no prior knowledge, to somehow find 
their workaround through the system, right?
    Mr. Bagdoyan. That is correct.
    Mr. Kennedy. How many folks are on your team, sir?
    Mr. Bagdoyan. My mission team has about 55 staff.
    Mr. Kennedy. And how--average education level?
    Mr. Bagdoyan. Most would have masters or above.
    Mr. Kennedy. How much time did you spend working on that 
workaround?
    Mr. Bagdoyan. On the workaround itself? That occurred in 
real time, so we just followed the instructions of the system 
in real time.
    Mr. Kennedy. But you have a team of 55 people, the majority 
of whom with master's degrees, with the resources of a fully--
at least, I should say, somewhat partially resourced Federal 
office to actually achieve this workaround, which is not 
necessarily the, one would say, potentially reflection of the 
average resources education level, or teammates of your average 
U.S. constituent.
    Mr. Bagdoyan. Not all 55 worked on it at the same time, I 
wish they had.
    Mr. Kennedy. Me, too.
    Mr. Bagdoyan. But it was a much, much, much smaller team of 
less than half a dozen basically.
    Mr. Kennedy. Still a half dozen folks with master's degrees 
and those resources, fair?
    Mr. Bagdoyan. Fair.
    Mr. Kennedy. OK. So now, and most of them have a background 
as being professional investigators as well, yes?
    Mr. Bagdoyan. The people who actually do the work, they 
are--yes, they are investigators.
    Mr. Kennedy. So we are talking about a half dozen folks 
that are professional investigators with the resources of the 
Federal Government trying to do this?
    Mr. Bagdoyan. That is the representation.
    Mr. Kennedy. OK. Now, we talked about it a little bit 
before with my colleague, the fact all of this is done 
underneath the penalties of perjury, and you went through the 
fact that those include potential civil fines and potential 
criminal liability as well, correct?
    Mr. Bagdoyan. That is correct.
    Mr. Kennedy. So what, I guess, I am trying to understand, 
sir, is we are talking about the fact that there are--and you 
conceded in the first page of the summary sheet the fact that 
this was done for a number of individuals cannot actually be 
accurately generalized, the result of the findings cannot be 
actually generalized to a larger population.
    Mr. Bagdoyan. That is correct.
    Mr. Kennedy. But the concern would be, obviously, that 
there are a large number of individuals that can be using false 
documentation in order to get coverage?
    Mr. Bagdoyan. That is the control we missed, yes.
    Mr. Kennedy. Just so I am able to understand, the concern 
is that there would be tens of thousands, or hundreds of 
thousands of individuals in this country that are willing to 
risk the penalties of perjury, $25,000 to $250,000 fine, plus 
potential criminal liability in order to get access to 
affordable health care coverage?
    Mr. Bagdoyan. That is the risk.
    Mr. Kennedy. That is the risk.
    Mr. Bagdoyan. That is correct.
    Mr. Kennedy. And are you aware, that in about another half 
hour, this body is going to vote to repeal the Affordable Care 
Act for the 61st time.
    Mr. Bagdoyan. I didn't know that.
    Mr. Kennedy. So we are having a hearing which is critically 
important to examining program integrity, and we are trying to 
focus on the program integrity while we recognize the fact that 
there are tens of thousands, potentially hundreds of thousands 
of folks, which is the concern of this report, that are willing 
to risk these liabilities in order to get access to affordable 
health care, the very program the majority is trying to repeal 
for the 61st time in an hour.
    I yield back.
    Mr. Pitts. The chair thanks the gentleman. I now recognize 
the gentleman from New York, Mr. Collins, 5 minutes for 
questions.
    Mr. Collins. Thank you, Mr. Chairman. And I am sitting in 
this last chair means I am one of the newest members of the 
committee. And I have to admit, when I came here, I always 
asked my staff, tell me the tone of the hearing and generally a 
hearing like this they would say, this is an informational 
hearing, meaning bipartisan. So I have to tell you, I have sat 
here and listened to the comments and questions, and I am 
somewhat befuddled that here we are having a hearing on what I 
think of as being waste, fraud, and abuse. I always thought 
those kinds of hearings and trying to identify problems didn't 
have a partisan take to it.
