[Federal Register Volume 76, Number 22 (Wednesday, February 2, 2011)]
[Proposed Rules]
[Pages 5774-5777]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-2254]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 170
[OCIIO-9983-NC; Docket No. THE SECRETARY-OS-2010-0034]
RIN 0950-AA19
Planning and Establishment of Consumer Operated and Oriented Plan
Program; Request for Comments Regarding Provisions of Consumer Operated
and Oriented Plan Program
AGENCY: Office of Consumer Information and Insurance Oversight,
Department of Health and Human Services.
ACTION: Request for comments.
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SUMMARY: This document is a request for comments regarding the
provisions of section 1322 of the Patient Protection and Affordable
Care Act (the Affordable Care Act), enacted on March 23, 2010, which
requires the Secretary to establish the Consumer Operated and Oriented
Plan program. The Secretary of Health and Human Services invites public
comments in advance of future rulemaking and grant and loan
solicitations.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on March 4, 2011.
ADDRESSES: All comments will be made available to the public. WARNING:
Do not include any confidential business information that you do not
want publicly disclosed. All comments are posted on the Internet
exactly as received, and can be retrieved by most Internet search
engines. No deletions, modifications, or redactions will be made to the
comments received, as they are public records.
In commenting, please refer to file code OCIIO-9983-NC. Because of
staff and resource limitations, we cannot accept comments by facsimile
(FAX) transmission. You may submit comments using any of the following
methods (please choose only one of the ways listed):
Electronically. You may submit electronic comments to
http://www.regulations.gov. Follow the instructions under the ``More
Search Options'' tab.
Mail. You may mail written comments to the following
address ONLY: Office of Consumer Information and Insurance Oversight,
Department of Health and Human Services, Attention: OCIIO-9983-NC, Room
445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201. Please allow sufficient time for mailed comments
to be received before the close of the comment period.
Hand or Courier. If you prefer, you may deliver (by hand
or courier) your written comments before the close of the comment
period to the following address: Office of Consumer Information and
Insurance Oversight, Department of Health and Human Services,
Attention: OCIIO-9983-NC, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue, SW., Washington, DC 20201.
Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the OCIIO drop slots located in the main lobby of the building. A
stamp-in clock is available for persons wishing to retain a proof of
filing by stamping in and retaining an extra copy of the comments being
filed.
Comments mailed to the address indicated as appropriate for hand or
courier delivery may be delayed and received after the close of the
comment period.
FOR FURTHER INFORMATION CONTACT: Catherine Halverson, Office of
Consumer Information and Insurance Oversight, Department of Health and
Human Services, at (301) 492-4391. Customer Service Information:
Individuals interested in obtaining information about the Patient
Protection and Affordable Care Act may visit the Secretary of Health
and Human Services' Web site (http://www.HealthCare.gov).
SUPPLEMENTARY INFORMATION:
[[Page 5775]]
I. Background
Section 1322 of Patient Protection and Affordable Care Act (the
Affordable Care Act) requires the Secretary to establish the Consumer
Operated and Oriented Plan program (CO-OP program) to foster the
creation of ``qualified nonprofit health insurance issuers'' (qualified
nonprofit issuers) that will offer qualified health plans in the
individual and small group markets. Such qualified nonprofit issuers
must, as directed by the new law, operate with a strong consumer focus
and use any profits to lower premiums, improve benefits, or improve the
quality of health care delivered to plan members. For purposes of this
document, ``a CO-OP'' refers to a qualified health plan offered by a
qualified nonprofit issuer.
Under the CO-OP program, the Secretary will make loans to assist in
funding start-up costs for qualified nonprofit issuers and will award
grants (repayable in 15 years) to assist such issuers in meeting State
solvency requirements. The Secretary must award the loans and grants
and begin funding distribution no later than July 1, 2013. Loans must
be repaid within 5 years and grants must be repaid within 15 years,
taking into account State reserve requirements and solvency
regulations.
