By: Aram Gavoor
The Inspector General for Health and Human Services, Daniel R. Levinson (HHS IG), sent a letter this week to Centers for Medicare & Medicaid Services (CMS) expressing concern that Obamacare state exchanges (State-based marketplaces or SBMs) may be unlawfully spending federal grant dollars to fund operations. The HHS IG identified the issue in the midst of audits of establishment or startup grant monies disbursed to SBMs.
The violation of the law is under Section 1311(a) of the Affordable Care Act (ACA), which requires that since January 1, 2015, SBMs must be self-sustaining. According to the HHS IG: “We have concerns that, without more detailed guidance from CMS, SBMs might have used, and might continue to use, establishment grant funds for operating expenses after January 1, 2015, contrary to law.”
This is not, however, the first time that ACA grant funds have potentially been misused.
In September 2014, Cause of Action exposed the fraudulent misuse of Navigator grant funds by Southern United Neighborhoods (SUN) in light of allegations that United Labor Unions Local 100 (ULU), a federal subgrantee of SUN, directed an ACA navigator, paid with federal grant funds, to recruit members for ULU in Texas.
In a letter to the HHS IG requesting an investigation and audit of SUN, Cause of Action explained that a former employee of SUN filed a class action lawsuit in which he sought damages for unpaid overtime for himself and other putative class members under federal labor law. He alleged that SUN and ULU shared control of the terms and conditions of his Navigator duties, and that he was directed by the labor union to recruit new ULU members by engaging cafeteria workers at schools in the course of his ACA work. OMB Circular A-133 and relevant HHS regulations mandate that federal grand funds may only be used for approved programmatic purposes, which does not include such behavior.
Cause of Action is cautiously optimistic that SUN and ULU will be held accountable for their potential misuse of ACA grant money. The HHS IG recently sent a letter to Cause of Action, confirming that there is an “open and ongoing investigation concerning this matter.” Both of these instances evince the need for the HHS IG to conduct a robust investigation/audit into the misuse of Obamacare funds.
