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December 19, 2016 at 01:06 PM
The Centers for Medicare & Medicaid Services (CMS) has included a health plan salvage provision for Consumer Operated and Oriented Plan carriers in the new Affordable Care Act system framework regulations for 2018.
CMS says it will let a failed CO-OP transfer its enrollees’ policies to another issuer through a sale or other transaction.
CMS says it also will let companies or foundations that invest in a CO-OP or lend money to a CO-OP put representatives on the CO-OP’s board.
One of the major beneficiaries of the provision could be Baltimore-based Evergreen Health Inc. Managers of that CO-OP have said they have a deal in place and need CMS permission to restructure the company’s operations under a more flexible for-profit charter.
Related: Maryland CO-OP withdraws from 2017 individual health market
Drafters of the ACA created up the CO-OP program in an effort to increase competition in the health insurance market, by providing startup loans for nonprofit, member-owned carriers.
The Democratic senators who championed the CO-OP program left the Senate soon after CMS began setting up the loan program, and the CO-OPs became political orphans in Washington.
Republicans slashed the available funding. The Obama administration responded to traditional health insurers’ concerns about competition from CO-OPs by putting tight limits on how the CO-OPs could use their loan money.
CMS also created rules that kept CO-OPs from getting loans or investment money from any sources other than CMS. CO-OPs are also prohibited from selling their operations or converting to for-profit charters. That kept the CO-OPs from using their assets as loan collateral.
