Health insurers are complaining that many enrollees in PPACA federal and state marketplace exchanges are waiting until they need expensive medical care to sign up for insurance by taking advantage of “special enrollment periods” that fall outside of the open enrollment seasons.

The Obama administration appears to be listening.

Andy Slavitt, the acting administrator for the Centers for Medicare and Medicaid Services, said in a speech Monday that the administration has to review rules for special enrollment periods, which he conceded were subject to abuse, reports Politico.

"There may be bad actors and others out there who are abusing those,” he said.

The feds will be taking the complaints seriously in the midst of threats from some major insurers, such as UnitedHealth, to stop participating in the Patient Protection and Affordable Care Act marketplace because they aren’t making money.

As of June of last year, only 10 percent of all marketplace enrollees had signed up during a special enrollment period. However, the Blue Cross Blue Shield Association estimates that those enrollees cost an average of 55 percent more.

In a letter to Secretary of Health and Human Services Sylvia Burwell, an Aetna executive claimed that a quarter of its enrollees came through special enrollment periods, and that such enrollees stay on their plans for an average of less than four months.

“Many individuals have no incentive to enroll in coverage during open enrollment, but can wait until they are sick or need services before enrolling and drop coverage immediately after receiving services, making the annual open enrollment period meaningless,” wrote Steven B. Kelmar, executive vice president of Aetna.

The problem is, there appears to be little means for insurers to verify that an applicant qualifies for special enrollment, which is available for a variety of events, including losing insurance due to a job change or job loss.

“State regulators are concerned that consumers are not required to provide documentation to substantiate their eligibility for a special enrollment period,” wrote the National Association of Insurance Commissioners in a letter to the HHS. “We know of many cases where individuals with serious medical conditions purchased coverage midyear by simply checking the right box or using the right language, and their eligibility was not questioned.”

The New York Times reports that even nonprofit insurers and advocacy groups, such as Kaiser Permanente, that have been big supporters of the PPACA are urging the feds to create stricter rules to prevent special enrollees from bleeding the system dry.

The problem is that any effort to crack down on inappropriate enrollment will likely mean that it will become more difficult for those who are playing by the rules to join. Unfair rejections have already been a major issue that has prevented many from signing up for insurance and has resulted in many others being kicked off of their plans.

Christine Speidel, an attorney for Vermont Legal Aid, told the Times that consumers are unlikely swindling insurers.

“Most consumers are confused by the rules on special enrollment periods and do not understand the system well enough to try to game it,” she said.

Instant Insights /

Insurers complain of PPACA special enrollment abuse

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