Federal Register, Volume 76 Issue 139 (Wednesday, July 20, 2011)

[Federal Register Volume 76, Number 139 (Wednesday, July 20, 2011)]
[Proposed Rules]
[Pages 43237-43250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-18342]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 156

[CMS-9983-P]
RIN 0938-AQ98

Patient Protection and Affordable Care Act; Establishment of
Consumer Operated and Oriented Plan (CO-OP) Program

AGENCY: Department of Health and Human Services.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement the Consumer Operated and
Oriented Plan (CO-OP) program, which provides loans to foster the
creation of consumer-governed, private, nonprofit health insurance
issuers to offer qualified health plans in the Affordable Insurance
Exchanges (Exchanges). The purpose of this program is to create a new
CO-OP in every State in order to expand the number of health plans
available in the Exchanges with a focus on integrated care and greater
plan accountability.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on September 16,
2011.

ADDRESSES: In commenting, please refer to file code CMS-9983-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address only:

Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-9983-P, P.O. Box 8010, Baltimore, MD
21244-8010.

Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address only:

Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-9983-P, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.

4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments only to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC--

Centers for Medicare & Medicaid Services, Department of Health and
Human Services, 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 CMS 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.)
b. For delivery in Baltimore, MD--

Centers for Medicare & Medicaid Services, Department of Health and
Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by following the
instructions at the end of the

[[Page 43238]]

``Collection of Information Requirements'' section in this document.
Comments erroneously mailed to the addresses indicated as appropriate
for hand or courier delivery may be delayed and received after the
comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Anne Bollinger, (301) 492-4395 for
issues related to eligibility and CO-OP standards. Catherine Demmerle,
(301) 492-4156 for issues related to conversions and program integrity.
Meghan Elrington, (301) 492-4388 for general issues and issues related
to loan terms.

SUPPLEMENTARY INFORMATION:

Acronym List

Because of the many terms to which we refer by acronym in this
proposed rule, we are listing the acronyms used and their corresponding
meanings in alphabetical order below:

CCIIO Center for Consumer Information & Insurance Oversight
CMS Centers for Medicare & Medicaid Services
CO-OP Consumer Operated and Oriented Plan
FACA Federal Advisory Committee Act
HHS Department of Health and Human Services
OIG Office of Inspector General
OMB Office of Management and Budget
PHS Act Public Health Service Act
QHP Qualified Health Plan
RFC Request for Comment
SHOP Small Business Health Options Program

Executive Summary: The Patient Protection and Affordable Care Act,
Public Law 111-148, enacted on March 23, 2010 and the Health Care and
Education Reconciliation Act of 2010, Public Law 111-152, enacted on
March 30, 2010, are collectively referred to in this proposed rule as
the ``Affordable Care Act.'' The Department of Defense and Full-Year
Continuing Appropriations Act, 2011, Public Law 112-10, which amended
the Affordable Care Act, was enacted on April 15, 2011. Section 1322 of
the Affordable Care Act created the Consumer Operated and Oriented Plan
program (CO-OP program) to foster the creation of new consumer-
governed, private, nonprofit health insurance issuers, known as ``CO-
OPs.'' In addition to improving consumer choice and plan
accountability, the CO-OP program also seeks to promote integrated
models of care and enhance competition in the Affordable Insurance
Exchanges established under sections 1311 and 1321 of the Affordable
Care Act.
The statute provides loans to capitalize eligible prospective CO-
OPs with a goal of having at least one CO-OP in each State. The statute
permits the funding of multiple CO-OPs in any State, provided that
there is sufficient funding to capitalize at least one CO-OP in each
State. Congress provided budget authority of $3.8 billion for the
program.
This proposed rule: (1) Sets forth the eligibility standards for
the CO-OP program; (2) establishes some terms for loans; and (3)
provides certain basic standards that organizations must meet to
participate in this program and become a CO-OP. The overall approach
and intent of this proposed rule is to provide flexibility for
organizations to develop and create a CO-OP. Acknowledging the
significant variation in market conditions and populations served that
CO-OPs will face, CMS encourages diversity in the organizational design
and approach.
Starting in 2014, individuals and small businesses will be able to
purchase private health insurance through State-based competitive
marketplaces called Affordable Insurance Exchanges. Exchanges will
offer Americans competition, choice, and clout. Insurance companies
will compete for business on a level playing field, driving down costs.
Consumers will have a choice of health plans to fit their needs.
Exchanges will give individuals and small businesses the same
purchasing clout as big businesses. The Departments of Health and Human
Services, Labor, and the Treasury (the Departments) are issuing
regulations implementing Exchanges in several phases. The first in this
series was a Request for Comment relating to Exchanges, published in
the Federal Register on August 3, 2010. Second, Initial Guidance to
States on Exchanges was published issued on November 18, 2010. Third, a
proposed rule for the application, review, and reporting process for
waivers for State innovation was published in the Federal Register on
March 14, 2011 (76 FR 13553). Fourth, on July 15, 2011, two proposed
regulations were published in the Federal Register to implement
components of the Exchange and health insurance premium stabilization
policies in the Affordable Care Act including one entitled, ``Patient
Protection and Affordable Care Act; Establishment of Qualified Health
Plans and Exchanges,'' hereinafter referred to as ``Exchanges proposed
rule.'' Fifth, additional regulations, including this one, are being
published in the Federal Register to implement Exchange related
components of the Affordable Care Act.
Submitting Comments: Comments from the public are welcome on all
issues set forth in this proposed rule to assist CMS in fully
considering issues and developing policies. Comments should reference
the file code CMS-9983-P and the specific section on which a comment is
made.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period as soon as possible
after they have been received, on the following Web site: http://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received in a timely manner will also be available for
public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, at the
headquarters of the Centers for Medicare & Medicaid Services, 7500
Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of
each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view
public comments, phone 1-800-743-3951.

Table of Contents

I. Background
A. Overview
B. Statutory Basis for the Consumer Operated and Oriented Plan
(CO-OP) Program
C. Purpose of the Consumer Operated and Oriented Plan (CO-OP)
Program
D. Request for Comment
E. Structure of the Proposed Rule
II. Provisions of the Proposed Regulation
A. Basis and Scope (Sec. 156.500)
B. Definitions (Sec. 156.505)
C. Eligibility (Sec. 156.510)
1. General
2. Exclusions from Eligibility
D. CO-OP Standards (Sec. 156.515)
1. General
2. Governance Requirements
3. Requirements to Issue Health Plans and Become a CO-OP
E. Loan Terms (Sec. 156.520)
1. Overview of Loans
2. Repayment Period
3. Interest Rates
4. Failure to Pay
5. Deeming of CO-OP Qualified Health Plans
6. Conversions
III. Collection of Information Requirements
IV. Response to Comments
V. Regulatory Impact Analysis
A. Introduction

[[Page 43239]]

B. Statement of Need, Health Insurance Markets, and CO-OP Plans
C. Anticipated Costs
D. Anticipated Benefits
E. Alternatives Considered
F. Accounting Statement
VI. Other Requirements for Analysis of Economic Effects Regulations
Text

I. Background

A. Overview

The CO-OP program provides Federal loans to foster and encourage
the creation of new consumer-run, private health insurers in every
State that will provide consumers and small businesses with greater
choice in the Exchanges starting in 2014. These new consumer-run,
private, nonprofit insurers will be a vehicle for providing higher
quality care that is affordable, coordinated, and responsive.

