Where Do CO-OPs Go From Here? Q&A With National CO-OP Director Janice VanRiper
At the turn of 2013, amidst all of the fiscal cliff talk, a major portion of President Barack Obama's healthcare law hit a brick wall. Under the American Taxpayer Relief Act of 2012, better known as the fiscal cliff bill, the Consumer Operated and Oriented Plan program lost all remaining funds.
CO-OPs, which were established within the Patient Protection and Affordable Care Act, are the non-profit health insurers governed by consumers that are expected to compete with large health insurers in the online marketplaces next year. Overnight, the program had lost billions in government funding in the fiscal cliff bill in move the Congressional Budget Office said would have a nominal effect on the national deficit, and consequently, only half the states in the country were left with a CO-OP to call their own.
Janice VanRiper, PhD, JD, is the executive director and CEO of the National Alliance of State Health CO-OPs, or NASHCO. Before she decided to head NASCHO, which is the national trade association for CO-OPs that was formed in 2010, Dr. VanRiper was general counsel and vice president of Blue Cross Blue Shield of Montana, chief deputy insurance commissioner in Montana and a bioethics professor at the Brody School of Medicine at East Carolina University in Greenville, N.C.
She certainly didn't have to get involved with CO-OPs, which have been viewed as small, non-profit Davids compared with the large, investor-owned, Goliath health plans. But Dr. VanRiper says she is very passionate about the "triple aim," the framework made famous by former CMS Administrator Don Berwick, MD: improving patient experience, improving the health of populations and reducing the per capita cost of healthcare.
Here, she explains where CO-OPs stand right now, why she thinks they are important to hospitals and the healthcare system at large, and how CO-OPs will fare in the future.
Question: First, can you explain where CO-OPs stand right now and then how the fiscal cliff bill impacted them?
Janice VanRiper: Currently, we have 24 approved CO-OPs. They are very busy getting ready to put products out in the exchanges that are set to go into effect Jan. 1. Open enrollment begins on Oct. 1. They are all getting licensed and getting everything they need to do that. That's the status of them.
The fiscal cliff did not really affect the currently approved CO-OPs or their loan agreements. Individually, they are doing well, and we expect they'll be ready to go.
The unfortunate thing with the fiscal cliff deal is that overnight, basically, Congress removed the funding of future CO-OPs. There was an excess of 40 CO-OP applications pending as of the latest application deadline, which was Dec. 31. A lot of potential CO-OPs got their applications in before the deadline, but by the next day, we found out all those applications would not even be reviewed, let alone approved and funded.
What's unfortunate is two things. First, folks in those remaining states put a lot of time and money to research those applications, and they won't be able to get reviewed. Second, people in the remaining 26 states, at least in the foreseeable future, won't be able to choose a health plan offered by a CO-OP. That's unfortunate for everyone. The goal is to provide competition in insurance markets. To the extent [states] won't have a CO-OP operating, they won't have the same competition compared to other states.
Q: How do you see the current batch of CO-OPs performing against larger, investor-owned health insurers?
JVR: I think there are both opportunities and challenges there. The opportunities include these CO-OPs are, by law, non-profit. They do not have to worry about making profits and reporting them out to their investors. There is also an opportunity to be more competitive with respect to other carriers.
One of the challenges is these other carriers are large and already have systems in place and have economies of sale in purchasing. But CO-OPs are networking like crazy amongst themselves to share best practices to make sure they know who the best service providers are, and the ACA allowed them to pursue certain group purchasing discounts. That's how CO-OPs are meeting the challenges of economies of scale and sharing information.
Q: I know CO-OPs are primarily looking to sell in the individual and small group markets. Can you explain their target audience a little more?
JVR: CO-OPs are brought up in different insurance marketplaces. One or two are really targeting people associated with unions. All of them are focusing in some way on low-income and the previously uninsured — those who have not had good access [to health insurance]. It's just a variation on that theme. There is an option for CO-OPs to sell some large group insurance, but not all CO-OPs are pursuing that.
An interesting point about CO-OPs is their consumer-controlled nature. The law requires a majority of the seats on CO-OP boards must be held by people who have purchased polices through that CO-OP. It's such an important point, and it's such a new model. Having those consumers and policyholders on board with control will put CO-OP management very much more in touch with issues consumers are running into, what's not working for them, etc. It's an important piece for how these CO-OPs will be different from other insurance plans.
Q: Hospitals and health systems are one of the biggest subsections of providers, yet it has not really been discussed how these CO-OPs will coincide with them. How can hospitals benefit from CO-OPs?
JVR: We actually have one CO-OP that was really put together by a provider group, including hospitals — Land of Lincoln Health in Illinois [which is sponsored by the Metropolitan Chicago Healthcare Council, an association with more than 150 hospitals and healthcare organizations]. In addition, many existing CO-OPs have people from various blocks, including providers and hospital administrators.
Aside from that, how might this be beneficial to hospitals and others sectors? I think a number of things could be said. CO-OPs, by law, promote integrated care models. CO-OPs don't have legacy systems, so they can come out of the chute with new and interesting ways to promote those models. They are looking at forming models where they can reduce unnecessary hospital admissions, steer people toward appropriate care, find alternative payment models that incentivize folks to seek appropriate care and providers to give appropriate care. And there are different mechanisms for that — and many CO-OPs are pursuing them and sharing ideas.
For example, the New Mexico CO-OP is pursuing a shared savings models with some of their primary care people. The emphasis and idea behind this is if you put the primary care physicians and the patients in charge of treatment plans and health insurance plans, then together they can make really good and better decisions. The Utah CO-OP is also spearheading an effort with centers of excellence, gathering info on specialists and hospital systems and other providers as to where patients can get the highest quality of care — and the best value.
Q: So I guess this is the million-dollar question: Where do CO-OPs go from here?
JVR: The idea is the CO-OP model will be very popular as more people know about them and have good experiences. In the not-too-distant future, CO-OPs will be self-sustaining and will pay off loans through premiums and so forth. We are in this for the long haul for sure.
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