    So, I just would start by saying I am extraordinarily 
disappointed in the other side of the aisle here in trying to 
take away from your hard work, just identifying potential 
problems to save the taxpayers money in what we call waste, 
fraud, and abuse. So personally, I thank you for what you have 
done, and certainly know you are doing your best every day to 
then take these recommendations back to CMS to save taxpayers 
money, or as you said, Mr. Bagdoyan, identify weaknesses. That 
is really what this was about what you called your control 
vulnerabilities, the controls didn't work.
    Just a couple of commonsense interesting questions here. 
Since these were fictitious--Social Security numbers ultimately 
got through, did these individuals ultimately sign up with 
these totally bogus Social Security numbers, and effectively 
obtain coverage? Is that the primary identifier of a policy, 
the Social Security number?
    Mr. Bagdoyan. It is not a condition of eligibility but it 
is identity proofing, yes.
    Mr. Collins. So I will say, as a Member of Congress, and as 
an American, I am befuddled that in the era of big data, that 
ultimately somebody gets a policy with an identifier that 
couldn't exist and that there is no cross-checking again. The 
big data world that we live in, I am somewhat astounded that 
that vulnerability exists. That should be an immediate 
disqualifier.
    So I am very not happy to hear you tell us that, but I 
would think that should be something that could be easily on 
the recommendations side of cross-check into the Social 
Security data files would eliminate that piece of it.
    Now the other thing, if someone is on Medicaid, they don't 
pay anything, correct? And if this was an expansion, the States 
don't pay anything, so this is 100 percent on the Federal 
Government's back.
    If the individual ends up on Medicaid under, certainly, the 
expansion portion, and so I am worried about the individual who 
works for a small business, who provides coverage, that 
individual, under, certainly, the expansion of the poverty 
level, would qualify under Medicaid, legitimately qualify. They 
have their own Social Security number, they are who they are, 
they live where they live. Income records indicate they meet 
all the criteria. But if they sign up on their employer plan, 
they have to pay some percentage of that coverage, whether it 
is individual or family coverage, but if they can come in under 
Medicaid, then they don't pay anything.
    So my worry would be back to somebody saying that they work 
at XYZ company, but XYZ doesn't provide healthcare coverage. So 
they are not being honest in that regard. And therefore, I am 
concerned what you are telling us, I think there was no cross-
checking back on that piece. So somebody who, low-income, wants 
coverage but has an employer providing it, is cheating or being 
deceptive in saying, no, my employer doesn't offer it, 
therefore they get it. Is that some of the scenario?
    Mr. Bagdoyan. Yes, the scenario, itself, was the applicant 
claiming that whatever the employer did provide did not meet 
the minimum standard, so they were seeking better coverage. And 
as I mentioned to another member earlier, we did set up a 
fictitious company for that very purpose with contact 
information. And as I mentioned, we did not get a single hit 
for verification purposes.
    Mr. Collins. So, just getting back and me initially 
thinking this was going to be a bipartisan informational 
hearing, I think a couple of things is, the Social Security 
check should be a no-brainer, but secondarily, a very big issue 
of potential--and we use the word ``fraud,'' but this is a low-
income individual trying to get coverage at no cost, but 
happens to work for a company that does provide a policy that 
meets the standards, but that person has to pay something into 
that; that that is very much a real-life scenario that could 
have happened that should be addressed in some way through that 
verification of somebody suggest that their company doesn't 
meet the minimum standard. Somebody should check on that. That 
is, I am assuming, what a recommendation might be.
    Mr. Bagdoyan. That is the intent of the check, yes.
    Mr. Collins. Yes. Well, thank you all for the work that you 
do on behalf of the taxpayers.
    Mr. Bagdoyan. Thank you.
    Mr. Collins. With that, Mr. Chairman, I yield back.
    Mr. Pitts. The chair thanks the gentleman, now recognize 
the gentleman, Mr. Ca AE1rdenas, 5 minutes for questions.
    Mr. Ca AE1rdenas. Thank you very much, Mr. Chairman. The 
question to Mr. Bagdoyan. Are you familiar with the term 
``presumptive eligibility''?
    Mr. Bagdoyan. In general, yes.