B. Statutory Basis for the Consumer Operated and Oriented Plan (CO-OP)
Program

Section 1322(a) of the Affordable Care Act directs CMS to establish
the CO-OP program to foster the creation of member-governed qualified
nonprofit health insurance issuers to offer CO-OP qualified health
plans in the individual and small group markets in the States in which
they are licensed to offer such plans.
Section 1322(b)(1) of the Affordable Care Act provides that CMS
shall provide two types of loans to organizations applying to become
qualified nonprofit health insurance issuers: Start-up Loans and
repayable grants (Solvency Loans). Start-up Loans will provide
assistance with start-up costs and Solvency Loans will provide
assistance in meeting solvency requirements in the States in which the
organization is licensed to issue CO-OP qualified health plans.
Section 1322(b)(2) provides that in making awards, CMS must take
into account the recommendations of the Advisory board further
described in section 1322(b)(4) of the Affordable Care Act and give
priority to applicants that offer CO-OP qualified health plans on a
statewide basis, use integrated care models, and have significant
private support.
Section 1322(b)(2) of the Affordable Care Act also directs CMS to
ensure that there is sufficient funding to establish at least one
qualified nonprofit health insurance issuer in each State and the
District of Columbia. It permits CMS to fund additional qualified
nonprofit health insurance issuers in any State if the funding is
sufficient to do so. If no entities in a State apply, CMS may use funds
to encourage the establishment of a qualified nonprofit health
insurance issuer in the State or the expansion of another qualified
nonprofit health insurance issuer from another State to that State.
Section 1322(b)(2) of the Affordable Care Act also directs any
organization receiving a loan to enter into an agreement to meet the
standards to become a qualified nonprofit health insurance issuer and
any other terms and conditions of the loan awards.
Section 1322(b)(2)(c)(iii) of the Affordable Care Act provides
that, if CMS determines that an organization has failed to meet any
provisions of the loan agreement or failed to correct such failure
within a reasonable period of time, the organization must repay an
amount equal to the sum of:
110 percent of the aggregate amount of loans received;
plus
Interest on the aggregate amount of loans for the period
the loans were outstanding starting from the date of drawdown.
CMS must notify the Department of the Treasury of any determination
of a failure to comply with the CO-OP program standards that may affect
an issuer's tax-exempt status under section 501(c)(29) of the Code.
Under section 1322(b)(3), Start-up Loans must be repaid within 5
years, and Solvency Loans must be repaid within 15 years. Repayment
terms in the award of loans must take into consideration any
appropriate State reserve requirements, solvency regulations, and
requisite surplus note arrangements that must be constructed by a
qualified health insurance issuer in a State to receive and maintain
licensure.
Section 1322(c)(1) of the Affordable Care Act defines ``qualified
nonprofit health insurance issuer'' as an organization that:
Is organized under State law as a private, nonprofit,
member corporation;
Conducts activities of which substantially all consist of
the issuance of CO-OP qualified health plans in the individual and
small group markets in each State in which it is licensed to issue such
plans; and
Meets the other requirements in subsection 1322(c) of the
Affordable Care Act.
Section 1322(c)(2) of the Affordable Care Act states that an
organization is not eligible to become a qualified nonprofit health
insurance issuer if the organization or a related entity (or any
predecessor of either) was a health insurance issuer on July 16, 2009.
In addition, an organization cannot be treated as eligible to apply for
a loan under the CO-OP program if it is sponsored by a State or local
government, any political subdivision thereof, or any instrumentality
of such government or political subdivision. A CO-OP must be a private,
nonprofit health insurance issuer.
Section 1322(c)(3) of the Affordable Care Act establishes
governance requirements for a qualified nonprofit health insurance
issuer. To ensure consumer control, the governance of the organization
must be subject to a majority vote of its members. The organization's
governing documents must incorporate ethics and conflict of interest
standards to protect CO-OP members against insurance industry
involvement and interference. To ensure consumer orientation, the
organization is required to operate with a strong consumer focus,
including timeliness, responsiveness, and accountability to members.
Section 1322(c)(4) of the Affordable Care Act directs the
organization to use any profits to lower premiums, improve benefits, or
for other programs intended to improve the quality of health care
delivered to its members.
Section 1322(c)(5) of the Affordable Care Act directs that the
organization must meet all the State standards for licensure that other
issuers of qualified health plans must meet in any State where the
issuer offers a CO-OP qualified health plan, including solvency and
licensure requirements and any other State law described in section
1324(b) of the Affordable Care Act.
Section 1322(c)(6) of the Affordable Care Act prohibits a qualified
nonprofit health insurance issuer from offering a health plan in a
State until that State has in effect (or CMS has implemented for the
State) the market reforms outlined in part A of title XXVII of the
Public Health Service Act (as amended by subtitles A and C of title I
of the Affordable Care Act) including but not limited to, the
requirements for guaranteed issue and limitations on premium variation.
Section 1322(e) of the Affordable Care Act prohibits
representatives of any Federal, State, or local government (or of any
political subdivision or instrumentality thereof), and representatives
of an organization that was an existing issuer or a related entity (or
predecessor of either) on July 16, 2009, from serving on the board of
directors of the qualified nonprofit health insurance issuer or a
private purchasing council established under section 1322(d) of the
Affordable Care Act.

[[Page 43240]]

Together, these provisions form the statutory basis for the CO-OP
program established under this rule.

