PPACA Defined: What is a CO-OP Program?

1. CO-OP programs are state- and consumer- focused

• Precedence will be given to programs that use integrated care models, operate on a statewide basis, and have significant private support.
• Organizations are not consumer-owned, but should operate with a strong consumer focus.
• Insurers must be new to the market; those that existed before July 16, 2009 will not qualify.

2. Programs must be nonprofit

• Under state law, organizations that can participate in the CO-OP program are nonprofit, member organizations.
• Any profits should be used to lower premiums or improve scope of benefits or quality of care.
• Recipients of grant or loan money must not use these funds for marketing purposes.

3. CO-OPs must be fairly and objectively governed

• CO-OP boards cannot include federal, state, or local representatives, or representatives of insurers that existed on or before July 16, 2009.
• Governing decisions must be subject to a majority vote.

4. The purchasing process must be monitored

• Private purchasing councils may be developed, and these can establish collective purchasing agreements for services provided. However, these councils may not set payment rates for providers or health care facilities that participate in the plan.
• The secretary of HHS cannot join in any negotiations between cooperatives and health care facilities or providers. This includes drug manufacturers, pharmacies, and hospitals. Additionally, the secretary cannot take part in setting pricing structures for health benefit reimbursement provided by the qualified health plans.

Source: The Commonwealth Fund