HHS OIG Report on Co-Op Program

The HHS Office of Inspector General (OIG) recently conducted a study of the Consumer-Oriented and Operated Plan Loan Program, commonly referred to as the CO-OP program. Authorized by the ACA, the CO-OP program foster the creation of nonprofit, consumer-governed health insurance issuers called CO-OPs that will offer qualified health plans in the individual and small group markets.

Goals of the CO-OP program include promoting integrated care, quality, and efficiency. As of January 2, 2013, the Centers for Medicare & Medicaid Services (CMS) had awarded loans totaling $1.98 billion to 24 CO-OPs. The applicants that receive this funding are new entities that may face financial and operational challenges in a competitive insurance market. CMS manages the CO-OP program and must implement it in a short time so that CO-OPs will be ready to enter the exchanges.

The OIG report found that despite challenges, CO-OPs have made progress toward achieving licensure and met 90 percent of their milestones during the period of review from February through September 2012. CMS's oversight strategy includes frequent monitoring and early intervention to ensure that CO-OPs adhere to program requirements and goals. Although CO-OPs appear to be making progress, they are still hiring staff, obtaining licensure, and building necessary infrastructure. In addition, the extent to which any particular CO-OP can achieve program goals depends on a number of unpredictable factors, such as each Exchange's operations, market competition, and enrollment.