C. Purpose of the Consumer-Operated and Oriented Plan Program

Section 1322 of the Affordable Care Act established the CO-OP
program to provide loans to foster the creation of new consumer-
governed nonprofit health insurance issuers (referred to as CO-OPs)
that will operate with a strong consumer focus. The statute divides the
loans into two types: loans for start-up costs to be repaid in 5 years
(``Start-up Loans'') and loans to enable CO-OPs to meet State insurance
solvency and reserve requirements to be repaid in 15 years (``Solvency
Loans''). Section 1322(b)(2)(A) of the Affordable Care Act directs CMS
to ensure that there is sufficient funding to establish at least one
CO-OP in each State and to give priority to organizations capable of
offering CO-OP qualified health plans on a Statewide basis. To further
ensure the presence of CO-OPs in the Exchanges, section 1301(a)(2) of
the statute deems CO-OP qualified health plans offered by a qualified
nonprofit health insurance issuer eligible to participate in the
Exchanges.
The CO-OP program also seeks to promote improved models of care.
Existing health insurance cooperatives and other business cooperatives
provide possible models for the successful development of CO-OPs around
the country. One major barrier to continued development of this model
has been the difficulty of obtaining adequate capitalization for start-
up costs and State reserve requirements. The CO-OP program is designed
to help overcome this major barrier to new issuer formation by
providing funding for these critical activities.
Pursuant to section 1322(b)(4) of the Affordable Care Act, the
Comptroller General announced the appointment of a 15 member CO-OP
Program Advisory Board to make recommendations to CMS on awarding loans
on June 23, 2010. Section 1322(b)(2)(A) directs the Secretary to
consider the recommendations of the Advisory Board when awarding loans
under the CO-OP program. After taking comments in three day-long public
hearings from January through March, 2011 and written comments, the
Advisory Board approved its final recommendations and report on April
15, 2011. The Advisory Board's final report is available at: http://cciio.hhs.gov/resources/files/coop_faca_finalreport_04152011.pdf.
The Advisory Board generally advised the Department to develop flexible
criteria that recognize the diversity of market conditions around the
country to enable the development of various CO-OP models and allow
different types of sponsorship. It also strongly encouraged the
Department to provide technical assistance at all stages of the process
in order to enhance the viability of individual CO-OPs and the success
of the program.
The Advisory Board developed four major principles for awarding
loans. CMS concurs with those principles:
(1) Consumer operation, control, and focus must be the salient
features of the CO-OP and must be sustained over time;
(2) Solvency and the financial stability of coverage should be
maintained and promoted;
(3) CO-OPs should encourage care coordination, quality and
efficiency to the extent feasible in local provider and health plan
markets; and
(4) Initial loans should be rolled out as expeditiously as possible
so that CO-OPs can compete in the Exchanges in the critical first open
enrollment period.
CMS also concurs with the Advisory Board in recognizing that
potential CO-OPs will initially present different capabilities and
levels of development. This proposed rule incorporates the principles
endorsed by the Advisory Board by allowing diversity among CO-OPs and
maintaining the vision outlined in the Advisory Board Final Report. The
CO-OP program will offer an entry point to eligible organizations that
seek to provide more consumer-focused coverage and create additional
competition for insurance that will make high-quality care more
affordable. By creating more health plan choices, CO-OPs can benefit
all consumers.

D. Request for Comment

On February 2, 2011, CMS published a Request for Comment (RFC) in
the Federal Register (76 FR 5774) seeking public comment on the rules
that will govern the CO-OP program. The comment period closed on March
4, 2011. CMS has considered and incorporated the comments received in
developing specific regulatory proposals.
The public response to the RFC yielded 55 unique comment
submissions. A total of 65 unique entities submitted comments,
including entities that submitted stand-alone comments and multiple
individuals who signed onto one comment submission. The 65 total unique
commenters included consumers and consumer advocacy organizations,
medical and health care professional trade associations and societies,
health insurers and insurance trade associations, health benefits
consultants, and actuaries. The majority of the comments related to the
types of organizations that would likely become successful CO-OPs and
the criteria CMS should use in awarding loans.

E. Structure of the Proposed Rule

The regulations outlined in this Notice of Proposed Rulemaking will
be codified in the new 45 CFR part 156 subpart F. The major subjects
covered in this proposed rule under subpart F of part 156 are described
below.
Section 156.500 describes the statutory basis of the CO-OP
program and the scope of this proposed rule;
Section 156.505 sets forth definitions for the terms
applied in subpart F;
Section 156.510 specifies the criteria to be eligible for
a loan under the CO-OP program;
Section 156.515 sets forth the standards for a CO-OP; and
Section 156.520 sets forth the terms for loans awarded
under the CO-OP program including repayment terms and interest rates.

II. Provisions of the Proposed Regulations

A. Basis and scope (Sec. 156.500)

Section 156.500 specifies the general statutory authority for and
scope of standards proposed in subpart F. The CO-OP program fosters the
creation of qualified nonprofit health insurance issuers to offer CO-OP
qualified health plans in the individual and small group markets.
Subpart F establishes certain governance requirements for CO-OPs and
the terms for loans awarded under the CO-OP program. Applicants may
apply for loans to help fund start-up costs and meet the solvency
requirements of States in which the applicant seeks to be licensed to
issue CO-OP qualified health plans.

B. Definitions (Sec. 156.505)

Section 156.505 sets forth definitions for terms that are used
throughout subpart F. Many of the definitions presented in Sec.
156.505 are taken directly from the Affordable Care Act, but new
definitions were created when necessary. All definitions proposed are
intended to apply only to subpart F.
Several of the terms used in subpart F are defined elsewhere in
Parts 155 and 156, which have been proposed previously (76 FR 41866).
The terms ``individual market,'' ``small group market,'' ``SHOP,'' and
``Exchange'' are defined in Sec. 155.20. ``Individual market'' is
defined as the market for health insurance coverage offered to

[[Page 43241]]

