An Overview of ConsumerOperated and Oriented Plans (CO-OP) and the
Agenda Role of the Affordable Care Act CO-OP Overview Role of Health Insurance Exchanges CO-OP Federal Regulations Introducing the Kentucky Health Cooperative
What is the Affordable Care Act?The development of health insurance Exchanges and CO-OPslike the Kentucky Health Cooperative are a direct result of thePatient Protection and Affordable Care Act (PPACA) – alsoknown as the Affordable Care Act (ACA).The ACA is the landmark health reform legislation passed byCongress and signed into law by the President in March 2010.
What is the Affordable Care Act? (continued)The ACA legislation includes a long list of health-relatedprovisions that are intended to: extend coverage to millions of uninsured Americans, implement measures that will lower health care costs and improve system efficiency, and eliminate industry practices that are harmful to patients, such as rescission and denial of coverage due to pre-existing conditions.
CO-OP Overview Legislated by the Accountable Care Act (ACA) Fosters the creation of nonprofit member-owned and member-governed health insurance issuers, known as “CO-OPs.” 24 CO-OPs are currently in development in more than 20 states across the nation.
What is a CO-OP? (continued)CO-OPs focus on developing programs intended to improve thequality of health care delivered to members, such as: preventive programs offered with early health screenings; focusing on health outcomes based on sound clinical evidence; ongoing measurement and comparison of performance to clinical quality standards; a comprehensive medical network; coordinated care programs; opportunities for members to participate in their care.
What is the CO-OP Target Market? The CO-OP will primarily operate in Health Insurance Exchanges established under the Accountable Care Act. The Kentucky Health Cooperative will offer products both inside and outside of the Kentucky Health Benefits Exchange. Individuals and Small Employer Groups with 2-50 employees are the primary focus.
What are Health Insurance Exchanges? Exchanges are organized marketplaces authorized by the Affordable Care Act where individuals and small employers can purchase health insurance. An Exchange is a set of government-regulated and standardized health care plans. Low and moderate income individuals can receive premium and cost-sharing subsidies that will only be available through Exchanges. Exchanges will make insurance markets more transparent, facilitate consumer choice and encourage competition among insurers.
What are Health Insurance Exchanges? (continued)Major requirements affecting insurers in the individual Exchangesinclude: guaranteed issue - insurers will not be permitted to refuse to insure any individuals, plans will be offered in four comparable tiers, covering the same basic benefits so you can compare them easily, members get to choose their level of out of pocket expense, strict regulations on rescission or the retroactive cancellation of a health insurance policy; and, elimination of lifetime and annual limits on claims payments.
What are Health Insurance Exchanges? (continued)Within the Exchange markets, consumers (both individuals andsmall group employers) can one-stop shop for a health care plan,compare benefits and prices, and choose the plan thats best. None of these plans will deny coverage on the basis of a preexisting condition, and all of these plans should include an affordable basic benefit package that includes prevention, and protection against catastrophic costs. All plans must cover preventive care without any out of pocket expense. Under federal law, all Exchanges must be fully certified and operational by January 1, 2014.
Consumer Operated andOriented Plan Federal Regulations 45 CFR §156.500
What is the Basis and Scope? The Consumer Operated and Oriented Plan (CO-OP) program legislated by the Accountable Care Act (ACA) fosters the creation of new consumer-governed, private, nonprofit health insurance issuers. Under the program, loans were awarded to encourage the development of CO-OPs. Applicants that met the eligibility standards of the CO-OP program could apply to receive loans to help fund start-up costs and meet the solvency requirements of states in which the Applicant sought to be licensed to issue qualified health plans.
Applicant versus Sponsor Applicant means an entity eligible to apply for a loan. Sponsor means an organization or individual that is involved in the development, creation, or organization of the CO-OP or provides financial support to a CO-OP.
Who Is Eligible To Apply? The Applicant must meet the eligibility standards set forth in the CO-OP program Funding Opportunity Announcement (FOA). The Applicant must declare that it intends to become a CO-OP and be a nonprofit member organization.
Who Is Ineligible To Apply? The organization is a pre-existing issuer, a trade association whose members consist of pre-existing issuers, a related entity, or a predecessor of either. A state or local government, any political subdivision thereof, or any instrumentality of such government or political subdivision.
