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HHS Releases FOA for CO-OPs

Consumer Operated and Oriented Plans (CO-OPs) are private non-profit, consumer-governed health plans that will help increase choice for consumers and small businesses participating in Insurance Exchanges starting in 2014. CO-OPs are designed to empower consumers and small businesses to take control of their own health insurance since they will be directed by their customers and offer more affordable, high quality health insurance options.  CO-OPs are required to use their profits to lower premiums, improve health benefits, improve the quality of health care, expand enrollment, or otherwise contribute to the stability of coverage for members. In addition to improving consumer choice and plan accountability, the CO-OP program also seeks to promote integrated models of care and enhance competition in the Affordable Insurance Exchanges.

Last week, HHS officials announced that loans would be available for those interested in operating a CO-OP. To be eligible for a loan, an applicant must be a private nonprofit member organization and must intend to become a CO-OP. The deadline to apply for the first round of loans is October 17, 2011. The anticipated loan award date for those is January 12, 2012. Subsequent applications will be accepted quarterly up to and including December 31, 2012. Loan awards or a response to the application will be provided approximately 75 days after each applicant receives notice that its application is complete.

An applicant may apply in this announcement for (1) joint Start-up and Solvency Loans or (2) only a Solvency Loan. The first option provides the recipient with both a Start-up Loan and a Solvency Loan issued through a single application. Start-up Loans are intended to assist applicants with the many start-up costs associated with establishing a new health insurance issuer. Solvency Loans are intended to assist applicants with meeting the solvency requirements of States in which the applicant seeks to be licensed to issue CO-OP qualified health plans.

There is a goal of having at least one CO-OP in each State. The statute permits the funding of multiple CO-OPs in any State, provided that there is sufficient funding to capitalize at least one CO-OP in each State. Congress provided budget authority of $3.8 billion for the program. The statute directs the Secretary to give priority to applicants that will offer CO-OP qualified health plans on a Statewide basis, will use integrated care models, and have significant private support. The statute also directs the Secretary to take into account the recommendations of the CO-OP Program Advisory Board.

It should be noted, however, that the statue allows CMS to fund more than one qualified nonprofit health insurance issuer in any State if the funding is sufficient to do so. If there is no applicant from a State, CMS may award loans to encourage the expansion of a qualified nonprofit health insurance issuer from another State to that State. Additionally, an applicant may apply for loans to establish a CO-OP in more than one State.

Application materials are available for download at http://www.grants.gov.To read the full announcement, search keyword “CO-OP.”