The Obama administration is taking only a “passive” effort to stop fraudulent subsidies from being paid to some Obamacare enrollees, according to an investigation by the federal government’s non-partisan watchdog.

A report by the Government Accountability Office found that the Center for Medicare and Medicaid Services was not properly using the screening process established by the Affordable Care Act to vet applicants for Obamacare subsidies, Medicaid and other benefits. The investigation included undercover fictitious applicants who were able to easily qualify for taxpayer-funded benefits, the report said.

This October 21, 2013 photo shows the US government internet health insurance exchange Healthcare.gov. US President Barack Obama on Monday defended his problem-plagued health reform plan, declaring at a White House event that, despite numerous glitches, the program is already helping many uninsured Americans. "Let me remind everybody that the Affordable Care Act is not just a website," Obama said, after the troubled online rollout of the plan. "It's much more...You may not know it, but you're already benefiting from these provisions in the law" (Getty Images)

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The report says the CMS “allowed an unknown number of applicants to retain coverage, including subsidies, they might otherwise have lost, thus producing higher costs for the federal government.”

The report continues, “While the subsidies, including those granted to GAO’s fictitious applicants, are paid to health-care insurers, and not directly to enrolled consumers, they nevertheless represent a benefit to consumers and a cost to the government.”

The report cited that already, about 431,000 applications, with about $1.7 billion in associated subsidies for the 2014 Obamacare enrollment period, still had unresolved inconsistencies as of April 2015 — several months after close of the coverage year.”

“CMS has assumed a passive approach to identifying and preventing fraud,” the GAO report says. “CMS relies on a contractor charged with document processing to report possible instances of fraud, even though CMS does not require the contractor to have fraud detection capabilities. Adopting a more strategic, risk-based approach could help identify fraud vulnerabilities before they could be exploited in the enrollment process.”

The report continues: “CMS has not performed a comprehensive fraud risk assessment — a recommended best practice — of the PPACA enrollment and eligibility process.”

The Obamacare law requires that applicant information be verified for income-based subsidies. To comply, the CMS created the “data service hub” that links information to the Internal Revenue Service and the Social Security Administration to screen applicants for subsidies. However, “CMS does not, according to agency officials, track or analyze aggregate outcomes of data hub queries,” the report says.