    Mr. Ca AE1rdenas. What we are talking about today, is this 
a program that has presumptive eligibility, or is it something 
that people have to properly and appropriately identify that 
they can or should be eligible before they actually receive 
their benefits?
    Mr. Bagdoyan. Yes, it has to be confirmed that they have 
eligibility that met all the requirements of the application 
process, they have submitted documents to clear any 
inconsistencies that were created as part of that.
    Mr. Ca AE1rdenas. So it appears that what we are discussing 
today isn't so much whether or not the Affordable Care Act law, 
in and of itself, encourages individuals who are not eligible 
to apply, receive services, and then after the fact, perhaps, 
be found out that they were not qualified.
    Mr. Bagdoyan. I presume the law would not encourage that to 
happen.
    Mr. Ca AE1rdenas. Correct. Because it is not a presumptive 
eligibility. Presumptive eligibility is not part of this law, 
correct?
    Mr. Bagdoyan. That is my understanding. And as I mentioned 
earlier, CMS told us that the agency had to balance access with 
program integrity. We see, based on our work, that access has a 
tilt in its favor at this time.
    Mr. Ca AE1rdenas. OK. So would you say that it is being 
utilized as a presumptive eligibility program or not?
    Mr. Bagdoyan. That type of analysis was not within the 
scope of our work. Our scope included testing controls----
    Mr. Ca AE1rdenas. Sure.
    So let me ask this question: So are there some effective 
controls in the process that--due to your research and your 
analysis and your efforts?
    Mr. Bagdoyan. Right. As I responded to questions from 
members and as some members pointed out, the first step of the 
application process involved something called identity 
proofing.
    Mr. Ca AE1rdenas. Correct.
    Mr. Bagdoyan. And that flag, we failed to clear online, and 
then we failed to clear it with the contractor as the next 
step. But again, following the system's own instructions, we 
were able to work around that control by engaging in a phone 
application.
    Mr. Ca AE1rdenas. OK. So, by and large, based on what you 
have been able to uncover, is it a failed system or a flawed 
system of identifying who is or is not eligible?
    Mr. Bagdoyan. In terms of failed and flawed, there are 
weaknesses is the best way to describe it.
    Mr. Ca AE1rdenas. OK. So that is more in the genre of 
flawed rather than failed, wouldn't you say, based on what you 
have been able to glean----
    Mr. Bagdoyan. Based on what we have done so far, right. And 
the forensic aspect of our work would give us a better idea of 
whether it is a failed or flawed or perfectly working system.
    Mr. Ca AE1rdenas. And who is in charge of doing that 
forensic analysis of your work?
    Mr. Bagdoyan. That is done under my direction as well.
    Mr. Ca AE1rdenas. OK. And when will you have that done?
    Mr. Bagdoyan. We are working on it. We received the data 
set from CMS for coverage year 2014. We are in the process of 
assessing whether the data are even reliable for us to make our 
analyses. If they are not, we won't be able to proceed. If they 
are, we will go ahead and do that, and we expect results, 
assuming we can proceed some time next year.
    Mr. Ca AE1rdenas. Do you feel comfortable that the amount 
of resources that were made available to you and the budgetary 
decisions, et cetera, on this effort that you embarked on, was 
it robust enough for you to feel confident that you could go 
out there and do enough work so that you could eventually get 
to the forensic analysis and have a strong conclusion as to how 
good or bad this process is?
    Mr. Bagdoyan. Yes. I think we have a solid plan in place. 
It is well-staffed, and the resources are adequate for that 
purpose.
    Mr. Ca AE1rdenas. OK. So you felt comfortable that the 
amount of resources that were made available to your 
department, you were able to bifurcate those resources into the 
effort that you put together was good enough, big enough, 
funded well enough?
    Mr. Bagdoyan. Yes, I would say on balance, that is correct.
    Mr. Ca AE1rdenas. OK. Well, I hope that it bears out that 
it was good enough for you to come to a comfortable conclusion, 
because just by my thinking, 50 states, some participating, 
some not, the number of fake applicants, et cetera, by my view, 
is a bit small, but hopefully, like you said, there was big 
enough effort for you to come to some strong conclusions.
