The Centers for Medicare & Medicaid Services (CMS)
announced steps it is taking to encourage the creation of consumer-operated and
oriented Plans (CO-OPs) — new private nonprofit, consumer-governed health
insurance plans designed to 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 designed to give consumers and small
businesses control over their own health insurance. CO-OPs are governed by
their members and offer affordable, consumer-friendly health insurance options,
according to a CMS press release. They use any profits to benefit 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.
“CO-OPs will provide consumers more choices,
greater plan accountability and help ensure a more competitive insurance
market,” Steve Larsen, director of the Center for Consumer Information and
Insurance Oversight, said. “[This] announcement shows how the Affordable
Care Act is bringing new choices and giving consumers a voice in insurance
markets throughout the nation.”
CMS worked from the recommendations of the public
advisory committee, and 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. CMS is
also taking public comment on the proposal and expects to release a Funding
Opportunity Announcement regarding the availability of loans to start up CO-OPs
The CO-OP program provides loans to private entities
with the goal of creating a new CO-OP in every state to expand the number of
exchange health plans with a focus on consumer accountability. The CO-OP
program contains extensive provisions to protect against fraud, waste and
abuse. Loan recipients are subject to strict monitoring, audits and reporting
requirements for the length of the loan repayment period plus 10 years.
Recipients must submit semiannual program reports and quarterly financial
statements. Additionally, CMS will conduct audits, including site visits, as
appropriate. CO-OPs must meet a series of milestones as laid out in their loan
term agreements before drawing any money from the program.
For more information, read the fact sheet at