Dive Brief:
- CMS announced late Friday a new interim final rule that both tightens the rules around special enrollment periods and loosens regulations around the CO-OP program to help the struggling entities attract investors.
- The second portion aims to help the health insurance co-ops created under the Affordable Care Act, many of which failed prior to 2016, develop new relationships to help bolster their financial viability.
- The regulation changes enable the co-ops to enter into affiliations and transactions more like those in the private sector, the notice states.
Dive Insight:
These changes follow the federal government's growing role this year in monitoring the co-ops and addressing concerns voiced by those insurers participating in the exchanges. The ability to raise capital was one of the issues pressed by Evergreen Health Cooperative's CEO Peter Beilenson.
"We encourage CO-OPs to actively consider seeking additional sources of funding as they plan for the year ahead," the CMS announcement states. Three major changes will make this possible:
- The rule ends the requirement a majority of the co-op's voting directors be members and all directors must be elected by co-op members (though a majority of directors still must be elected by members.) The added flexibility for board eligibility is consistent with that of the private sector, CMS noted.
- The rule also eases the matter of compliance with the co-ops' requirement that a minimum of two-thirds of their plans be qualified health plans in the individual or small group market. A co-op can miss compliance for a given year if it is in compliance with any applicable requirements for offering silver and gold plans, has a detailed plan and timetable for meeting the two-thirds requirement, and "acts with demonstrable diligence and good faith to meet the standard."
- Finally, the rule addresses the question of whether a co-op can convert or sell to a for-profit or non‑consumer operated entity. It notes doing so would end the co-op's rights under the CO-OP Loan Agreement, but that under "appropriate circumstances," HHS recognizes such a transaction could preserve coverage for enrollees when the issuer would otherwise become insolvent.