Healthcare Town Hall

Even before the first member is enrolled, consumer operated and oriented plans (CO-OPs) will invest thousands of hours in developing the operational infrastructure that will provide healthcare coverage for their members. Conventional approaches to managing cost such as contract negotiations with network providers for competitive unit costs and implementing medical management models to curb excessive utilization are important starting points for controlling the cost of claims. However, recent changes to the nation’s healthcare system have created a few additional items for CO-OPs to consider as they prepare for October 2013 and enrolling their first members.

Read more in the latest issue of CO-OP Point of View.

Reform co-op, Steve Kaczmarek

Consumer operated and oriented plans (CO-OPs) share many similar values with the community health centers (CHCs) that are supported by the Health Resources and Services Administration (HRSA). Both are nonprofit with consumer-majority governing boards, and the population that currently obtains care through CHCs will likely account for many of the members that CO-OPs enroll. This edition of Milliman’s CO-OP Point of View newsletter discusses how CO-OPs and CHCs are currently in alignment and may be poised for mutual success. Click here to view the newsletter.

Reform co-op, Helen Blumen, Mike Sturm

The U.S. Department of Health and Human Services (HHS) yesterday announced two new consumer operated and oriented plan (CO-OP) loans. Here is more information:

Kentucky Health Care Cooperative
Service Area: Kentucky
Award Amount: $58,831,500
Award Date: June 22, 2012

Kentucky Health Care Cooperative is sponsored by a coalition of business leaders, providers and community organizations who plan to improve health outcomes throughout the Commonwealth of Kentucky by providing better access to high quality care at an affordable cost. The Cooperative will participate in Kentucky’s Health Insurance Exchange, as well as in the individual and small group marketplace.

The Vermont Health CO-OP (Incorporated as the Consumer Health Coalition of Vermont)
Service Area: Vermont
Award Amount: $33,837,800
Award Date: June 22, 2012

The Vermont Health CO-OP (incorporated as the Consumer Health Coalition of Vermont) was founded by Vermonters with extensive experience in health insurance and regulation, State health reform efforts, health care delivery, and successful corporate start-ups, with the support of providers, employers, and consumers. The CO-OP will work with Vermont Managed Care, the network affiliated with Vermont’s academic medical center, to coordinate the delivery of health services statewide through its growing network of hospitals, physicians, primary care medical homes and other health care providers.

For the full announcement, click here.

Reform co-op

Given their not-for-profit nature, it may not seem obvious that the consumer operated and oriented (CO-OP) health plans enabled by the Patient Protection and Affordable Care Act (PPACA) need to market themselves. But, argues Shyam Knolli in the latest issue of CO-OP Point of View, CO-OPs still need to differentiate their products and gain market share. Recommended strategies include using data to drive strategy and creating innovative yet easy-to-understand products.

Reform co-op, Healthcare Reform, market share, Shyam Knolli

Consumer Operated and Oriented Plans (CO-OPs), the not-for-profit health plans envisioned in the PPACA, have been gaining traction, with CMS announcing hundreds of millions of dollars in loans to help establish such plans in Maine, Oregon, South Carolina, Iowa, Nebraska, Montana, New Jersey, New Mexico, Wisconsin and New York.

Milliman recently started a newsletter on CO-OPs. The first issue encouraged CO-OPs to learn from history and avoid pitfalls common to all new insurance plans. Milliman produced a briefing on CO-OPs back in July of 2011. For quick access to all the Health Care Town Hall posts on CO-OPs, use this link.

Reform co-op, Courtney White, Healthcare Reform, Lorraine Mayne, Shelley Moss

The consumer operated and oriented plans (CO-OPs) created by the Patient Protection and Affordable Care Act (PPACA) will soon be the newest entrants in the health insurance marketplace. However, they are the next in a long history of entities aiming to sustain competition and innovation in the provision of prepaid healthcare. A careful review of the successes and failures of HMOs and health insurers that have come before can provide key insights into the challenges that CO-OPs face in creating, growing, and sustaining a plan. CO-OP managers can learn from this history and gain valuable insights that will help them formulate strategies on what to do—and what not to do—to build a viable, thriving, and competitive health plan. Learn more in the first issue of “CO-OP Point of View.”

Reform co-op, Shelley Moss, Troy Pritchett

Inside Health Insurance Exchanges looks at Consumer Operated and Oriented Plans (CO-OPs) in the wake of $638 million in grants from CMS to seven CO-OPs. Here is an excerpt:

Courtney White, a consulting actuary at Milliman, predicts that the majority of states — though not all — will have a CO-OP in place by 2014. He tells HEX that the start-up companies will have “a unique opportunity” to build enrollment in 2014 when a large pool of underinsured and uninsured people gain access to health coverage and federal premium assistance through state insurance exchanges. Milliman has helped more than 30 CO-OPs complete their applications to HHS…

One of the most significant challenges for CO-OPs will be in building provider networks in a relatively short time. And they’ll need to try to sign contracts that are competitive with those of the largest carriers in each state, says White. “Since contracting leverage is primarily based on volume or members and the CO-OPs do not have any yet, they will need to help the providers fully understand the vision and mission of the CO-OP,” he says. “They need to differentiate themselves from the traditional insurance carriers.”