    I have one last question. Of the fake names, how many of 
them were more Russian in nature or German in nature, or 
Spanish in nature, what have you, the fake names that you put 
together to try to get through this process?
    Mr. Bagdoyan. It is a mix of names. We didn't pick any 
particular ethnic or other group to create the identities.
    Mr. Ca AE1rdenas. So no ethnic group, name-wise, was over--
--
    Mr. Bagdoyan. I don't recall.
    Mr. Ca AE1rdenas [continuing]. Sampled in this? OK.
    Well, I would love to see those names eventually. Thank you 
very much.
    Mr. Bagdoyan. Thank you.
    Mr. Ca AE1rdenas. I yield back.
    Mr. Pitts. The chair thanks the gentleman. I now recognize 
the gentleman from Pennsylvania, Dr. Murphy, 5 minutes for 
questions.
    Mr. Murphy. Thank you. And thank you for what you have done 
here.
    First, let me ask this: Mr. Bagdoyan, when someone is 
testing out how a system works, do the companies, in general, 
run potential names through and see what works? Whatever the 
company is, whether it is Amazon, seeing if one can order a 
book, or it is Walmart, isn't that how generally people do 
that? They will put some name in and test it out?
    Mr. Bagdoyan. In the private sector, from my personal 
experience, that is an extensive part of what a company does, 
yes.
    Mr. Murphy. And we know that the initial rollout to the 
Affordable Care Act, as well as state exchanges, were filled 
with serious problems. And we had heard previously, through 
many people in our committees who were involved with the state 
and the Federal rollout, that they had even consulted with 
advisers, who said that there was going to be serious problems 
with security systems, and I assume that under those 
circumstances, they ran names through and see if the 
information was secured. So I am assuming this is standard 
practice. So let me ask a couple of questions here.
    Ms. Yocom, in your report, you had talked about people with 
coverage gaps or they had also some duplication. Do we have any 
idea what the average or the number is in terms of number of 
people who have a coverage gap? Do we have any idea what the 
number is?
    Ms. Yocom. We do not, no.
    Mr. Murphy. OK. So out of the millions of people enrolled, 
we just simply don't know. How many may have a plan, they lose 
it, and they go on to Medicaid, or they are on Medicaid, so we 
don't know----
    Ms. Yocom. No.
    Mr. Murphy. But there are also people who may have 
duplication, overlap, which cost the taxpayer, cost the 
government. Do you have a number, idea of how many that is?
    Ms. Yocom. We do not have a national number. We did talk 
with issuers and also with states who had done some analyses, 
and right now, those numbers don't appear to be large, but----
    Mr. Murphy. When you say ``don't appear to be large,'' are 
we talking thousands, hundreds of thousands, millions?
    Ms. Yocom. Like, one insurer identified about 18 
individuals who were covered in both.
    Mr. Murphy. OK. Fair enough.
    Ms. Yocom. And that is a single issuer in a single state.
    Mr. Murphy. I am concerned about those from the standpoint 
of the taxpayers, and further, most concerned about those who 
lose coverage and don't have health care. But we don't know 
what that number is, though?
    Ms. Yocom. Right. We don't have a good number of that, no.
    Mr. Murphy. All right. But if someone has duplicate 
coverage, are they counted twice when we are counting how many 
Americans now have coverage under the Affordable Care Act?
    Ms. Yocom. Conceivably, they could be counted twice. So 
they could be counted under the exchange, and then also as a 
Medicaid enrollee, so I would say yes, that is possible.
    Mr. Murphy. So as we are looking at this and we are looking 
at huge cost overruns, do you have any idea how many people are 
fraudulently signing up for?
    Ms. Yocom. No, we do not.
    Mr. Murphy. Mr. Bagdoyan, can you extrapolate from your 
data how many people are gaming----
    Mr. Bagdoyan. Absolutely not. As I mentioned earlier, this 
is not generalizable. It is not designed to extrapolate any 
rate of fraud.
    Mr. Murphy. It was just a preliminary study?
    Mr. Bagdoyan. And it is preliminary. As I said, we are 
looking at the entire enrollee database of 2014. If that 
database proves to be reliable enough for us to conduct 
analyses, we might have a better idea later on.
    Mr. Murphy. So related to some questions you were answering 
before, I just want to be sure of this: Is this common practice 
among other areas of the government to test the system to see 
if it is vulnerable to fraud?
