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CO-OP Final Rule

CO-OP Final Rule

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Published by: Ignatius Bau on Dec 12, 2012
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Federal Register
/Vol. 76, No. 239/Tuesday, December 13, 2011/Rules and Regulations
appropriate Fund-financed responseunder CERCLA has been implemented,and no further response action byresponsible parties is appropriate.’’ 40CFR 300.425(e)(1)(ii). EPA, with theconcurrence of the State of New York,through NYSDEC, believes that thiscriterion for deletion has been met.Consequently, EPA is deleting this Sitefrom the NPL. Documents supportingthis action are available in the Site files.
V. Deletion Action
EPA, with the concurrence of theState of New York, has determined thatall appropriate responses underCERCLA have been completed and thatno further response actions underCERCLA, other than M&M and five-yearreviews, are necessary. Therefore, EPAis deleting the Site from the NPL.Because EPA considers this action to benoncontroversial and routine, EPA istaking this action without priorpublication. This action will be effectiveFebruary 13, 2012 unless EPA receivesadverse comments by January 12, 2012.If adverse comments are received withinthe 30-day public comment period of this action, EPA will publish a timelywithdrawal of this direct final Notice of Deletion before the effective date of thedeletion and the deletion will not takeeffect. EPA will, if appropriate, preparea response to comments and continuewith the deletion process on the basis of the Notice of Intent to Delete and thecomments received. In such a case,there will be no additional opportunityto comment.
List of Subjects in 40 CFR Part 300
Environmental protection, Airpollution control, Chemicals, Hazardouswaste, Hazardous substances,Intergovernmental relations, Naturalresources, Oil pollution, Penalties,Reporting and recordkeepingrequirements, Superfund, Waterpollution control, Water supply.
Dated: November 22, 2011.
Judith A. Enck,
Regional Administrator, EPA, Region 2.
For the reasons set out in thepreamble, 40 CFR part 300 is amendedas follows:
1. The authority citation for part 300continues to read as follows:
33 U.S.C. 1321(c)(2); 42 U.S.C.9601–9657; E.O. 12777, 56 FR 54757, 3 CFR1991 Comp., p. 351; E.O. 12580, 52 FR 2923,3 CFR 1987 Comp., p. 193.
2. Table 1 of Appendix B to part 300is amended by removing ‘‘HitemanLeather,’’ ‘‘West Winfield’’, ‘‘NY.’’
[FR Doc. 2011–31912 Filed 12–12–11; 8:45 am]
[CMS–9983–F]RIN 0938–AQ98
Patient Protection and Affordable CareAct; Establishment of ConsumerOperated and Oriented Plan (CO–OP)Program
Department of Health andHuman Services.
Final rule.
This final rule implementsthe Consumer Operated and OrientedPlan (CO–OP) program, which providesloans to foster the creation of consumer-governed, private, nonprofit healthinsurance issuers to offer qualifiedhealth plans in the Affordable InsuranceExchanges (Exchanges). The goal of thisprogram is to create a new CO–OP inevery State in order to expand thenumber of health plans available in theExchanges with a focus on integratedcare and greater plan accountability.
These regulations are effectiveFebruary 13, 2012.
Meghan Elrington, (301) 492–4388 forgeneral issues and issues related toloan terms and governance standards.Anne Bollinger, (301) 492–4395 forissues related to definitions andeligibility.Ilana Cohen, (301) 492–4371 for issuesrelated to CO–OP standards.
