New Private Nonprofit Health Plans Will Increase Competition, Give Consumers and Small Businesses More Health Insurance Choices

August 4, 2011 – On July 18, CMS took steps to encourage the creation of Consumer Operated and Oriented Plans (CO-OPs), new private non-profit, consumer-governed health insurance plans that CMS states will help increase competition and give consumers and small businesses additional affordable health insurance choices.  CMS is proposing standards for CO-OPs, and for qualifying for $3.8 billion in repayable loans to help start-up and capitalize these new health plans. All CO-OP loans must be repaid with interest and loans will only be made to private, nonprofit entities that demonstrate a high probability of becoming financially viable.
 
CO-OPs are private, non-profit insurers governed by their members and offering affordable, consumer-friendly health insurance options.  CO-OPs will use any profits to benefit its members, including actions to lower premiums, improve health benefits, improve the quality of members’ health care, expand enrollment, or otherwise contribute to the stability of coverage for members.
 
The rules proposing the framework were developed with significant input from many stakeholders, including testimony at public meetings from consumers, small businesses and health care providers.   The proposed rule is only a first step.  CMS is taking public comment on the proposal and expects to release a Funding Opportunity Announcement regarding the availability of loans to start up CO-OPs soon.
 
The CO-OP program:

• Provides for loans to private entities with the goal to create a new CO-OP in every State
• Contains extensive provisions to protect against fraud, waste, and abuse. 
• Requires loan recipients to be subject to strict monitoring, audits, and reporting requirements for the length of the loan repayment period plus 10 years. 
• Requires recipients to submit semi-annual program reports and quarterly financial statements.
• Will be audited byCMS, including site visits, as appropriate. 
• Must meet a series of milestones as laid out in their loan term agreements before drawing down any money from the program.

CO-OPs will sell coverage through the State’s Affordable Insurance Exchange as well as have the opportunity to sell coverage to small businesses through the State’s Small Business Health Option Programs (SHOPExchanges).  Several successful health insurance cooperatives currently exist around the country, covering nearly 2 million individuals.  A number of diverse groups are organizing to take advantage of this new opportunity.  In one state, primary care providers are working to create a CO-OP to focus on care for rural areas.  In another, a CO-OP steering committee has been formed by interested physicians, technology and business experts, and community groups.
 
Further information on the Consumer Operated and Oriented Plan program, including the determinations of the Federal Advisory Board and information for prospective applicants, can be found at:   CO-OP Programs

CMS will accept comments on the proposed rule until September 16, 2011.

Tags: Healthcare Reform