The CO-OP program has a one-time $3.4 billion appropriation to support loans to help set up and maintain CO-OP health insurance issuers. All CO-OP loans must be repaid with interest and loans will only be made to private, non-profit entities that demonstrate a high probability of becoming financially viable.
CO-OPs may not be sponsored by existing health insurers or the government. The CO-OP program contains extensive provisions to protect against fraud, waste, and abuse. Loan recipients are subject to strict monitoring, audits, and reporting requirements for the length of the loan repayment period plus 10 years. Recipients will submit semi-annual program reports and quarterly financial statements.
Additionally, CMS will conduct audits, including site visits as appropriate. CO-OPs must meet a series of milestones as laid out in their loan agreements before drawing down any money from the program.
Like other cooperative models, the foundational concept of health insurance CO-OPS is to use profits to benefit enrollees, which could be achieved through lowering premiums, improving health benefits, or performing other activities to increase the stability of coverage for CO-OP members. CMS will closely monitoring CO-OPs to ensure that they are meeting these goals.