Health Care and Life Sciences > Health Reform Resource Center > HHS Issues Proposed Rule and Funding Opportunities for Consumer Oriented and Operated Plans (CO-OPs)
26 Aug '11

The Department of Health and Human Services (HHS) recently issued a proposed rule regarding the establishment of non-profit CO-OP insurance plans as required by the Affordable Care Act.  CO-OPs must operate with a strong consumer focus and use profits to lower premiums, improve benefits or improve the quality of care delivered to plan members.  The proposed rule sets forth the eligibility standards to become a CO-OP, stating that health insurance issuers and government entities are not eligible to directly participate in the program.   The proposed rule also provides standards for CO-OP governance and describes loan eligibility criteria  that will help achieve the agency’s goal of having at least one CO-OP in every state.

Organizations seeking to establish a CO-OP are also eligible to apply for a portion of the $3.8 billion in repayable loans available to cover start-up and capitalization costs.  Along with the proposed rule, CMS announced a funding opportunity that provides two types of loan opportunities: 1) joint start-up and solvency loans; or 2) solvency loans only.  Loan recipients will be allowed to draw down funds as they reach “milestones” proposed in their loan application.  HHS anticipates that the first round of loans will be awarded to 51 applicants by January 12, 2012.  All CO-OP loans must be repaid with interest and loan recipients will be subject to audits and reporting requirements.   Start-up loans must be repaid within five years and solvency loans must be repaid within 15 years.

Link to proposed rule.

Link to funding opportunity.