Top News

Seven new nonprofit health insurance cooperatives, including four with a strong focus on patient-centered medical homes and primary care, will receive approximately $639 million in seed money to create what the Centers for Medicare and Medicaid Services calls "more affordable, consumer-friendly and high quality health insurance options," the agency announced Feb. 21.

This new type of health insurance plan, known as a Consumer Oriented and Operated Plan (CO-OP), was created by the Affordable Care Act. The newly approved CO-OPs are expected to operate in eight states beginning Jan. 1, 2014, through the new health insurance exchanges; however, the CO-OPs also will be allowed to offer health plans outside the exchanges, according to CMS officials.

The CO-OP program offers low-interest federal loans to nonprofit groups to help them set up and maintain health insurance programs.

"Each awardee receives start-up loans and solvency loans," said Tim Hill, deputy administrator and director of the Center for Consumer Information and Insurance Oversight at CMS. The loans carry interest rates of less than 1%, Mr. Hill said during a telephone briefing.

The seven CO-OPs approved by CMS represent what should be only the first round of such approvals, said Barbara Smith, director of the CO-OP program at CMS.

Even though the CO-OPs are sponsored by community organizations and coalitions, "they’re designed to be completely separate organizations. They have to be consumer governed, and they will have separate CEOs and boards," Ms. Smith said in the teleconference.

The first round of CO-OPs includes three sponsored by the Freelancers Union, a union made up of independent workers. Those CO-OPs are partnering with physicians and other health care providers in three states – New Jersey, New York, and Oregon – to create models based on patient-centered medical homes, according to CMS; they received a total of more than $341 million in loans from CMS.

Another CO-OP, New Mexico Health Connections, is sponsored by a coalition of health care providers, community groups, and business leaders that plan to work with their provider community to improve health outcomes, according to CMS. New Mexico Health Connections, which is slated to start in 11 counties and expand statewide within 2 years, received more than $70 million in loans through CMS.

Through a rigorous selection process, the agency selected only CO-OPs that officials believe have a strong chance of success, Ms. Smith said.

The agency will closely monitor the organizations to ensure that they are meeting program milestones and will release funds incrementally as those milestones are met. CO-OPs also will submit quarterly financial statements including cash flow and enrollment data, be subject to site visits, and undergo annual external audits.

CMS officials continue to review more CO-OP applications and will accept more through the end of this year, said Ms. Smith, who added that awards will be announced "on a rolling basis."

02/22/12