Red flags in a CMS celebration of health insurance agents and brokers

CMS salutes health insurance agents working in the ACA marketplace, May 24, 2023

A May 2023 CMS presentation to health insurance agents and brokers selling ACA marketplace plans opens on a celebratory note. Enrollment in the Open Enrollment Period for 2023 was up 19% year-over-year in the 33 states using the federal exchange, HealthCare.gov. CMS implicitly credited brokers for much of the surge, noting:

The Plan Year (PY) 2023 Open Enrollment Period (OEP) was the strongest year yet for agents and brokers assisting consumers through the Marketplace.

CMS noted that agents* assisted 6.8 million active enrollments in HealthCare.gov in PY 2023, which comes to 70% of the active enrollment total (“active enrollment” excludes 2.5 million auto-re-enrollments, for which agents or other assisters are not credited). CMS further noted that 74,100 agents were registered with HealthCare.gov in PY 2023.

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The CMS presentation also celebrates agents’ increased reliance on Enhanced Direct Enrollment (EDE) pathways — that is, commercial enrollment platforms that streamline enrollment and provide agents with a range of customer management tools. Agents can effectuate enrollment on an EDE platform without the customer creating a personal account on HealthCare.gov. According to the presentation, 5.5 million agent-assisted enrollments were executed via EDE in PY 2023 — or 81% of all agent-assisted enrollments, up from 72% in 2022. EDEs have enabled agents to work at speed, and CMS recognizes them as a stool that has helped spur enrollment growth.

The good news delivered, the CMS presentation pivots to “areas for improvement” — and these are worth looking at in light of problems that have recently burst into public view — most notably, a rising incidence of agent fraud, in which agents either assign themselves to an existing enrollment and change the enrollee’s plan without the enrollee’s permission or enroll a previously-unenrolled person without permission.

Specifically:

• Agent-assisted enrollments generated “data matching issues” (DMIs) in 26% of enrollments, vs. 12% in non-agent enrollments. DMIs arise when HealthCare.gov can’t verify information provided in the application, such as income or immigration status.

• Agent-assisted enrollments lacked Social Security numbers in 16% of cases, vs. less than 1% for non-agent enrollments.

• Low income enrollees eligible for Cost Sharing Reduction (available only with silver plans) selected bronze plans, forgoing CSR and subjecting themselves to high out-of-pocket costs, more often when assisted by agents. Among those eligible for the highest level of CSR (i.e., those with income up to 150% of the Federal Poverty Level, for whom the two cheapest silver plans are free), 17% of agent-assisted enrollees selected bronze plans, vs. 9% of non-agent enrollees.

The problematic enrollment features highlighted above — applications triggering DMIs, applications submitted without Social Security numbers, and low-income bronze plan selections — are not always markers of faulty practice. After the Biden administration enhanced premium subsidies via the American Rescue Plan Act (ARPA) in March 2021 (originally as a pandemic relief measure, later extended through 2025 by the Inflation Reduction Act), more agencies and brokerages focused on low-income enrollees, as silver plans with CSR became available for zero premium at incomes up to 150% FPL, and free bronze plans became widely available further up the income chain. (In the ten states that have refused to enact the ACA Medicaid expansion, including behemoths Florida and Texas, well more than half of enrollees have incomes below 150% FPL, and large majorities have access to multiple free bronze plans.) Low-income enrollees are likelier to have uncertain and loosely documented incomes, light credit footprints (credit agencies are a “trusted data source” for the marketplace), frequent changes of address, changing or unusual immigration status, and other issues that trigger DMIs. They may have trouble providing social security numbers for all family members; they may be difficult to contact when needed. Agents working at speed during OEP may have reason to file an application without a SS# prior to an enrollment deadline.

As for bronze plan selection: increasingly, cut-rate insurers with narrow networks provide the lowest-cost silver plans. Agents using plan selection tools that identify plans where the enrollee’s providers are in-network, or their drugs are in-formulary, may point enrollees toward bronze (or in some markets, gold) plans when the desired insurer’s silver plans carry substantial premiums for even the lowest income enrollees. (I have spotlighted specific markets and situations in which a low-income enrollee may have reason to forgo CSR, as well as the erosion of CSR takeup since 2017 and — surprisingly after ARPA made silver plans free at incomes up to 150% FPL — in 2023 and 2024.)