The Affordable Care Act requires the Secretary to convene a Federal
advisory board. This advisory board will offer recommendations to the
Secretary on the awarding of loans and grants to emerging co-ops under
Section 1322.
II. Solicitation of Comments
We are inviting public comment to aid in the development of
regulations regarding this loan and grant program. To assist interested
parties in responding, this request for comment describes various
topics about which the Secretary is particularly interested in
receiving public comments. Commenters should use the questions below to
provide the Secretary with relevant information for the development of
regulations regarding the CO-OP program. However, it is not necessary
for commenters to address every question below, and commenters may also
address additional issues related to the provisions for the CO-OP
program in the Affordable Care Act. Individuals, groups, and
organizations interested in providing comments may do so by following
the instructions in the ADDRESSES section above.
Below, we summarize relevant statutory provisions and solicit
public comment on the topics about which the Secretary is particularly
interested.
A. Section 1322(a) of the Affordable Care Act
Section 1322(a) of the Affordable Care Act directs the Secretary to
establish a program to foster, through grants and loans, the
establishment of qualified nonprofit health insurance issuers.
Substantially all of the activities of the qualified nonprofit issuers
must be in the individual and small group markets. The issuers must be
licensed in the State(s) in which they operate. The CO-OP program shall
provide for the awarding of loans and grants to provide assistance for
the establishment of qualified nonprofit issuers.
Section 1322(c) of the Affordable Care Act defines a ``qualified
nonprofit health insurance issuer'' as one: (1) That is organized under
State law as a nonprofit member corporation, (2) substantially all of
the activities of which consist of the issuance of qualified health
plans in the individual and small group markets, and (3) that meets
other requirements of section 1322(c). To qualify for a loan or grant,
the qualified nonprofit issuer (or a related entity or predecessor)
must not have been a health insurance issuer on July 16, 2009 and must
not be sponsored by a State or local government, any political
subdivision thereof, or any instrumentality of such government or
political subdivision. Section 1322(c)(4) provides that an organization
cannot be a qualified nonprofit health insurance issuer unless any
profits made by the organization are required to be used to lower
premiums, to improve benefits, and for other programs intended to
improve the quality of health care delivered to its members. Section
1322(e) provides that no representative of any Federal, State, or local
government (or any political subdivision or instrumentality thereof),
and no representative of a health insurance issuer or a related entity,
may serve on the board of directors.
1. What is your assessment of the types of groups or organizations
that would meet the criteria outlined above, and be successful in
establishing durable qualified plans in the individual and small group
markets? Do any organizations currently exist that would satisfy these
statutory eligibility criteria for receiving a loan or grant under the
CO-OP program? To what extent, and in what way, do funding needs of
qualified nonprofit issuers that have already been established differ
from the needs of those that have not been? How might funding needs
differ for other groups or organizations that do not currently exist,
but would be successful in establishing durable qualified plans in the
individual and small group markets? How would such differences be
considered in determining appropriate financing terms for Federal loans
or grants?
2. What skills, background, and expertise should be required of the
loan or grant applicant? What skills, background and expertise should
be required of the management team of the qualified nonprofit issuer
once the entity is operational (e.g., experience in providing
coverage)? What factors are most likely to lead to the successful
operation and sustainability of a CO-OP?
3. What relationship with CO-OP enrollees would promote initial and
continued enrollment, e.g., service to a geographic community, a strong
provider network, its health care mission, etc.?
4. What issues might a qualified nonprofit issuer face in
developing provider networks in rural or other medical shortage areas?
5. How much time would a new qualified non-profit issuer need to
establish a plan, become operational, begin to accept enrollment and
provide health insurance coverage? What factors may affect the timeline
necessary to become operational, and how?
6. What specific details should be required in feasibility studies,
business plans, and marketing plans provided by prospective applicants
before any loan or grant award is made? What should be included in the
scope and content of these studies and plans? What level of detail
should be required at the time of application?