Exceptions To The Ineligible Regulation The Applicant has as a sponsor a nonprofit organization that is not an issuer or a trade association whose members consist of issuers and that also sponsors a pre-existing issuer, provided that the pre-existing issuer does not share any of its board or the same chief executive with the Applicant. The Applicant has purchased assets from a preexisting issuer provided that it is an arm’s-length transaction where neither party was in a position to exert undue influence on the other.
Formation versus Operational Board Formation board - The initial Board of Directors of the CO-OP before it has begun accepting enrollment and had an election by the members of the organization to the Board of Directors. Operational board - The Board of Directors elected by the members of the CO-OP after it has begun accepting enrollment. The Operational Board must be elected by 1/1/2015 if the CO-OP accepts enrollment on 1/1/2014.
What Type of Funding is Available? The CO-OP Program offers a combination of Start-up loans and Solvency Loans to fund the organization. Start-up Loan - A loan provided by CMS to a loan recipient for costs associated with establishing a CO-OP. Solvency Loan - A loan provided by CMS to a loan recipient in order to meet state solvency and reserve requirements.
CO-OP Eligibility Standards A CO-OP must satisfy the standards of the Regulation. A CO-OP must meet all other statutory, regulatory, or other requirements. (NFP Rules, Insurance regulations, etc.).
CO-OP Eligibility Standards – Governance Standards Member control - A CO-OP must implement policies and procedures to foster and ensure member control of the organization. Standards for the Board of Directors - The operational board for a CO-OP must meet standards for ethical conduct, conflict of interest, and disclosure.
Other CO-OP Eligibility Standards Consumer Focus - A CO-OP must operate with a strong consumer focus, including timeliness, responsiveness, and accountability to members. Ethics and Conflicts of Interest - A CO-OP must have governing documents that incorporate ethics, conflict of interest, and disclosure standards. Health Plan Issuance - A CO-OP must have as its primary focus the issuance of health plans in the individual and small group market.
Conversion Prohibition The CO-OP shall not convert or sell to a for-profit or non-consumer operated entity at any time after receiving a loan. The CO-OP shall not undertake any transaction that would result in the CO-OP implementing a governance structure that does not meet the standards of the regulations.
Kentucky Health Cooperative’s MissionThe Kentucky Health Cooperative exists topromote community health and well-being byengaging the members and providers it servesin the valued delivery of quality coverage ofintegrated health care services.
Kentucky Health Cooperative Awarded Loan Funding in May 2012. Headquartered in Louisville, Kentucky. Currently working with the Department of Insurance to obtain approval to operate as an insurer statewide. Offer products through the Kentucky Health Benefit Exchange Offer coverage to all eligible individuals and small groups in keeping with the guaranteed issue mandate of the Affordable Care Act. The Cooperative will focus on education, building awareness and support, and community involvement for all eligible groups in the Commonwealth.
Kentucky Health Cooperative The Cooperative intends to be a statewide organization, offering products to the individual and small group market and other market segments inside and outside the Exchange. Benefits offered will focus on: The product needs of those Kentuckians who have been previously uninsured or underinsured, Individuals and groups operating in both rural and urban settings, Be a price competitive alternative.
Kentucky Health Cooperative Use benefit designs that will be value-based with coverage and cost sharing to create incentives to provide efficient care with an emphasis on wellness and preventive care. Provide a statewide, quality provider network of physicians and hospitals. Undertake to understand the diverse needs of Kentucky’s citizens through market research, focus groups and community meetings.
Who Regulates the Cooperative? The federal Department of Health and Human Services provides initial loan funding and monitoring. The Kentucky Commissioner of Insurance will provide all insurance-related supervision. The Cooperative is currently governed by a community board composed of: Providers, Individuals providing particular expertise to KYHC. Eventually all directors will be elected by the members.
What Makes the Cooperative Different?KYHC will differentiate itself in a number of ways: The nonprofit nature of the Cooperative Offering a competitive price Innovative health care Broad access to providers Local community involvement Grass roots outreach program High quality member services Local governance/operational and financial transparency
For More Information:For additional information about the Kentucky HealthCooperative visit www.mykyhc.org or call (502) 287-1285For additional information about the Affordable CareAct, health insurance Exchanges and CO-OPs visitwww.Health care.gov.