All that said, these three data points do seem likely indicators of the rising prevalence of agent fraud reported by KHN’s Julie Appleby and discussed in several of my recent posts (most recently here). Via EDE platforms, agents can access and make changes to any HealthCare.gov account if they have the enrollee’s name, date of birth, and state of enrollment. They can designate themselves the agent of record, replacing the prior agent, and enroll the prospective client in a new plan (enabled after OEP by a 2022 rule granting enrollees with income up to 150% FPL year-round access to a monthly Special Enrollment Period in which plans can be switched). They can target clients for whom zero-premium plans are available, who won’t be made aware of the switch by demands for premium payment. Thanks in part to the ARPA subsidy boosts, in many markets (e.g., in the nonexpansion states) six, twelve, or more zero-premium bronze plans are available to most enrollees (see the last subhead in this post).

I would not be surprised if the prevalence of all three “areas for improvement” for agents— high DMI rates, no Social Security number, and low-income bronze plan selection — further increased in 2024. I have asked CMS for the data. By all accounts unauthorized plan-switching and unauthorized enrollment surged in 2024 — in May, CMS reported that in three months of 2024 it received 40,000 complaints of unauthorized plan switches and of 50,000 unauthorized enrollments.

Enrollment data for 2024 shows an historic enrollment surge, mostly concentrated in nonexpansion states (all of which use HealthCare.gov) and mostly at low incomes — along with a surge in agent activity. In 2024, enrollment in HealthCare.gov states increased by 33% — and enrollment at 100-150% FPL by 58%. In HealthCare.gov states, 53% of enrollees had incomes in the 100-150% FPL range; 51% had premiums of $10/month or less (see the 2024 state-level PUF). More than 83,300 agents were registered with HealthCare.gov in 2024 (per a CMS email to me), compared to 74,100 in 2023. Agent-assisted enrollment increased from 70% of active enrollment in 2023 to 78% in 2024.

As with lawyers, accountants, and other licensed professionals, a good health insurance agent is priceless when you need one. There are agents who will burrow deep into the welter of available health plans (many of them barely distinguishable) to find the plan that makes a client’s prescriptions affordable, or one with essential providers in-network at affordable cost, or who will help nudge an inherently unpredictable income projection (e.g., for a self-employed client) over or under a subsidy breakpoint to make coverage affordable. Some will pursue providers or insurers to get a needed treatment covered or a bill corrected. I know several agents of this kind. Then there are large call centers filled often poorly trained agents pursuing leads obtained through misleading ads to sell plans using misleading scripts. Of course, there are many variations between those poles.

Virtually all agents are independent contractors; many or most work through Field Marketing Organizations (FMOs) that get them registered with carriers to sell their products and may provide a range of other services, including marketing resources, training, and technology. In the post-ARPA era, many FMOs and call centers are targeting low-income people in nonexpansion states who can be signed up for zero-premium plans; one claims that an application can typically be completed in 10-15 minutes. EDEs help speed the process; HealthSherpa claims that the average application can be completed in 7.5 minutes. Speed is not necessarily a bad thing for a straightforward application, especially if the enrollee clearly qualifies for zero-premium high-CSR silver and one of the two silver plans available at zero premium meets her needs. But there is obviously a very broad range of quality in the consultation.

In some agencies running call centers, explains Joshua Brooker, an independent broker and Chair of the Individual Markets Working Group at the National Association of Benefits and Insurance Professionals (NAPIB), “When you work as an employee, someone says, ‘here’s a name of someone interested in insurance, these are the three carriers you’re allowed to recommend, go out and do it,’ and you have to sell four, five, six people in an hour, they’re not asking questions — they’re just making phone calls, saying ‘Hey, you need insurance, here’s the recommendation,’ and then they move on to the next person.”

Agencies and FMOs hell-bent on volume have in turn stimulated an industry of lead brokers determined to provide leads, chiefly through online ads in fierce competition to win clicks. It’s easy to see how low-quality consultation crosses a line into fraud. And CMS needs to get a handle — fast — on the outright fraud that has escalated in the post-ARPA era.

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* Since the terms “agent” and “broker” appear to be used interchangeably in health insurance, I’ve decided to just go with “agent,” which seems to be term that “agents and brokers” themselves use most often.