With state health insurance exchanges set to go live in 2014, states are working hard to develop their exchanges’ infrastructure and establish regulations for insurance plans’ participation, including benefits design, reporting requirements, and more. Amid debates over essential health benefits and federal subsidies for the purchase of insurance is one little-known provision of the ACA: the establishment of new, nonprofit insurance option for the exchanges. Consumer Operated and Oriented Plans are a consumer-run insurance structure called for under section 1322 of the Affordable Care Act. Like other options on the exchange, CO-OPs are designed to be affordable and consumer-friendly, and are geared primarily towards individuals and small businesses.
CO-OPs are non-profit organizations and have customer-majority boards of directors. This leadership is elected by customers themselves, giving consumers legitimate and meaningful influence over how their care is paid for and managed. All profits must be used to lower premiums or to improve benefits or quality of care. CO-OPs will be held to the same federal and state standards that other insurance plans must meet, including medical loss ratios, and are exempt from federal taxes.
This type of insurance plan is intended to give consumers more choices and to stimulate competition between insurers to lower costs. Under the ACA, the Department of Health and Human Services will be offering $3.4 billion in loans to assist with the development of co-ops. Newly formed CO-OPs are scheduled to go into effect on January 1, 2014. They will be available in the ACA-created state health insurance exchanges, where consumers can compare plans and select the one most appropriate for their needs. CO-OPs may also be purchased outside of the exchanges.
Already, ten CO-OPs have received assistance from HHS, most recently in July, 2012, and there will be quarterly application periods through the end of this year.
A recent report from the Commonwealth Fund outlines advice for providers wishing to get involved with a CO-OP. Since CO-OPs must offer low-cost care to attract consumers, providers must be open to a variety of payment methods, including capitated rates. There also needs to be shared accountability in any partnership between providers and CO-OPs to maintain the financial stability of the CO-OP. Shared savings models and financial incentives should be offered to providers to encourage efficiency and cost control. CO-OPs must support care management to control costs, especially among consumers with chronic diseases. Providers who use electronic health records and patient management protocols will be best positioned for CO-OPs, since each is a proven cost-cutting approach to managing care that CO-OPs will be looking for.
Behavioral health providers stand to benefit through participating in CO-OPs. Like other integrated care networks made possible under the ACA, CO-OPs must offer a broad range of services, including mental health and substance abuse treatment. Behavioral health organizations will also have access to wide networks of connected, coordinated providers that CO-OPs offer. Many CO-OPs will likely promote community-based prevention efforts and support groups, potentially facilitating consumer engagement in care.
For more information, see:
- Realizing Health Reform’s Potential: Innovative Strategies to Help Affordable Consumer Operated and Oriented Plans (CO-OPs) Compete in New Insurance Marketplaces
- FAQs from HHS on CO-OPs
Brendan Flinn is a senior political science major at the State University of New York at Albany and a public policy intern at the National Council for Community Behavioral Healthcare.