And attracting members won’t be easy. White says CO-OPs will need “a strong marketing force that can explain their story and demonstrate the benefits of a CO-OP over a traditional insurance company.”

They’ll also need to make sure they’re ready to sell coverage by the time state exchanges begin their open-enrollment period on Oct. 1, 2013. Missing that initial wave of uninsured could be detrimental to the success of a CO-OP, says White.

And there will be hurdles in becoming licensed insurance companies or HMOs in their states. Moreover, HHS intended for the solvency loan “to be subordinated debt” on the balance sheet. That means that the state would not consider it as debt, but rather equity for the purpose of measuring solvency, White explains. “While preliminary discussions about the subordinated debt have taken place with states, these conversations need to continue to ensure proper licensing.”

The full article is available here.

Reform CMS, co-op, Courtney White

Politico looks at the uphill climb to establish consumer operated and oriented plans (CO-OPs), one of the provisions of the Patient Protection and Affordable Care Act (PPACA). As you might expect, the progress differs from one state to another:

The efforts are as different as the states where they’re brewing, from rural Montana, where the state’s former insurance commissioner has joined prominent physicians and leaders in labor and business to found a CO-OP, to The Freelancers Union, based in New York, which hopes to bring in some portion of its 150,000 members, among others.

“The $3.8 billion of social capital to start these up is as much money as I’ve seen or expect to see in my lifetime for a project like this,” said Sara Horowitz, executive director of The Freelancers Union. “Not having to meet the return on investment expectations of private capital can make all the difference.”

The idea of a fresh start is alluring to many in the healthcare system.

CO-OPs have the competitive advantage of “writing from a blank slate,” said John Morrison, who heads the National Alliance of State Health Cooperatives, an association set up in 2010 to pool resources as they try to organize.“We don’t have legacy systems — business practices that we’re locked into,” he said. “We can look at the data and target resources to the providers who have the best outcomes. We can focus on primary care, and I think a lot of us will work with the medical home model.”

While there has been progress in some regions, there is one conspicuous exception:

A handful of others are expected to apply independently, but significant parts of the country are not represented. Bill Thompson, principal and consulting actuary with Milliman, said he has heard of little or no interest from New England states.

“There’s a remarkable gap in what’s going on in the Northeast, and we’re scratching our heads,” he said. “The start-up and initial capitalization is there, but it seems to be a void up here.”

Many CO-OP watchers are waiting to see whether major institutional players, such as academic medical centers, might try to jump in. But the law has strict governance restrictions that require a majority of the board to be made up of CO-OP members, with some exceptions for people with special expertise.

Reform Bill Thompson, co-op

With the October 17 application deadline for consumer operated and oriented plans (CO-OPs) fast approaching, Health Leaders takes another look at the challenge of establishing a CO-OP. Here is an excerpt:

CO-OPs are designed to be non-profit, member-governed health plans that create another consumer option for cost-effective healthcare insurance.

When the program was first announced, Courtney White, a principal and consulting actuary in the Atlanta office of Milliman Inc., explained in an interview with HealthLeaders Media that “CO-OPs will look like a regular insurance company. They’ll take risk, make reimbursements and process claims.”

He identified accountable care organizations [ACOs], integrated delivery systems and chambers of commerce as likely candidates to form CO-OPs.

HHS will kick-start the CO-OPs process with $3.8 billion in loans, or about $100,000 per applicant to help fund feasibility studies and business plans.

For more on CO-OPs, click here. For more on ACOs, click here.

Reform co-op, Courtney White

The U.S. Department of Health and Human Services (HHS) issued proposed regulations for Consumer Operated and Oriented Plans (CO-OPs) yesterday, and HealthLeaders has the story today. Here’s an excerpt:

“CO-OPS will look like a regular insurance company. They’ll take risk, make reimbursements and process claims,” explained Courtney R. White, a principal and consulting actuary in the Atlanta office of Milliman Inc., who authored a brief about CO-OPS.

Interest has been slow on the uptake but is catching on. White suspects that as presented in the Affordable Care Act, CO-OPs may not have looked very sophisticated, but with the ACO movement and integrated delivery systems in place “there is a structure to them; they aren’t just thrown together.”

Provider groups and associations have recently expressed interest in CO-OPs. He identifies accountable care organizations, integrated delivery systems and chambers of commerce as likely candidates to form CO-OPs. In his brief he notes that hospital and physician groups appear best situated for CO-OPs because through an integrated care model “they hold the key to creating a competitive product.”

You might also check out this blog entry, from way back when this concept was first hatched.

Reform co-op, Courtney White