individuals other than in connection with a group health plan. ``Small
group market'' is defined as the health insurance market under which
individuals obtain health insurance coverage (directly or through any
arrangement) on behalf of themselves (and their dependents) through a
group health plan maintained by a small employer. ``SHOP'' is defined
as a Small Business Health Options Program operated by an Exchange
through which a qualified employer can provide its employees and their
dependents with access to one or more QHPs. ``Exchange'' is defined as
a governmental agency or non-profit entity that meets the applicable
requirements of this part and makes QHPs available to qualified
individuals and qualified employers. Unless otherwise identified, this
term refers to State Exchanges, regional Exchanges, subsidiary
Exchanges, and a Federally-facilitated Exchange.
CMS proposes that a ``CO-OP qualified health plan'' means a health
plan that has in effect a certification that it meets the standards
described in subpart C of part 156, which has been previously proposed
(76 FR 41866), except that the plan can be deemed certified by CMS or
an entity designated by CMS as described in 156.520(e).
``Applicant'' is defined as an entity eligible to apply for a loan
described in Sec. 156.520.
A ``qualified nonprofit health insurance issuer'' is a loan
recipient, which satisfies or can reasonably be expected to satisfy the
standards in section 1322(c) of the Affordable Care Act and Sec.
156.515 within the time frames specified in this subpart, until such
time as CMS determines the loan recipient does not satisfy or cannot
reasonably be expected to satisfy these standards. This ensures that
loan recipients can receive the benefits of section 1322(h), addressing
the tax exemption for qualified nonprofit health insurance issuers, at
the appropriate time, as determined by the Internal Revenue Service.
CMS proposes that the term ``consumer operated and oriented plan (CO-
OP)'' means a loan recipient that satisfies the standards in section
1322(c) of the Affordable Care Act and Sec. 156.515 within the time
frames specified in this subpart. Thus, to be considered a CO-OP, a
loan recipient must meet the governance and health plan issuance
standards described in Sec. 156.515 within the timeframes established
in this subpart. In addition, the loan recipient must comply with State
insurance laws and State insurance reforms and ensure that revenues in
excess of expenses inure to the benefit of its members in accordance
with section 1322(c)(4) of the Affordable Care Act.
We define a ``nonprofit member corporation'' (also referred to as a
``nonprofit member organization'') as a nonprofit, not-for-profit,
public benefit, or similar membership entity organized as appropriate
under State law. For the purposes of this subpart, as defined in
section 1304(d) of the Affordable Care Act, ``State'' means each of the
50 States and the District of Columbia. CMS proposes that in order for
an organization to be eligible for CO-OP loans (and become an
``applicant'') it would first have to meet the definition of a
nonprofit member organization.
CMS proposes to adopt the Advisory Board's recommendation to use
the terms ``formation board'' and ``operational board'' when discussing
the governance requirements for a CO-OP. The term ``formation board''
means the initial board of directors of the applicant or loan recipient
before it has begun accepting enrollment and conducted an election to
the board of directors. ``Operational board'' means the board of
directors elected by the members of the CO-OP after it has begun
accepting enrollment. A ``member'' is an individual covered under
health insurance policies issued by a CO-OP.
Section 1322(c)(2)(A) of the Affordable Care Act prohibits an
organization from participating as a ``qualified nonprofit health
insurance issuer'' in the CO-OP program ``if the organization or a
related entity (or any predecessor of either) was a health insurance
issuer on July 16, 2009.'' Consistent with section 1551 of the
Affordable Care Act, we propose that an entity is an ``issuer'' under
this subpart if it satisfies the definition in section 2791(b)(2) of
the Public Health Service Act: an insurance company, insurance service,
or insurance organization (including a health maintenance organization)
which is licensed to engage in the business of insurance in a State and
which is subject to State law which regulates insurance. Additionally,
``pre-existing issuer'' means (for the purposes of this subpart) a
health insurance issuer that was in existence on July 16, 2009. We seek
comments on this definition.
CMS proposes the definition of ``related entity'' to mean an
organization that shares common ownership or control with a pre-
existing issuer or a trade association whose members consist of pre-
existing issuers, and satisfies at least one of the following
conditions: (1) Retains responsibilities for the services to be
provided by the issuer; (2) furnishes services to the issuer's
enrollees under an oral or written agreement; or (3) performs some of
the issuer's management functions under contract or delegation. Thus,
CMS would permit a nonprofit organization that is not an issuer or the
representative of an issuer but shares control with an existing issuer
to ``sponsor'' or facilitate the creation of a CO-OP if the applicant
(and resulting CO-OP) and the existing issuer do not share the same
chief executive or any of the board of directors. We seek comment on
this interpretation.
``Sponsor'' is defined as an organization or individual that is
involved in the development, creation, or organization of the CO-OP or
provides financial support to a CO-OP. We propose that a
``predecessor'' means any entity that participates in a merger,
consolidation, purchase or acquisition of property or stock, corporate
separation, or other similar business transaction that results in the
formation of the new entity.
Section 1322(b)(1) of the Affordable Care Act directs CMS to award
to applicants loans to provide assistance in meeting start-up costs and
any State solvency requirements in the States in which the applicant
seeks to be licensed to issue CO-OP qualified health plans. ``Start-up
Loan'' means a loan provided by CMS to a loan recipient for costs
associated with creating and developing a CO-OP. The term ``Solvency
Loan'' means a loan provided by CMS to a loan recipient in order to
meet State solvency and reserve requirements.

C. Eligibility (Sec. 156.510)

Section 156.510 outlines the minimum standards that an organization
must meet to be eligible to receive a loan from the CO-OP program to
create a new private consumer-operated insurer.
1. General
In paragraph (a), we propose that the applicant declare its
intention to become a CO-OP. Since the loan recipient may not meet all
of the conditions to be considered a CO-OP at the time of the
application, it is important that the organization intend to meet all
of the standards and demonstrate the likelihood of being able to meet
such requirements by the time periods established in this subpart
before the award is made, especially those related to consumer focus
and consumer governance of the organization.
Consistent with the recommendation of the Advisory Board, CMS
proposes the applicant have formed a nonprofit

[[Page 43242]]

member organization under State law prior to applying for a loan. This
means that the new nonprofit member corporation, and not an
organization that is sponsoring the creation of a CO-OP, would be the
applicant for and recipient of a loan.
2. Exclusions From Eligibility
Paragraph (b) codifies the conditions in section 1322(c)(2) of the
Affordable Care Act under which an organization will not be eligible to
participate in the CO-OP program. Paragraph (b)(1)(i) codifies that if
an organization is a pre-existing issuer, a related entity, or any
predecessor of either, it is not eligible for loans under the CO-OP
program and therefore, cannot become a CO-OP. In addition, an
organization is not eligible for the CO-OP program if the organization
or a related entity (or any predecessor of either) is a trade
association whose members consist of pre-existing issuers. We seek
comment on this interpretation.
Paragraph (b)(1)(ii) codifies that, if an organization is sponsored
by a State or local government, any political subdivision thereof, or
any instrumentality of such government or political subdivision, it is
not eligible to be a CO-OP and cannot apply for a loan under the CO-OP
program. CMS considered whether this prohibition should apply to
provider organizations that are associated with State university
medical centers and concluded that medical centers, physician
practices, hospitals, and other organizations that are part of a State
university system are instrumentalities of the State. We believe that
the prohibition against sponsorship by State or local government, and
their political subdivisions and instrumentalities, must also apply to
medical centers that are part of State or local governments and to
medical practice groups that are created and overseen by a medical
center owned by State or local government. This prohibition would not
apply to Indian tribes. We invite comment on these interpretations.
As incorporated in section 1551 of the Affordable Care Act, section
2791(b)(2) of the PHS Act defines a ``health insurance issuer'' as ``an
insurance company, insurance service, or insurance organization * * *
which is licensed to engage in the business of insurance in a State and
which is subject to State law which regulates insurance (within the
meaning of section 514(b)(2) of the Employee Retirement Income Security
Act of 1974).'' CMS believes that the following types of entities are
examples of organizations that are not ``issuers'' and would be
eligible to sponsor applicants for loans under the CO-OP program
provided that they otherwise meet the requirements for eligibility:
(1) A prospective applicant not licensed by its State as a health
insurance issuer on July 16, 2009, but which has subsequently achieved
a State license,
(2) Self-funded and Taft-Hartley group health plans, and
(3) Church plans that were not licensed issuers on July 16, 2009,
and
(4) Three-share or multi-share programs not licensed by their State
insurance regulator.
CMS invites comment on how these organizations and others like them
would sponsor an applicant.
Taking into account comments received on the RFC and the
recommendations of the Advisory Board, in paragraph (b)(2)(i) CMS
proposes that a nonprofit organization that is not an issuer but that
currently sponsors an issuer would remain eligible to sponsor an
applicant for a CO-OP loan in certain circumstances. Specifically a
nonprofit non-issuer organization that currently sponsors a pre-
existing issuer and meets other eligibility parameters may sponsor an
applicant for a CO-OP loan provided that the pre-existing issuer does
not share any of the board or the same chief executive with the
applicant. We seek comment on this interpretation.
In paragraph (b)(2)(ii), we are further proposing that an
organization that has purchased assets from a preexisting issuer in an
arm's-length transaction where neither party was in a position to exert
undue influence on the other is eligible to apply for a CO-OP loan.
Therefore, an organization is eligible for CO-OP loans if it contracts
for services, including health provider network access, premium
billing, and case management from a health insurance issuer that
existed on July 16, 2009, as long as the existing issuer has no control
over the new private nonprofit issuer. Conversely, an applicant and a
pre-existing issuer could have common control by a non-issuer
organization. The applicant and pre-existing issuer would not be
related entities unless the pre-existing issuer also provided the CO-
OP's services or management functions.

