The Kentucky Marketplace's Internal Controls Were Generally Effective in Ensuring That Individuals Were Enrolled in Qualified Health Plans According to Federal Requirements
The internal controls of the Kentucky Health Benefit Exchange (Kentucky marketplace) was generally effective in ensuring that individuals were enrolled in qualified health plans (QHPs) according to Federal requirements. However, we identified deficiencies with maintenance of identity-proofing documentation, verification of eligibility for minimum essential coverage, and resolution of inconsistencies in eligibility data. QHPs are private health insurance plans that each marketplace recognizes and certifies as meeting certain participation standards and covering a core set of benefits.
On the basis of our review of 45 sample applicants from the enrollment period for insurance coverage effective in calendar year 2014, we determined that certain internal controls were effective, such as the controls for verifying applicants'
incarceration status. However, on the basis of our sample review and performing other audit procedures, such as interviewing marketplace officials and reviewing supporting documentation, we determined that other controls were not effective. 
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Translation
Specifically, the Kentucky marketplace did not always (1) maintain identity-proofing verification documentation; (2) verify applicants' eligibility for minimum essential coverage; or (3) notify applicants of, or resolve, inconsistencies
in eligibility data.
The presence of an internal control deficiency does not necessarily mean that the Kentucky marketplace improperly enrolled an applicant in a QHP or improperly determined eligibility for insurance affordability programs. Other mechanisms exist that may remedy the internal control deficiency.
The deficiencies that we identified occurred because the Kentucky marketplace did not
(1) ensure that it maintained identity-proofing documentation or (2) design its enrollment system, in case initial data verification failed, to ensure that further data validation would occur or an inconsistency would be identified and resolved in a timely manner.
We recommended that the Kentucky marketplace (1) maintain identity-proofing documentation for applicants who apply for QHPs and (2) improve the design of its enrollment system to ensure that it identifies and resolves all inconsistencies in eligibility data and determines an applicant's eligibility on the basis of available electronic data sources, as appropriate. Kentucky marketplace officials concurred with all of our findings and recommendations and provided information on actions that they had taken to address our recommendations.
Filed under: Center for Medicare and Medicaid Services