7. What level of investment would be required by a qualified
nonprofit issuer to develop sufficient administrative and claims
processing information technology (IT) systems? Is there a minimum
level of investment that would be required regardless of the size of
enrollment? Does it vary according to enrollment size, geographic
location, or other factors, and by how much? Are funding needs for this
purpose different for any qualified nonprofit issuers that may already
be in existence, and if so, in what way?
8. What level of investment would be required by a qualified
nonprofit issuer to develop sufficient health information technology
systems necessary to operate a health plan in the health insurance
Exchange market, including the use of electronic health records? Is
there a minimum level of investment that would be required regardless
of the size of enrollment? Does it vary according to enrollment size,
enrollee characteristics, or other factors, and by how much? Are
funding needs for this purpose different for any qualified nonprofit
issuers that
[[Page 5776]]
may already be in existence, and if so, in what way?
9. What is the range of funding necessary to capitalize and fund
the establishment of a new qualified nonprofit issuer? How much of that
amount can be raised privately, or funded through non-Federal
government support? What factors should be considered in determining
the appropriate amount of Federal loans and/or grants that would be
needed to support the establishment of a new nonprofit health insurance
issuer? To what extent do the funds needed to capitalize a qualified
nonprofit issuer, and the degree of Federal support necessary likely to
vary across issuers?
10. What level of investment is needed to maintain appropriate
fiduciary management and oversight, including setting actuarially sound
premiums?
11. Are you aware of any State laws that could create opportunities
for or barriers to the formation of qualified nonprofit issuers? Do you
think States are likely to create or amend licensure laws to
accommodate the formation of qualified nonprofit issuers? Under what
circumstances could regional qualified nonprofit issuers serving
multiple states be formed? Is there a role for a federation of
qualified nonprofit issuers to serve more than one state or region,
with risk shared among the issuers? Would this approach be desirable
for specific types of communities (for example, agricultural/rural
communities)? How would such a federation be organized? How would it be
capitalized? What are the advantages and disadvantages of a regional
qualified nonprofit issuer or a regional federation of issuers? What
barriers would need to be overcome? What would be the advantages of,
and barriers to, serving a metropolitan area that crosses State lines?
12. While ``substantially all'' of a qualified nonprofit issuer's
activities must be in the individual and small group markets, in what
other markets or product lines, if any, would it be desirable for
qualified nonprofit issuers to participate? For instance, could they
participate in Medicaid or the Children's Health Insurance Program
(CHIP) and still satisfy the statutory criteria for being a qualified
nonprofit issuer? How difficult would it be for a new qualified
nonprofit issuer to successfully participate in the small group market?
How difficult would it be for a new qualified nonprofit issuer to
successfully participate in the individual market? To what extent would
participation in other markets affect the viability of new qualified
nonprofit issuers or their ability to satisfy the statutory criteria
for being a qualified nonprofit issuer? What type of start-up costs are
necessary and reasonable for establishing a qualifying CO-OP? What
startup costs might be associated with establishing a private
purchasing council?
13. Are there other considerations that should inform what costs
would be eligible for a CO-OP loan? Should there be limited time
periods for which Federal loans for start-up costs may be available?
Are there any start-up costs that would be incurred after the qualified
nonprofit issuer begins to provide coverage under one or more plans?
14. What market factors would most likely affect a qualified
nonprofit issuer's durability in the market? What factors should be
considered in determining which issuers are likely to be viable in the
long-term?
15. In evaluating applications for loans and grants, what actuarial
and minimum plan enrollment criteria should be considered? What is the
effect, if any, if providers are anticipated to bear risk? How would
such criteria affect the financial soundness of the qualified issuer?
16. What types of technical assistance, if any, should the
Secretary provide to grantees? How should such technical assistance be
structured?
17. In what geographic areas are qualified nonprofit issuers most
likely to be successful (e.g., rural or metropolitan areas or certain
regions of the country)?
18. How can qualified nonprofit issuers build provider networks?
What strategies have proven effective?