D. CO-OP Standards (Sec. 156.515)

1. General
A CO-OP must satisfy the standards set forth in all statutory,
regulatory, or other requirements as applicable. CMS proposes
additional standards that a CO-OP must meet in Sec. 156.515, many of
which are recommendations made by the Advisory Board in the final
report dated April 15, 2011. We invite comment on these proposed
standards, which are set forth below.
2. Governance Requirements
In response to the RFC, provider organizations submitted comments
that suggested that providers may be in the best position to sponsor
CO-OPs and encouraged CMS to impose no additional standards related to
governance beyond those in the statute. In contrast, other commenters
suggested that CMS set specific standards for the composition of the
governing body, such as those to avoid conflicts and to encourage
diverse representation on governing bodies that are representative of
the local population. Other commenters expressed concern that in some
markets providers could create a CO-OP and control pricing in the
market.
Section 1322(c)(3)(C) of the Affordable Care Act directs the
Secretary to promulgate regulations requiring the organization to
operate with a strong consumer focus, including timeliness,
responsiveness, and accountability to members. Pursuant to this
authority and taking into account the comments, CMS proposes additional
governance requirements in paragraph (b). These proposed standards
reflect the recommendations of the Advisory Board.
Paragraph (b)(1) proposes that a CO-OP implement policies and
procedures to foster and ensure member control of the organization.
Section 1322(c)(3) of the Affordable Care Act states that the
governance of the organization be subject to a majority vote of its
members. Paragraph (b)(1)(i) proposes that the organization be governed
by an operational board with each of its directors elected by a
majority vote of its members. In paragraph (b)(1)(ii), we propose that
every member of the CO-OP be eligible to vote for each director of the
CO-OP during the elections described in (b)(1)(iv). In paragraph
(b)(1)(iii), we propose that each member of the organization have one
vote in the elections of directors.
Paragraph (b)(1)(iv) proposes that the first election of the
operational board of directors occur no later than one year after the
effective date on which the CO-OP provides coverage to its first
member. The Advisory Board recommended that this election should take
place within the first year after enrollment begins or when a certain
designated membership level is reached, but should occur no later than
two years after the organization enrolls its first

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member, recognizing that a certain level of membership is necessary for
meaningful elections. CMS is concerned that the Advisory Board's
recommendation of an election date of the start-up period plus two
years after enrollment will delay the introduction of consumer
governance beyond a point where it can have an impact on the strategic
direction of the CO-OP. We do not believe that holding an election one
year after coverage begins will burden the formation board or CO-OP
operations since the formation board will have the full start-up period
plus one year to plan for this transition. We solicit comments on the
proposed timeline.
Paragraph (b)(1)(v) proposes that the elections for the board of
directors of the organization be contested and that there be more
candidates for open positions on the board than there are positions. We
are not specifying the mechanism by which the CO-OP will achieve this
standard, but we believe that the CO-OP's bylaws should address this
standard, most likely by creating a nominating committee that will
ensure that this standard is met. This standard will help ensure that
consumer members of the organization have a choice of candidates for
the board of directors, provide an opportunity for a change in
directors, and help prevent a group of directors from exerting
disproportionate control over the organization. CMS believes that the
operation of contested elections will provide safeguards against the
long-term entrenchment or undue influence of any individual director
while protecting the members' choice of directors.
Consistent with the recommendations of the Advisory Board and
commenters to the RFC, paragraph (b)(1)(vi) proposes that a majority of
the voting directors must be members of the organization. While all
directors must be elected by the members, a CO-OP may want to reserve
positions for directors who have certain types of expertise that are
essential to the governance of the organization, such as providers or
individuals with experience in health care operations or finance. CMS
recognizes that it may not be possible to find members of the CO-OP
with the desired expertise who are willing to serve as directors. The
purpose of this provision is to recognize the need to allow for
directors who are not members, but to ensure that members who are
consumers of the services of the organization are the majority of the
board of directors and that the governance of the organization is
accountable to consumers.
Standards for the operational board of directors, consistent with
the recommendations of the Advisory Board are included in (b)(2).
Paragraph (b)(2)(i) specifies that each director must meet ethical,
conflict-of-interest, and disclosure standards. Specifically, each
director must act in the sole interest of the CO-OP and its members,
avoid self-dealing, and act prudently and consistently with the terms
of the CO-OP's governance documents and applicable State and Federal
law.
Paragraph (b)(2)(ii) specifies that each voting director has only
one vote on matters before the board. This standard also recognizes
that a CO-OP may choose to have directors who provide expertise but do
not vote. Non-voting directors must bring specific expertise or be
members of the management team of the CO-OP, whose participation in the
board of directors is considered essential.
Paragraph (b)(2)(iii) acknowledges that positions on the board of
directors may be designated for individuals with certain types of
expertise or experience. The type of expertise that is needed may vary
over time and the CO-OP may choose to enlist candidates for the board
with certain types of expertise through its nominating process.
Paragraph (b)(2)(iv) specifies that positions on the board that are
designated for individuals with specialized expertise, experience, or
affiliation (for example, providers, employers, labor representatives)
cannot constitute a majority of the operational board even if the
individuals serving in designated seats are members of the CO-OP. This
standard should be addressed in the bylaws of the CO-OP, in the
conflict of interest standard for board members, and in the nominating
procedures of the CO-OP.
Paragraph (b)(2)(v) codifies the limitation in section 1322(e) of
the Affordable Care Act that no representative of any Federal, State or
local government (or of any political subdivision or instrumentality
thereof) and no representative of any organization described in Sec.
156.510(b)(i) may serve on the board of directors.
Paragraph (b)(3) codifies the provision that an organization must
have governing documents that incorporate ethics and conflict of
interest standards protecting against insurance industry involvement
and interference. At a minimum, the standards must establish procedures
for identifying potential conflicts of interest and addressing any
violation of the standards.
Paragraph (b)(4) codifies the provision that the CO-OP must operate
with a strong consumer focus, including timeliness, responsiveness, and
accountability to members. Finally, the CO-OP must demonstrate
financial viability and the ability to meet all other statutory, legal,
or other requirements.
3. Requirements to Issue Health Plans and Become a CO-OP
In paragraph (c)(1), CMS codifies section 1322(c)(1)(B) of the
Affordable Care Act that provides that substantially all of the
activities of the CO-OP consist of the issuance of CO-OP qualified
health plans in the individual and small group markets in each State in
which it is licensed to issue such plans. CMS proposes that a CO-OP
will satisfy this standard if at least two-thirds of the contracts for
health insurance coverage issued by a CO-OP are CO-OP qualified health
plans offered in the individual and small group markets in the States
in which the CO-OP operates. An organization must continually meet this
requirement to be considered a CO-OP. Members of the Advisory Board
noted that State insurance regulations generally refer to the contracts
for insurance, not the number of lives covered under each contract,
when referring to policy issuance. The Advisory Board therefore
recommended that: the interpretation of ``substantially all'' refer to
contracts issued; the proportion of contracts that must meet the
``substantially all'' test be interpreted to provide CO-OPs maximum
flexibility; and CO-OPs be allowed to meet that standard over time to
build enrollment gradually in the individual and small group market.
Consistent with the Advisory Board recommendations on this issue and
public comment received in response to the RFC, CMS interprets the
statute to mean that each insurance policy or contract that an issuer
sells constitutes a single activity. We solicit comments on whether
two-third is the appropriate threshold for this standard.
This proposed standard would allow providers wishing to sponsor CO-
OPs to enroll their own employees in the CO-OP and thereby encourage
provider participation. It would also permit CO-OPs to participate in
Medicaid and Children's Health Insurance Program (CHIP), which would
enable individuals and families to remain with the same health
insurance issuer and providers if they move between the Exchange and
these programs.
In paragraph (c)(2), CMS proposes that a CO-OP applicant receiving
a Start-up Loan or Solvency Loan offer at least one CO-OP qualified
health plan at both the silver and gold benefit levels, as defined in
section 1302(d) of the Affordable Care Act, in every individual