    Mr. Bagdoyan. Well, GAO does that as a matter of course, 
and as part of its broader charge to----
    Mr. Murphy. So is it generally-accepted valuable practice 
to----
    Mr. Bagdoyan. It is, yes.
    Mr. Murphy [continuing]. To test to see if fraud----
    Mr. Bagdoyan. Control environments, you may be familiar 
with the green book; it is a thick document that lays out the 
internal controls for the Federal Government agencies. They are 
required to follow those, and part of GAO's work either through 
audit and/or investigation----
    Mr. Murphy. But if you don't do this, how do you figure out 
if there is fraud in the system? Do you simply ask people if 
they have defrauded the system? So they ask a show of hands how 
many people are gaming the system, and which is, obviously, not 
going to do anything?
    Mr. Bagdoyan. Yes, you would have to do the work. Asking 
questions is not sufficient.
    Mr. Murphy. So this is just the way to do it. And as a 
taxpayer, and as a Member of Congress protecting the taxpayers, 
that seems to make sense to me, you have to test the system and 
find it out.
    I go back here, and we have had, for example, Secretary 
Sebelius before us a couple of years ago. When the Affordable 
Care Act first came out, we talked about 35 or 45 million 
Americans without any health insurance coverage. And now what 
we are talking about, I hear different estimates, 9, 10, 11 
million, whatever it is, of people who now have coverage. And 
so we had asked her, of that, how many were Medicaid-eligible 
for, but didn't apply but now have it? How many were not 
Medicaid-eligible for but now have it because the number went 
up? How many were eligible for private insurance but chose not 
to take it? How many did have insurance but their coverage got 
the pink slip because of the new standards for health care, so 
now they have to sign up for something new? And how many of 
these groups were generally folks that did not have insurance 
before and now could have it? And she said, there is no way of 
telling. We just wouldn't have those numbers.
    So I am puzzled by it, because out of this number of 9, 10, 
11 million, I still don't know how many people the Affordable 
Care Act is helping. It truly wanted to help people who didn't 
have coverage and now have coverage. But of that, too, what you 
are telling me is, and of that, we don't know how many people 
may be gaming the system, and, in some cases, some people could 
even potentially say, an employer could even say, we don't have 
coverage here, but here is how to get coverage but nobody has 
to pay, or here is how you can qualify for Medicaid, when you 
don't really have it. Am I correct that people could 
potentially do that?
    Mr. Bagdoyan. I assume so, if there was intent, they could 
attempt it.
    Mr. Murphy. OK. And we won't judge their intent. But it 
seems to me, and I know that there is an old psychological 
principle that people tend to ascribe motives in others that 
they live in their own heart. I would hope that both sides of 
the aisle here would try to say, how do we fix this system, how 
do we deal with the defrauding the system so we don't have 
that? I hope that is a result of this hearing. I yield back, 
Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman. I now recognize 
the gentleman from New York, Mr. Engle, 5 minutes of questions.
    Mr. Engel. Thank you very much, Mr. Chairman. Obviously, 
nobody wants fraud. We need to root it out. But we don't want 
to use it as a reason to kill the program. I think the program 
is very important and is working well for the American people.
    So, Ms. Yocom, I would like to ask you a bunch of 
questions, so I would like to request you keep your answers 
short, because I have a whole bunch of questions for you.
    Ms. Yocom. I will do my best.
    Mr. Engel. I want to talk to you about the issues of 
coverage gaps and duplicate coverage. Can you walk through the 
reasons why coverage gaps might occur for individuals 
transitioning between Medicaid and marketplace coverage?
    Ms. Yocom. Yes. It is basically a difference of timing and 
the dates, and when the coverage becomes effective.
    Mr. Engel. Thank you. The Affordable Care Act made a number 
of changes to streamline eligibility requirements and 
enrollment processes between Medicaid and marketplace coverage, 
but still, there is some inherent difficulty in coordinating 
coverage across multiple programs. So can you walk us through--
again, please keep it as brief as you can--your recommendations 
to CMS to reduce the likelihood of coverage gaps and the impact 
of such gaps on beneficiaries?
