HHS Issues Final Rule for CO-OP Program

The Department of Health and Human Services has issued the final rule on the Consumer Operated and Oriented Plan (pdf) program, which will provide loans for the creation of consumer-governed, private and non-profit health insurance issuers to offer qualified health plans in state health insurance exchanges.

Through the Patient Protection and Affordable Care Act, the CO-OP program would allow consumer-governed entities as well as healthcare systems and other healthcare providers to create the health plans to compete directly with traditional health insurers. Additionally, the program looks to create a new CO-OP in every state.


Key points from the final rule include the following:

•    There are four major principles for awarding loans: consumer operation must be sustained over time; solvency and the financial stability of coverage should be maintained; care coordination, quality and efficiency should be encouraged; and initial loans should be rolled out as expeditiously as possible.

•    Organizations that receive funding from a state or local government but are not government organizations under state law and are not governed by a state or local government may be eligible for the CO-OP program.

•    Certain non-profit organizations that are also a sponsor for a pre-existing health insurance issuer are permitted to sponsor a CO-OP as long as the pre-existing issuer does not share any of its board members or have the same CEO with the CO-OP.

•    Organizations that meet eligibility standards can apply for either a start-up loan or a solvency loan. Start-up loans help with the start-up costs associated with establishing a CO-OP, while solvency loans help loan recipients meet requirements, solvency regulations and other arrangements in each state in which the applicant seeks to be licensed.

•    Start-up loans must be repaid within five years, and solvency loans must be paid within 15 years.

•    Loan recipients can participate in the health insurance exchanges for two years and may be recertified every two years for up to 10 years following the life of their loans.

Related Articles on the CO-OP Program:

Connecticut Physicians to Form Health Insurance CO-OP

AHA Comments on Co-Op Proposed Rule

CMS Accepting Loan Applications for CO-OP Insurance Plans

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