[[Page 43244]]

market Exchange that serves the geographic market in which it is
licensed and intends to provide health care coverage (market area). In
addition, CMS proposes that if a CO-OP chooses to offer coverage in the
small group market outside the Exchange, a CO-OP must commit to
offering at least one CO-OP qualified health plan at both the silver
and gold benefit levels in the SHOP of any market area where the CO-OP
is licensed. Note that it is a choice for a CO-OP to offer coverage in
the small group market, but if it does so, it must also offer coverage
through SHOP to prevent adverse selection against SHOP. These standards
are consistent with section 1301 of the Affordable Care Act providing
that health insurance issuers that participate in the Exchanges offer
qualified health plans at both the silver and gold benefit levels.
In paragraph (c)(3) CMS proposes that within the earlier of thirty-
six months following the initial drawdown of a Start-up Loan or six
months following the initial drawdown of the Solvency Loan, a loan
recipient be licensed in a State and offer at least one CO-OP qualified
health plan at the silver and gold benefit levels (as defined in
section 1302(d) of the Affordable Care Act) in an individual market
Exchange and, if offering a health plan in the small group market, in a
SHOP. Thus, the loan recipient must satisfy the requirements of title
XXVII of the Public Health Service Act applicable to health insurance
coverage in the individual market and small group market, if applicable
and comply with all standards generally applicable to qualified health
plan issuers. To continue offering CO-OP qualified health plans in the
Exchanges, a CO-OP must continue to meet these standards.
Due to concerns regarding the ability of a CO-OP to establish
sufficient enrollment to make its health plans viable, CMS proposes
that when offering a CO-OP qualified health plan in an Exchange for the
first time, loan recipients may only begin to offer health plans and
accept enrollment during an open enrollment period for the applicable
Exchange. We seek comment on this proposal.
In paragraph (d), CMS proposes that a loan recipient must satisfy
the requirements of section 1322(c) of the Affordable Care Act and
Sec. 156.515 and become a CO-OP within fifty-four months following the
first drawdown of a Start-up Loan or eighteen months following the
initial drawdown of a Solvency Loan.
These provisions will ensure that loan recipients actively work
toward becoming a CO-OP that offers CO-OP qualified health plans in the
Exchanges. Commenters to the RFC indicated that it could take from 6
months to 3 years for a new CO-OP to become operational and begin
accepting enrollment, with most commenters stating that 18 to 24 months
would be needed to become operational. CMS believes that the proposed
timeframes provide sufficient time for a loan recipient to offer CO-OP
qualified health plans in the Exchanges and become a new CO-OP that
meets all of the governance requirements of the CO-OP program. We
request comment on these proposed standards.

E. Loan Terms (Sec. 156.520)

1. Overview of Loans
Paragraph (a)(1), proposes that organizations that meet eligibility
standards according to Sec. 156.510 can apply for Start-up Loans and
Solvency Loans (pursuant to a separate CO-OP program Funding
Opportunity Announcement (FOA)). Organizations may apply for Start-up
Loans to assist with start-up costs associated with establishing a CO-
OP. In addition, CMS proposes that organizations that meet the
eligibility standards may apply for Solvency Loans to assist in meeting
the solvency requirements of States in which the applicant seeks to be
licensed to issue CO-OP qualified health plans.
Section Sec. 156.520 outlines the terms of the loans awarded under
the CO-OP program. Other than the 5-year and 15-year repayment periods,
the statute leaves the specific terms of the loans to CMS's discretion
but requires that CMS take into consideration State solvency
requirements. Accordingly, CMS proposes loan terms that are consistent
with the goals of the CO-OP program, most likely to encourage
successful CO-OPs, and protect the Federal investment.
The Advisory Board strongly recommended that CMS begin awarding
loans in late 2011 or early 2012 to provide sufficient time for CO-OPs
to become operational and accept enrollment during the first Exchange
open enrollment period to compete for membership and gain the level of
enrollment needed to be viable. Commenters to the RFC generally agreed
that it is important for CMS to provide startup funding to CO-OPs as
soon as possible. Accordingly, we intend to begin awarding CO-OP loans
in this timeframe.
As a condition of licensure as a health insurer, State insurance
departments require that an insurer maintain an amount of capital that
is consistent with its size and risk profile. This measure of reserve
is called risk-based capital (RBC). State law establishes a variety of
required regulatory actions if an insurer's RBC falls below established
levels or percent of RBC. These regulatory interventions can range from
a corrective action plan to liquidation of the insurer if it is
insolvent. Solvency and the financial health of insurers is
historically a State-regulated function.
Solvency Loans are intended to help loan recipients meet the
reserve requirements, solvency regulations, and requisite surplus note
arrangements in each State. Since Solvency Loans must be repaid to the
Federal government within 15 years, the Advisory Board expressed a
concern that they will be treated by States as debt rather than capital
that satisfies State solvency and reserve requirements.
A loan is considered a liability and typically would not assist an
organization in meeting solvency requirements, since the liability
would have to be subtracted from the calculation of reserves in order
to determine the net protection afforded to enrollees. In order to
assist CO-OPs in meeting State solvency requirements, the loans will be
structured so that premiums would go to pay claims and meet cash
reserve requirements before repayment to CMS. The goal of this
provision is to satisfy the reserve requirements of the individual
insurance department in the States in which each CO-OP seeks licensure.
The Advisory Board proposed that CO-OPs discuss the appropriate
mechanisms with their insurance regulators for structuring the loans to
meet reserve requirements and include a description of those mechanisms
in their applications so that loan and repayment terms for that
applicant conform to the State's requirements.
CMS proposes in Sec. 156.520(a)(3) to structure Solvency Loans to
each loan recipient in a manner that meets State reserve and solvency
requirements so that the loan recipient can fund its required capital
reserves. This ensures that they are recognized as contributing to
State reserve and solvency requirements in the States in which the
applicant intends to offer CO-OP qualified health plans. We request
comment on this provision.
2. Repayment Period
Section 1322(b)(3) of the Affordable Care Act states that loans
awarded must be repaid within 5 years and 15 years respectively, taking
into consideration any appropriate State reserve requirements, solvency
regulations, and requisite surplus note arrangements that must be
constructed in a State. This standard is codified in Sec. 156.520(b).

