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Affordable Care Act to support consumer-governed health insurance

Robin Wulffson MD's picture
CMS, Affordable CareAct, CO-OPs, consumer operated health plans

BALTIMORE, MD – On February 21, the Centers for Medicare and Medicaid Services (CMS) announced that it was enhancing its support of Consumer Oriented and Operated Plans (CO-OPs). To date, a total of seven non-profits offering coverage in eight states were created by the Affordable Care Act. These new CO-OPs will receive repayable loans totaling $638,677,300.

According to CMS, the new plans will give consumers and small businesses more health insurance choices, promote competition, and increase choice in the insurance market. CMS notes that, as consumer-directed organizations, the CO-OPs are designed to be accountable to members and responsive to the specific healthcare needs of plan members by using profits to lower premiums, improve quality, and expand benefits or enrollment.

These new plans, which will become operational on January 1, 2014, will be known as the Affordable Insurance Exchanges in the states they operate within. In addition to offering health plans through an Exchange, CO-OPs may also offer health plans outside of an Exchange. The first round of applications was due on October 17, 2011 and the second round of applications was due on January 3, 2012. There will be subsequent quarterly application deadlines through December 31, 2012. Awards will be announced on a rolling basis.

“We are excited to support the health insurance CO-OPs,” noted Marilyn Tavenner, Acting CMS Administrator. She added, “CO-OPs will promote competition in the insurance market and respond well to the healthcare needs of Americans.”

According to CMS, all CO-OP loans must be repaid with interest and loans will only be made to private, nonprofit entities that demonstrate a high probability of becoming financially viable. CMS will closely monitor CO-OPs to ensure they are meeting program milestones. Funds can only be drawn down incrementally as milestones are met. To ensure strong financial management, CO-OPs are required to submit quarterly financial statements, including cash flow and enrollment data, receive site visits, and undergo annual external audits. This monitoring is concurrent with the financial and operational oversight of State insurance regulators.

In recent years, Medicare and Medicaid has been the victim of fraud from hospitals, healthcare professionals, and device manufacturers. Included in the provisions for the new The CO–Ops are extensive safeguard to protect against fraud, waste, and abuse. All CO-OP applicants underwent thorough background, which included public records searches at the local, state, and national level as well as searches of federal debarment databases. Furthermore, loan recipients are subject to strict monitoring, audits, and reporting requirements for the length of the loan repayment period plus 10 years.

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CO-OP awardees to date:

Midwest Members Health (Iowa and Nebraska); Award Amount: $112,612,100
Midwest Members Health is sponsored by the Iowa Institute, a community organization. They will work to provide health insurance coverage throughout Iowa and Nebraska.

Montana Health Cooperative (Montana); Award Amount: $58,138,300
Montana Health Cooperative is sponsored by a coalition of small businesses and community leaders and plans to add a strong primary care capacity to Montana’s rural and medically underserved communities. Montana Health Cooperative will provide health insurance coverage statewide.

Freelancers CO-OP of New Jersey (New Jersey); Award Amount: $107,213,300

Freelancers CO-OP of New Jersey is sponsored by Freelancers Union, a union of independent workers that is partnering with providers with an innovative and effective Patient-Centered Medical Home model. Freelancers CO-OP of New Jersey will provide health insurance coverage statewide.

New Mexico Health Connections (New Mexico); Award Amount: $70,364,500
New Mexico Health Connections is sponsored by a coalition of community groups, business leaders, and providers that plan to work with their provider community to improve health outcomes in 11 counties and expand statewide within two years.

Freelancers Health Service Corporation (New York); Award Amount: $174,445,000

Freelancers Health Service Corporation is sponsored by Freelancers Union, a union of independent workers whose model is driven by a focus on providing high quality, consumer oriented coverage and financial sustainability that emphasizes the use of patient-centered medical homes. Freelancers Health Service Corporation will provide health insurance coverage throughout New York State.

Freelancers CO-OP of Oregon (Oregon); Award Amount: $59,487,500
Freelancers CO-OP of Oregon, sponsored by Freelancers Union, is partnering with providers that have an extensive integrated primary care model that will be a strong asset to this CO-OP. Freelancers CO-OP of Oregon will provide health insurance coverage statewide

Common Ground Healthcare Cooperative (Wisconsin); Award Amount: $56,416,600
Common Ground Healthcare Cooperative is sponsored by Common Ground, a community organization in Wisconsin that represents almost 100 small businesses, churches, unions, colleges, and community groups. Beginning its operations in southeastern Wisconsin, Common Ground Healthcare Cooperative will provide health insurance coverage throughout Wisconsin within five years.

Reference: Centers for Medicare and Medicaid Services (CMS)

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