PPACA: HHS Drafts CO-OP Regs

In a conference call with reporters, Steve Larsen, deputy director for oversight at the Center for Consumer Information & Insurance Oversight (CCIIO), an arm of HHS' Centers for Medicare & Medicaid Services (CMS), played down the importance of the cost estimates.

"There is that back-end estimate, for conservatism's sake," he said.

Although PPACA prohibits an existing insurer from becoming a CO-OP plan, HHS says an applicant could apply to start a CO-OP even if the applicant was:

• Sponsored by a nonprofit that was not an issuer but controlled an existing issuer — as long as the applicant and the existing issuer had different chief executive officers and separate boards.
• A self-funded, church or Taft-Hartley plan.
• An organization that "purchased assets or services from a preexisting issuer in an arm's length transaction where neither party was in a position to exercise undue influence over the other."

HHS is proposing that state university medical centers and their hospitals and physician practices would not be able to sponsor a CO-OP plan.

HHS would permit the creation of a "formation board" to get the cooperative under way, but it would require the election of an "operational board" by the members of the cooperative no later than one year after the organization began to provide coverage.

Under the rule, the operational board must be elected by cooperative members on a one member-one vote basis and a majority of the voting board members must be members of the cooperative. The proposal requires that elections must be contested. Members must comply with strict conflict-of-interest and disclosure requirements to protect against insurance industry involvement and interference.

At least two-thirds of the health insurance policies and contracts issued by a CO-OP plan in each state would have to be for qualified individual and small group health plans.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans (AHIP), says AHIP is still reviewing the proposed regulations.

AHIP believes in principle that "there must be a level playing field where all companies providing insurance, including CO-OPs, are required to abide by the same rules and regulations," Zirkelbach says.

Other CO-OP coverage from National Underwriter Life & Health:

• IRS: CO-OPs Can t Lobby
• CCIIO Plows Ahead on Rate Review Process, CO-OPs
• PPACA: Feds Seek Comments on Nonprofit Health Plans
• Nonprofit Plan Advisory Board Announces Meeting
• Health Co-Ops Face Uncertain Future