[[Page 43245]]

Loan recipients must make loan payments consistent with the
repayment schedule approved by CMS and agreed to by the loan recipient
until the loans have been paid in full. Recognizing that it would be
difficult for a loan recipient to begin repaying the loans before it
has enrolled members and received premiums, the Advisory Board
recommended that loan repayment begin after the loan recipient has
begun receiving enrollment. Commenters to the RFC generally recommended
repayment schedules for loans that are flexible. Most commenters
indicated that preventing the failure of a CO-OP should take priority
over repayment because insolvency of a CO-OP would harm its members and
create disruption in insurance markets.
CMS agrees with the commenters and believes that a flexible
repayment approach would promote the growth of CO-OPs, serve the
interests of the CO-OP members and the public, and enhance the
likelihood of full repayment. Flexibility in the repayment schedule
helps address the diversity in each CO-OP's local market conditions,
projected member risk profiles, business strategy, and projected
enrollment size. CMS proposes to permit individualized repayment
schedules to be submitted with the application with features such as a
grace period, graduated repayments, or balloon payments at the end of
the repayment period.
The Advisory Board recommended an enhanced oversight process for
cases where a loan recipient is not meeting the terms and conditions of
its loan but where CMS has concluded that discontinuing funding is not
in the best interest of the members, the public, or the government.
Consistent with the Advisory Board's recommendation, CMS may execute a
loan modification or workout when a loan recipient is having difficulty
making loan repayments. If a loan recipient is unable to (1) make
repayments or meet other conditions of the loan without adversely
affecting coverage stability, member control, quality of care, or the
public interest generally or (2) meet State reserve and solvency
requirements, CMS would have the option to execute a loan modification
or workout.
3. Interest Rates
In Sec. 156.520(c), CMS proposes that loan recipients pay an
interest rate benchmarked to the average interest rate on marketable
Treasury securities of similar maturity. These interest rates are tied
to prevailing market conditions while providing low cost loans that are
consistent with the statute's direction to foster the development of
viable private nonprofit CO-OPs. CMS is considering reductions to the
benchmarked rate for Start-Up Loans and Solvency Loans to make it
easier for new CO-OPs to repay their loans.
Section 1322(b)(2)(C)(iii) of the Affordable Care Act states that
if CMS determines that a loan recipient has failed to meet any of its
contractual obligations, or has used Federal funds in a prohibited or
improper manner, the loan recipient must repay to CMS 110 percent of
the aggregate amount of loans received under this section, plus
interest. This provision is codified in Sec. 156.520(c) so that if a
loan recipient's loan agreement is terminated by CMS, the loan
recipient would be charged the statutory penalty and an interest rate
equal to the average interest rate on marketable Treasury securities of
similar maturity. We request public comment on the proposed interest
rates and the structure of the debt instrument.
4. Failure to Pay
In Sec. 156.520(d), CMS proposes to use any and all remedies
available to it under law to collect loan payments or penalty payments
if a loan recipient fails to make payments consistent with the
repayment schedule in its loan agreement or in a loan modification or
workout.
5. Deeming of CO-OP Qualified Health Plans
In Sec. 156.520(e) we codify the ``deeming'' provisions of section
1301(a)(2) of the Affordable Care Act. To be deemed certified to
participate in an Exchange, we propose that a loan recipient must be in
compliance with the terms of the CO-OP program, the Federal standards
for CO-OP qualified health plans set forth pursuant to section 1311(c)
of the Affordable Care Act and State standards. CMS or an entity
designated by CMS will make a determination regarding whether or not a
loan recipient meets these standards based on evidence provided by the
loan recipient. CMS or its designee will notify the Exchange in which
the loan recipient proposes to operate that the loan recipient is
deemed certified to participate. Similarly, if a loan recipient loses
its deemed status for any reason, CMS or its designee will provide
notice to the applicable Exchanges.
A loan recipient that is deemed certified to participate in the
Exchange would be exempt from the certification procedures for each
applicable Exchange. However, the loan recipient must still meet any
standards established by CMS for all qualified health plans
participating in an Exchange, along with all State requirements in the
case where a State is operating the Exchange.
6. Conversions
The Advisory Board expressed a concern about the potential for
successful CO-OPs to become targets for conversion to for-profit, non-
consumer operated entities. Such an outcome could reduce consumer
control, limit choice, and weaken competition in the insurance
marketplace. Accordingly, the Advisory Board recommended imposing
conditions on conversions that would create strong disincentives for a
company to acquire a CO-OP and for a CO-OP to pursue such offers.
Because allowing conversions to a for-profit or non-consumer operated
entity would be contrary to the goals of the CO-OP program, CMS
proposes to prohibit such conversions. This prohibition on conversions
and sales to for-profit or non-consumer operated entities would ensure
that loans awarded under this program are used to sustain program goals
over time.
CMS recognizes the potential for changes in CO-OP governance in
circumstances other than conversions and sales to for-profit or non-
consumer-operated entities. Since the goals of the CO-OP program are to
make available new consumer-governed private nonprofit health plans and
expand competition in the Exchanges, CMS proposes to prohibit any
transaction by a CO-OP that would result in a change to a governance
structure that does not meet the standards in Sec. 156.515 or any
other program standards. We request comment on these prohibitions.

III. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before an information collection request is submitted to the
Office of Management and Budget (OMB) for review and approval. We will
solicit comments on the information collection request in association
with the implementation of the CO-OP program (for example, application,
reporting) in one or more future 60-day notices.

V. Regulatory Impact Analysis (RIA)

A. Introduction

Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic,

[[Page 43246]]

environmental, public health and safety effects, distributive impacts,
and equity). An RIA must be prepared for rules with economically
significant effects ($100 million or more in any 1 year). This proposed
rule is economically significant. Accordingly, the Office of Management
and Budget has reviewed this proposed rule.

