In my last post, I started the review of the Consumer Operated and Oriented Plan (CO-OP) program. This is a program to encourage the creation of new nonprofit health insurance carriers. I looked at the loans and grants that will be available to these new carriers and what criteria these carriers must meet to qualify for these funds. Today's post will look at the new carriers' collective option to achieve greater efficiency; limits on who may partipate in carriers' governance; limits on the federal Departhment of Health and Human Services activities with regard to these carriers; funding for the grants and loans; tax exemptions for the new carriers; future marketplace studies; and fairness in how different carriers are treated.
Private Purchasing Council
Nonprofit health carriers participating in the CO-OP program have the option of creating a private purchasing council. This council will enter into collective purchasing agreements on behalf of all participating insurers, thus achieving cost efficiencies in the areas of claims administration, administrative services, health information technology and actuarial services. The law prohibits the council from setting payment rates for health care facilities and providers participating in the carriers' coverage. Federal anti-trust laws apply to both the council and its participating carriers.
The law bars the following from serving as members of a qualified nonprofit health carrier's board of directors:
- Representatives of federal, state or local governments or their political subdivisions or instrumentalities
- Representatives of entities that were health insurance carriers on July 16, 2009
Restraints on HHS
- Get involved in negotiations between qualified nonprofit health insurance carriers (individually or collectively) and health care facilities or providers
- Create or maintain a structure of reimbursement rates for covered health benefits
- Interfere with competition between qualified nonprofit health insurance carriers
Congress appropriated $6 billion for the grants and loans to new qualified nonprofit health insurance carriers.
Qualified nonprofit health insurance carriers have tax-exempt status if:
- They have received loans or grans under the CO-OP program
- They are in compliance with the requirements I described in my last blog post
- They notify HHS that they are applying for tax-exempt status
- They use their profits to lower premiums, improve benefits, or for other programs to improve the quality of health care their members receive, and not to benefit any private shareholders or individuals
- Their substantial activities do not include "carrying on propaganda" or otherwise attempting to influence legislation
- They do not particpate in or intervene in political campaigns supporting or opposing candidates for public office
- They do not publish or distribute statements supporting or opposing candidates
The carriers will have to report to the Internal Revenue Service the reserve requirements for each state in which they are licensed, and the actual reserve amounts they have on hand. They will be subject to the tax on excess benefit transactions.
Study and Report
The federal General Accountability Office will conduct an ongoing study of the competition and market concentration in the U.S. health insurance market following implementation of health care reform. One subject of the study will be an analysis of new health insurance carriers in the market. The GAO must report to Congress every two years starting by the end of 2014 on the results of the study, including recommendations for administrative or legislative changes to increase competition in the market.
Level Playing Field
If plans offered by qualified nonprofit health insurance carriers are exempt from certain federal or state laws, coverage offered by private health insurance carriers is also exempt. These include laws relating to:
- Guaranteed renewal
- Pre-existing conditions
- Quality improvement and reporting
- Fraud and abuse
- Solvency and financial requirements
- Market conduct
- Prompt payment
- Appeals and grievances
- Privacy and confidentiality
- Benefit plan material or information
The next lesson in the primer will look at the flexibility states will have to create alternative programs.