RENO — The Centers for Medicare & Medicaid Services (CMS) awarded a loan last week to Hospitality Health CO-OP in Nevada to launch a new private non-profit, consumer-governed health insurance company, called a Consumer Operated and Oriented Plan (CO-OP). CO-OP loans are only made to private, nonprofit entities that demonstrate a high probability of financial viability. All CO-OPs receiving loans were selected by CMS on a competitive basis based on external independent review by a multi-disciplinary team. Only when CO-OPs meet or exceed developmental milestones are funds allowed to be incrementally drawn down.

In addition to giving consumers more choices and improving competition in their States, as consumer-run insurers, CO-OPs will operate differently from traditional insurance companies. More than half of the Board of Directors must be the customers or members of the CO-OP, and all directors must be elected by a majority vote of the members, improving accountability and transparency. Under the Affordable Care Act, profits gained by a CO-OP must go directly back to their enrollees, to be used to lower premiums, expand benefits, or improve quality.

CMS will closely monitor CO-OPs to ensure they are meeting program goals. To ensure strong financial management, CO-OPs are required to submit quarterly financial statements, including cash flow and enrollment data, receive site visits, and undergo annual external audits.  This monitoring is concurrent with the financial and operational oversight by State insurance regulators. The CO-OPs are required to meet State and federal standards for qualified health plans to sell coverage through the Exchanges and the State’s Small Business Health Option Programs (SHOP Exchanges).

For more information on the Nevada CO-OP and other recent awardees, please visit: http://www.healthcare.gov/news/factsheets/2012/02/coops02212012a.html.