ThePatient Protection and Affordable CareAct, (Pub. L. 111–148), enacted onMarch 23, 2010, and the Health Careand Education Reconciliation Act of 2010 (Pub. L. 111–152), enacted onMarch 30, 2010, are collectively referredto in this final rule as the ‘‘AffordableCare Act.’’ The Department of Defenseand Full-Year ContinuingAppropriations Act, 2011 (Pub. L. 112–10), which amended Section 1322 of theAffordable Care Act, was enacted onApril 15, 2011. Section 1322 of theAffordable Care Act created theConsumer Operated and Oriented Planprogram (CO–OP) to foster the creationof new consumer-governed, private,nonprofit health insurance issuers. Inaddition to improving consumer choiceand plan accountability, the CO–OPprogram also seeks to promoteintegrated models of care and enhancecompetition in the Affordable InsuranceExchanges (Exchanges) establishedunder the Affordable Care Act.The statute authorizes the Secretary tomake loans to capitalize eligibleprospective CO–OPs with a goal of having at least one CO–OP in each State.It also permits the funding of multipleCO–OPs in any State, provided thatthere is sufficient funding to capitalizeat least one CO–OP in each State. Thereis $3.8 billion in appropriations for theprogram.All CO–OP loans must be repaid withinterest, and loans will only be made toprivate, nonprofit entities thatdemonstrate a high probability of  becoming financially viable. The CO–OP program contains extensiveprovisions to protect against fraud,waste, and abuse. Loan recipients aresubject to strict monitoring, audits, andreporting requirements for the length of the loan repayment period plus 10 yearsand CO–OPs must meet a series of milestones before drawing downdisbursements, as described in theirloan agreements.This final rule—(1) Sets forth theeligibility standards for the CO–OPprogram; (2) establishes terms for loans;and (3) provides basic standards thatorganizations must meet to participatein this program and become a CO–OP.This rule is intended to provideflexibility for eligible organizations toencourage diversity in theorganizational design and approachwhile ensuring that the statutory goalsare met.Starting in 2014, individuals andsmall businesses will be able topurchase private health insurancethrough State-based competitivemarketplaces called AffordableInsurance Exchanges (Exchanges).Insurance companies will compete fornew business on the basis of price andvalue and consumers will have a choiceof health plans to fit their needs. TheDepartments of Health and HumanServices, Labor, and the Treasury (theDepartments) are seeking public input,providing guidance, and issuingregulations implementing Exchanges inseveral phases. A Request for Commentrelating to Exchanges was published inthe
Federal Register
on August 3, 2010.Initial Guidance to States on Exchangeswas published on November 18, 2010. Aproposed rule for the application,review, and reporting process forwaivers for State innovation waspublished in the
Federal Register
onMarch 14, 2011 (76 FR 13553). On July15, 2011, two proposed regulations were
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Federal Register
/Vol. 76, No. 239/Tuesday, December 13, 2011/Rules and Regulations
published in the
Federal Register
toimplement components of theExchange: ‘‘Establishment of Exchangesand Qualified Health Plans’’ and‘‘Standards Related to Reinsurance, RiskCorridors and Risk Adjustment.’’ OnAugust 17, 2011, three proposedregulations were published in the
Federal Register
: ‘‘Eligibility ChangesUnder the Affordable Care Act of 2010,’’‘‘Exchange Functions in the IndividualMarket: Eligibility Determinations;Exchange Standards for Employers,’’and ‘‘Health Insurance Premium TaxCredit.’’ Additional regulations will bepublished in the
Federal Register
toimplement Exchange relatedcomponents of the Affordable Care Act.
Table of Contents
I. BackgroundA. Overview of the Consumer Operatedand Oriented Plan (CO–OP) ProgramB. Statutory Basis for the ConsumerOperated and Oriented Plan (CO–OP)ProgramC. Structure of the Final RuleII. Summary of the Proposed Provisions andResponses to Comments on the CO–OPProposed RuleA. Basis and Scope (§156.500)B. Definitions (§156.505)C. Eligibility (§156.510)D. CO–OP Standards (§156.515)1. General2. Governance Requirements3. Requirements To Issue Health Plans andBecome a CO–OPE. Loan Terms (§156.520)1. Overview of Loans2. Repayment Period3. Interest Rates4. Failure To Pay5. Deeming of CO–OP Qualified HealthPlans6. ConversionsF. Comments Beyond the Scope of theFinal RuleIII. Collection of Information RequirementsIV. Regulatory Impact AnalysisA. IntroductionB. Summary and Need for RegulatoryActionC. CostsD. TransfersE. BenefitsF. Alternatives ConsideredG. Accounting StatementV. Other Requirements for Analysis of Economic EffectsRegulations Text
Acronym List
Because of the many terms to whichwe refer by acronym in this final rule,we are listing the acronyms used andtheir corresponding meanings inalphabetical order below:
CCIIOCenter for Consumer Information &Insurance OversightCMSCenters for Medicare & MedicaidServicesCO–OPConsumer Operated and OrientedPlanERISAEmployee Retirement IncomeSecurity ActFACAFederal Advisory Committee ActFOAFunding Opportunity AnnouncementFQHCFederally Qualified Health CenterHHSU.S. Department of Health and HumanServicesMLRMedical Loss RatioOIGOffice of Inspector GeneralOMBOffice of Management and BudgetPHS ActPublic Health Service ActQHPQualified Health PlanRFCRequest for CommentSHOPSmall Business Health OptionsProgram
I. Background
A. Overview of the Consumer Operated and Oriented Plan (CO–OP) Program
Section 1322 of the Affordable CareAct directs the Secretary to establish theCO–OP program to provide loans tofoster the creation of new consumer-governed nonprofit health insuranceissuers, referred to as CO–OPs, in everyState. These new consumer-run, private,nonprofit insurers will be one vehiclefor providing higher quality care that isaffordable and uses innovative caremodels in the Exchanges starting in2014.The statute divides the CO–OP loansinto two types: loans for start-up costs,to be repaid in 5 years (‘‘Start-upLoans’’), and loans to enable CO–OPs tomeet State insurance solvency andreserve requirements, to be repaid in 15years (‘‘Solvency Loans’’). Section1322(b)(2)(A) of the Affordable Care Actdirects CMS to ensure that there issufficient funding to establish at leastone CO–OP in each State and to givepriority to organizations that can offerthese CO–OP qualified health plans ona Statewide basis, provide integratedcare, and have significant privatesupport. Section 1301(a)(2) of the statutedeems CO–OP qualified health plansoffered by a qualified nonprofit healthinsurance issuer eligible to participatein the Exchanges. By creating morehealth plan choices, the CO–OPprogram can benefit all consumers.The CO–OP program also seeks topromote improved models of care.Existing health insurance cooperativesand other business cooperatives providepossible models for the successfuldevelopment of CO–OPs around thecountry. One major barrier to continueddevelopment of this model in the healthinsurance market has been the difficultyof obtaining adequate capitalization forstart-up costs and State insurancereserve requirements. The CO–OPprogram is designed to help overcomethis barrier to new issuer formation byproviding loans specifically for thesecritical activities.Pursuant to section 1322(b)(4) of theAffordable Care Act, the ComptrollerGeneral announced the appointment of a 15 member CO–OP Program AdvisoryBoard on June 23, 2010 to makerecommendations to CMS on awardingloans. Section 1322(b)(2)(A) directs theSecretary to consider therecommendations of this AdvisoryBoard when awarding loans under theCO–OP program. After taking testimonyfrom experts and comments in 3 day-long public hearings from Januarythrough March 2011 and examiningwritten comments, the Advisory Boardapproved its final recommendations andsubmitted its public report on April 15,2011. This final report is available at:
. The Advisory Board generally advisedthe Department to develop flexiblecriteria that recognize the diversity of market conditions around the country toenable the development of various CO–OP models and allow different types of sponsorship. It also encouraged theDepartment to provide technicalassistance at all stages of the process inorder to enhance the viability of individual CO–OPs and the success of the program.The Advisory Board recommendedfour major principles for awardingloans. CMS concurs with theseprinciples:(1) Consumer operation, control, andfocus must be the salient features of theCO–OP and must be sustained overtime;(2) Solvency and the financialstability of coverage should bemaintained and promoted;(3) CO–OPs should encourage carecoordination, quality and efficiency tothe extent feasible in local provider andhealth plan markets; and(4) Initial loans should be rolled outas expeditiously as possible so that CO–OPs can compete in the Exchanges inthe critical first open enrollment period.This final rule and the FundingOpportunity Announcement (FOA) forthe CO–OP program incorporate thesefour principles endorsed by theAdvisory Board.On February 2, 2011, CMS publisheda Request for Comment (RFC) in the
Federal Register
(76 FR 5774) seekingpublic comment on the rules that willgovern the CO–OP program. The publiccomments received in response to theRFC were considered in thedevelopment of the proposed rulepublished in the
Federal Register
on July 20, 2011 with a comment periodthat ended on September 16, 2011 (76
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Federal Register
/Vol. 76, No. 239/Tuesday, December 13, 2011/Rules and Regulations
FR 43237). In addition, a FundingOpportunity Announcement (FOA) forthe CO–OP program, available at
(CFDA Number 93.545),was published on July 28, 2011 (andamended on September 16, 2011) andprovides detailed information regardingthe application and awardadministration process for the CO–OPprogram.