19. What is the extent of interest in forming qualified nonprofit
issuers under Section 1322 of the Affordable Care Act? In what State(s)
or geographic region are these entities likely to be established?
B. Section 1322(b) of the Affordable Care Act
Section 1322(b) of the Affordable Care Act requires that the
Secretary shall give priority to applicants that will offer qualified
health plans on a statewide basis, utilize integrated care models, and
have significant private support.
1. How should the term ``integrated care model'' be defined in the
context of section 1322? How should the degree of integration and the
degree to which integrated care is used be measured? Should qualified
nonprofit issuers formed by primary care networks, even if they
contract with secondary and tertiary providers, also be given priority
for the award of a grant or loan? To what degree should priority be
based on whether providers share risk?
2. How should ``significant private support'' be defined in this
context?
3. What options for private support should qualified nonprofit
issuers be able to pursue while maintaining nonprofit status? How can
such support be structured to avoid inurnment to the benefit of non-
members and protect the independence of consumer governance?
4. What types of organizations are most likely to be successful in
meeting any or all of the statutory priority criteria?
C. Section 1322(b)(2)(a)(iii) of the Affordable Care Act
Section 1322(b)(2)(A)(iii) of the Affordable Care Act requires the
Secretary to ensure that there is sufficient funding to establish at
least one qualified nonprofit issuer in each State, except that nothing
shall prevent the establishment of multiple issuers in a State if the
funding is sufficient. Section 1322(b)(2)(B) provides that if no issuer
applies to be a qualified nonprofit health insurance issuer in a State,
the Secretary may use the amounts for the awarding of grants to
encourage the establishment of an issuer or the expansion of another
qualified nonprofit health insurance issuer from another State into the
State where no issuer applied.
1. How can the Secretary best ensure sufficient funding to
establish at least one qualified nonprofit issuer in each State?
2. How might the Secretary encourage the establishment of a CO-OP
in a state without a qualified nonprofit issuer?
D. Section 1322(b)(C)(ii) of the Affordable Care Act
Section 1322(b)(C)(ii) of the Affordable Care Act restricts the use
of loan and grant funds for (i) carrying out propaganda, or otherwise
attempting to influence legislation, or (ii) for marketing.
1. How should the restriction on the use of federal funds for
marketing be applied?
2. What other sources of financing for marketing would be available
to qualified nonprofit issuers?
3. What accounting standards and metrics should be used to
determine the sources of funding for marketing activities? If qualified
nonprofit issuers did engage in these activities using non-federal
funding, what rules should be in place to ensure federal funds are not
used?
[[Page 5777]]
E. Section 1322(b)(2)(D) of the Affordable Care Act
Section 1322(b)(2)(D) of the Affordable Care Act requires the
Secretary to award and begin the distribution of loans and grants not
later than July 1, 2013.
1. To what extent is it necessary for new qualified nonprofit
issuers to be operational by 2014 in order to be successful? How soon
should grants or loans be distributed to establish qualified nonprofit
issuers that can be operational in 2014?
2. How might funds be best allocated and, to what extent should
distribution of loan funds be front-loaded to meet the statute's goal
of establishing a CO-OP in each state?
3. Given the limited funding for this program, how long should draw
down on grants and loans be permitted after the award date if loans and
grants are not being utilized?
F. Section 1322(b)(3) of the Affordable Care Act
Section 1322(b)(3) of the Affordable Care Act requires that
regulations regarding the repayment of loans and grants be ``consistent
with State solvency regulations and other similar State laws that may
apply.'' Loans shall be repaid within 5 years and grants shall be
repaid within 15 years, taking into consideration any appropriate State
reserve requirements, solvency regulations, and requisite surplus note
arrangements that must be constructed to provide for repayment prior to
awarding loans/grants.
1. When developing a repayment schedule, how should HHS take into
consideration state reserve requirements?
2. What factors will determine the ability of qualified nonprofit
issuers to generate sufficient revenues to repay the loans and grants?