    Ms. Yocom. Yes. Our recommendations are really around 
testing, testing the eligibility processes and identifying if 
there are common mistakes that keep happening, and then 
providing fixes to those.
    Mr. Engel. And is it the case that CMS has agreed with your 
recommendations?
    Ms. Yocom. They have.
    Mr. Engel. Thank you. I would like to ask you about the 
possibility of duplicate coverage through Medicaid and the 
marketplaces. Why might this occur?
    Ms. Yocom. It could occur for a couple of reasons. The most 
basic is that an individual may fail to resign their coverage; 
they have a change in circumstance, and they forget to notify 
the marketplace.
    Mr. Engel. While I understand that there is always room for 
improvement, CMS has significant safeguards to minimize the 
impact of duplicate coverage; is that not correct?
    Ms. Yocom. There are safeguards in place. We would suggest 
that more are needed.
    Mr. Engel. For instance, APTC that is paid out for 
enrollees who are terminated for nonpayment of premiums are 
recouped from insurers. Am right about that?
    Ms. Yocom. Yes.
    Mr. Engel. And CMS requires insurers to update their prior 
month enrollment each month, and recoups APTC provided for 
issuers for terminating individuals; is that not correct?
    Ms. Yocom. That is correct.
    Mr. Engel. Additionally, can you talk about the periodic 
data matching that CMS has announced to help ensure that 
consumers enrolled in Medicaid are not also enrolled in the 
marketplace plan?
    Ms. Yocom. Right. They are just beginning to conduct these, 
and, once again, are sharing if there are consistent patterns, 
sharing what needs to be done to fix it.
    Mr. Engel. So CMS conducts periodic and regularly scheduled 
data matches to identify duplicate coverage and will send 
notices to individuals with duplicate coverage to immediately 
end their marketplace coverage, if they are enrolled in 
Medicaid. Future schedule for PDM will be determined based on a 
number of factors, including the level of effort required by 
state and Medicaid agencies; is that correct?
    Ms. Yocom. Yes. Our concern is that they haven't yet 
settled on how periodic to be, and they haven't settled on how 
extensive those requests are. And we think that is going to be 
important for them to figure out and apply.
    Mr. Engel. So what I have just said, is that a reasonable 
approach by the agency?
    Ms. Yocom. It is. I think more surety on the periodicity of 
the reviews would be important.
    Mr. Engel. OK. It is also the case that some duplicate 
coverage is allowable. Is that not right?
    Ms. Yocom. That is correct. There are scenarios where it is 
allowed under the statute.
    Mr. Engel. For instance, when a case is transferred to the 
Medicaid agency for a decision on eligibility, the individual 
doesn't have to end his or her subsidized coverage in a QHP 
until the month after he or she is determined eligible; is that 
correct?
    Ms. Yocom. Right. And that is where these checks come in. 
That is why those checks are important, because it can be cut 
off earlier and not extend, the duplicate coverage.
    Mr. Engel. Thank you. Would you agree that the best 
practice at that point is for the marketplace to end 
eligibility for APTC once an individual has been determined 
eligible for Medicaid as some States do?
    Ms. Yocom. Yes, in general. And CMS has said that they are 
working on a way to make that happen more automatically. Right 
now it is not automatic.
    Mr. Engel. So CMS is definitely considering that; am I 
right?
    Ms. Yocom. They are considering that.
    Mr. Engel. Right. Right. Well, thank you very much.
    Mr. Chairman, I yield back the balance of my time.
    Mr. Pitts. The chair thanks the gentleman.
    That concludes the questions of the members present. As 
usual, we may have follow-up questions. Members who were unable 
to attend may provide us with questions in writing. We will 
submit those to you. We ask that you please respond promptly if 
we do.
    And I remind the members that they have 10 business days to 
submit questions for the record. They should submit their 
questions by the close of business on Friday, November 12th.
    Thank you for your testimony. Thank you for your work on 
behalf of the taxpayers. Thank you for your efforts to provide 
integrity to our programs to make sure that those who are 
eligible to receive assistance receive that assistance. And a 
very good hearing, very important hearing. And without 
objection, the subcommittee is adjourned.
    [Whereupon, at 11:16 p.m., the subcommittee was adjourned.]
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