B. Statutory Basis for the Consumer Operated and Oriented Plan (CO–OP)Program
Section 1322(a) of the Affordable CareAct directs CMS to establish the CO–OPprogram to foster the creation of member-governed qualified nonprofithealth insurance issuers to offer CO–OPqualified health plans in the individualand small group markets in the States inwhich they are licensed.Section 1322(b)(1) of the AffordableCare Act directs CMS to make two typesof loans available to organizationsapplying to become qualified nonprofithealth insurance issuers: Start-up Loansand repayable grants (Solvency Loans).Start-up Loans will provide assistancewith start-up costs and Solvency Loanswill provide assistance in meetingsolvency requirements of Stateregulators in the States in which theorganization is licensed to issue CO–OPqualified health plans. Although thestatute refers to Solvency Loans as‘‘grants,’’ they are loans because theymust be repaid.Section 1322(b)(2) provides that inmaking awards, CMS must take intoaccount the recommendations of theAdvisory Board further described insection 1322(b)(4) and give priority toapplicants that offer CO–OP qualifiedhealth plans on a Statewide basis, useintegrated care models, and havesignificant private support.Section 1322(b)(2) also directs CMS toensure that there is sufficient funding toestablish at least one qualified nonprofithealth insurance issuer in each Stateand the District of Columbia. It permitsCMS to fund additional qualifiednonprofit health insurance issuers inany State if the funding is sufficient todo so. If no entities in a State apply,CMS may use funds to encourage theestablishment of a qualified nonprofithealth insurance issuer in the State orthe expansion of another qualifiednonprofit health insurance issuer fromanother State to that State.Section 1322(b)(2) also directs anyorganization receiving a loan to enterinto an agreement to meet the standardsto become a qualified nonprofit healthinsurance issuer and any other termsand conditions of the loan awards.Under section 1322(b)(2)(C)(ii), theagreement must provide that no portionof the loans be used for propagandapurposes, attempts to influencelegislation, or marketing.Section 1322(b)(2)(C)(iii) providesthat, if CMS determines that anorganization has failed to meet anyprovisions of the loan agreement orfailed to correct such failure within areasonable period of time, theorganization must repay an amountequal to the sum of:
110 percent of the aggregate amountof loans received; plus
Interest on the aggregate amount of loans for the period the loans wereoutstanding starting from the date of drawdown.CMS must notify the Department of the Treasury of any determination of afailure to comply with the CO–OPprogram standards (including theprovisions of a loan agreement) that mayaffect an issuer’s tax-exempt statusunder section 501(c)(29) of the InternalRevenue Code of 1986 (the Code).Under section 1322(b)(3), Start-upLoans must be repaid within 5 years,and Solvency Loans must be repaidwithin 15 years. Repayment terms in theaward of loans must take intoconsideration any appropriate Statereserve requirements, solvencyregulations, and requisite surplus notearrangements that must be constructed by a qualified health insurance issuer ina State to receive and maintainlicensure. Section 1322(b)(3) providesthat, not later than July 1, 2013 andprior to awarding loans, CMS mustpromulgate these regulations, ‘‘withrespect to the repayment’’ of the loans.Legal obligations regarding repaymentas well as other obligations required forprogram compliance will be included inloan agreements.Section 1322(c)(1) defines ‘‘qualifiednonprofit health insurance issuer’’ as anorganization that:
Is organized under State law as aprivate, nonprofit, member corporation;
Conducts activities of whichsubstantially all consist of the issuanceof CO–OP qualified health plans in theindividual and small group markets ineach State in which it is licensed toissue such plans; and
Meets the other requirements insubsection 1322(c).Section 1322(c)(2) states that anorganization is not eligible to become aqualified nonprofit health insuranceissuer if the organization or a relatedentity (or any predecessor of either) wasa health insurance issuer on July 16,2009. In addition, an organizationcannot be treated as eligible to apply fora loan under the CO–OP program if aState or local government, any politicalsubdivision thereof, or anyinstrumentality of such government orpolitical subdivision sponsors it.Section 1322(c)(3) establishesgovernance requirements for a qualifiednonprofit health insurance issuer. Toensure consumer control, thegovernance of the organization must besubject to a majority vote of itsmembers. The organization’s governingdocuments must incorporate ethics andconflict of interest standards to protectCO–OP members against insuranceindustry involvement and interference.To ensure consumer orientation, theorganization is required to operate witha strong consumer focus, includingtimeliness, responsiveness, andaccountability to members.Section 1322(c)(4) directs theorganization to use any profits to lowerpremiums, improve benefits, or for otherprograms intended to improve thequality of health care delivered to itsmembers.Section 1322(c)(5) states that theorganization must meet all the Statestandards for licensure that other issuersof qualified health plans must meet inany State where the issuer offers a CO–OP qualified health plan, includingsolvency and licensure requirementsand any other State law described insection 1324(b).Section 1322(c)(6) prohibits aqualified nonprofit health insuranceissuer from offering a health plan in aState until that State has in effect (orCMS has implemented for the State) themarket reforms outlined in part A of title XXVII of the Public Health ServiceAct (as amended by subtitles A and Cof title I of the Affordable Care Act).Section 1322(d) enables qualifiednonprofit health insurance issuers toestablish a private purchasing council toenter into collective purchasingarrangements for items and services thatincrease administrative and other costefficiencies including claimsadministration, administrative services,health information technology, andactuarial services. The privatepurchasing council is prohibited fromsetting payment rates for health carefacilities or providers that contract withqualified nonprofit health insuranceissuers.Section 1322(e) prohibitsrepresentatives of any Federal, State, orlocal government (or of any politicalsubdivision or instrumentality thereof),and representatives of an organizationthat was an existing issuer or a relatedentity (or predecessor of either) on July16, 2009, from serving on the board of directors of the qualified nonprofithealth insurance issuer or a private
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