How and when will such issuers likely develop sufficient revenues to
start the repayment of grants provided to fund reserves?
3. What interim benchmarks after initial funding should the
Secretary use to determine an issuer's ongoing likelihood of success
and whether corrective actions, or other protective measures might be
necessary with respect to loan and grant funds?
4. What data are available about the potential success and failure
rate of nonprofit health plans who may apply for grants and loans? If
data are not available, what proxy data would be useful to inform
benchmarks, or other performance standards?
G. Section 1322(c)(2) of the Affordable Care Act
Section 1322(c)(2) of the Affordable Care Act provides that an
organization shall not be treated as a qualified nonprofit issuer (and
therefore shall not be qualified to apply for loans and grants under
the CO-OP program) if the organization or a related entity (or a
predecessor of either) was a health insurance issuer on July 16, 2009.
Section 1322(c)(2) of the Affordable Care Act also provides that an
organization shall not be treated as a qualified nonprofit issuer if it
is sponsored by a State or local government, political subdivision
thereof, or an instrumentality of such government or political
subdivision.
1. What should and should not constitute a ``related entity'' or
``predecessor'' of a health insurance issuer for purposes of Section
1322 of the Affordable Care Act?
H. Section 1322(c)(3) of the Affordable Care Act
Section 1322(c)(3) of the Affordable Care Act requires that a
qualified nonprofit issuer must be a nonprofit, member corporation and
meet a number of governance requirements including the following:
The governance of the organization must be subject to a
majority vote of its members;
Its governing documents must incorporate ethics and
conflict of interest standards against insurance industry involvement
and interference; and
The organization is required to operate with a strong
consumer focus, including timeliness, responsiveness, and
accountability to members.
1. How can prospective applicants demonstrate a commitment to
operating with a strong consumer focus, including responsiveness and
accountability to members? How can prospective applicants demonstrate a
commitment to responsiveness and accountability to members from diverse
populations?
2. What type(s) of governance structure(s) should be required? What
criteria should be used in determining who is eligible to be members of
the organization and of the governing body? What type of
characteristics should the governing body have to ensure consumer
representation and involvement? What are the options for consumer
governance, beyond electing the board of directors, that would most
promote ongoing consumer engagement and responsiveness of the qualified
nonprofit issuer to consumer needs?
I. Section 1322(c)(4) of the Affordable Care Act
Section 1322(c)(4) of the Affordable Care Act provides that an
organization cannot be a qualified nonprofit health insurance issuer
unless any profits made by the organization are required to be used to
lower premiums, to improve benefits, and for other programs intended to
improve the quality of health care delivered to its members.
1. How could the governance structure and type of organization help
ensure that excess revenues are used for the benefit of members? What
accounting standards and metrics should be used to determine how such
funds are applied? Should such funds in one year be used to lower
premiums in a subsequent year? What types of benefits might be
considered? Should excess funds be used to prepay loans or grants, to
allow for greater revenues/benefits to the members over time? Is this
preferable to giving refunds to members for the year in which the
profit was earned?
2. How should programs intended to improve the quality of care be
defined and measured in this context?
J. Section 1322(c)(5) of the Affordable Care Act
Section 1322(c)(5) of the Affordable Care Act requires qualified
nonprofit issuers to meet all the requirements that other issuers of
qualified health plans are required to meet, including solvency and
licensure requirements, rules on payments to providers, network
adequacy rules, rate and form filing rules, any applicable State
premium assessments and any other State laws described in section
1324(b).
1. Do any States permit newly-formed issuers (or plans) to meet
these requirements incrementally over a period of time after enrollment
and provision of health insurance coverage?
K. What other considerations should be addressed relating to the CO-OP
program?
Please include in your comment letter any additional questions or
comments you have about the CO-OP program.
Dated: January 26, 2011.
Marilyn Tavevnner,
Principal Deputy Administrator and Chief Operating Officer.
[FR Doc. 2011-2254 Filed 1-28-11; 4:15 pm]
BILLING CODE 4150-03-P