B. Statement of Need, Health Insurance Markets, and CO-OP Plans

The Affordable Care Act established the Consumer Operated and
Oriented Plan (CO-OP) program. Section 1322(b)(3) of the Affordable
Care Act requires CMS to promulgate regulations to implement this
program. The purpose of this program is to create a new CO-OP in every
State in order to expand the number of qualified health plans available
in the Exchanges with a focus on integrated care and greater plan
accountability.
Only a few States offer insurance choices sponsored and managed by
entities primarily focused on meeting the health insurance needs and
preferences of consumers, as determined directly by consumers or their
elected representatives. Currently, we believe that there are four
issuers in the country that meet this standard, located in the States
of Washington, Idaho, Minnesota, and Wisconsin. While these issuers
cover in excess of one million lives, their market share is only about
one percent of private insurance coverage.
Congress has provided budget authority of $3.8 billion to assist
sponsoring organizations in creating such plans and to do so with
enough capital and reserves to become licensed and ultimately effective
competitors in State insurance markets. These funds will enable CO-OPs
to use Federal government loans (``Solvency Loans'') to meet the
requirements for risk-based capital that State insurance commissions
impose on health plans to ensure that they will be able to finance the
services they have contractually promised their enrollees.
The Affordable Care Act, as implemented through this regulation,
prohibits issuers that existed prior to July 16, 2009 from
participating in the CO-OP program but allows CO-OPs to use experienced
managers and health care organizations to manage the functions they
have to perform in providing health insurance. Further, as indicated
throughout the preamble to this proposed rule, the CO-OP Advisory Board
in its advice to the Secretary, and the Department in its proposed
provisions, have consistently favored provisions that would give CO-OP
flexibility, within the boundaries set by the statute, in setting up
and operating these plans.
CO-OPs may not, however, enter the program unless their activities
are limited primarily to issuing plans in the individual and small
group markets. CO-OPs will therefore face the problem of being either
brand new organizations or existing organizations facing a major change
in purpose.

C. Anticipated Federal Costs

As previously explained, Congress has provided $3.8 billion to
assist sponsoring organizations in creating such plans and to do so
with enough capital and reserves to become licensed and ultimately
effective competitors in State insurance markets.\1\ The capital
requirements for CO-OPs would be financed, in part, by member premiums
and in part by the $3.8 billion dollars available for loans over the
next five years. The net Federal costs of these loans to CO-OPs are
``transfers.'' The net transfer costs resulting from default and loss
of interest over the relevant 5 year (Start-up Loan) and 15 year
(Solvency Loan) periods are estimated later in this analysis, in Table
1. We estimate that 65 percent of the Solvency Loans and 60 percent of
the Start-up Loans will be repaid. Our estimates use one percent below
the current yields for 5-year U.S. Treasury bonds as the repayment
interest rate on Start-up Loans and two percent below the current
yields for longer term U.S. Treasury Bonds as the repayment rate for
the Solvency Loans.
---------------------------------------------------------------------------

\1\ We note that these capital requirements are not ``cost'' for
the purpose of calculating the benefits and costs of this Federal
program. Costs, in the context of this program, are the resources
spent on applying for and complying with the terms of the loans. As
noted above, we will solicit comments on the information collection
requests associated with the implementation of the CO-OP program
(for example, application, reporting) in one or more future 60-day
notices.
---------------------------------------------------------------------------

D. Anticipated Benefits

CO-OPs also offer a unique opportunity to foster and spread
emerging models of integrated delivery systems, both to improve health
outcomes and to lower health costs (see, for example, testimony of Sara
Collins before the Advisory Committee, The Consumer Operated and
Oriented Plan (CO-OP) Program Under the Affordable Care Act: Potential
and Options for Spreading Mission-Driven Integrated Delivery Systems,
at http://www.commonwealthfund.org/~/media/Files/Publications/
Testimony/2011/Jan/Collins--CoOp%20testimony--11311.pdf). CO-OPs can
adopt new models and new arrangements that are more patient-centered
than the current fragmented delivery system. Improved delivery systems
may provide better health outcomes due to coordinated care, better
chronic disease management, and improved quality of care.
In addition, by adding competition in numerous local and State
markets, CO-OPs have the potential to promote efficiency, reduce
premiums or premium growth, and improve service and benefits to
enrollees. By their nature, traditional cooperatives, on which the CO-
OP program is modeled, focus on responsiveness to their members and
accountability to member needs, which may create flexibility to reduce
administrative costs. Direct savings could be substantial after the
initial start-up period given the magnitude of the total spending that
may be involved. Resulting attempts to regain market share by
traditional insurance issuers competing with CO-OPs could lead to
system-wide savings across millions of enrollees.

E. Alternatives Considered

Throughout this proposed rule we have presented and analyzed
alternatives. The program is largely defined by the statute, but in
this proposed rule, we have sought to identify options that would best
enable newly formed CO-OPs to offer CO-OP qualified health plans. We
welcome comments on any other alternatives that would improve the
proposed rule and the likelihood of program success.
The most important alternatives to our proposed standards would be
to impose either a higher or lower interest repayment on loans. Among
the thousands of Federal programs providing financial assistance, the
great majority make grants that are not repayable. The Federal
government also provides financial assistance through loan programs.
Borrower interest rates, in some cases, are higher than Treasury rates,
while in other cases rates are subsidized by the Government (see the
estimates in the Federal Credit Supplement volume of the Budget of the
United States Government for FY 2012, at http://www.gpoaccess.gov/usbudget/fy12/cr_supp.html).
There is also a tradeoff between the amount of a loan subsidy and
the likely default rate. For example, if a 1 percent increase in the
interest rate were to increase the likelihood of total default by 1
percent or more, the net effect would be to increase Federal costs. In
the CO-OP program, substantially higher interest rates could threaten
required solvency reserves. We cannot predict quantitatively the
effects of

[[Page 43247]]

interest charges on the willingness of organizations to sponsor CO-OPs,
but substantially higher interest charges would clearly reduce the
likelihood of CO-OPs being created in as many States. Higher interest
charges could also reduce the ability of CO-OPs to expand and
correspondingly reduce the benefits of the program.

F. Accounting Statement

As required by OMB Circular A-4, we have prepared an accounting
statement. The transfer costs shown are the net costs resulting from
default and loss of interest over the relevant 5 year (Start-up Loan)
and 15 year (Solvency Loan) periods. We have estimated that $600
million would be used for Start-up Loans and $3,200 million would be
used for Solvency Loans. As previously presented, for purposes of this
calculation our primary estimate is that 65 percent of the Solvency
Loans and 60 percent of the Start-up Loans are repaid. We have used a
low-cost estimate that assumes 80 percent repayment of all loans and a
high-cost estimate that assumes 50 percent repayment of all loans. Our
estimates use one percent below the current yields for 5-year U.S.
Treasury bonds as the repayment interest rate on Start-up loans and two
percent below the current yields for the average of 10-year and 20-year
U.S. Treasury Bonds as the repayment rate for the Solvency Loans (see
http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield).

Table 1--Accounting Statement: Classification of Estimated Costs and Savings
[$ in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Units
--------------------------------
Category Primary estimate Low estimate High estimate Year Discount Period
dollars rate (%) covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Qualitative: New CO-OP enrollees served may experience better health outcomes. There are also potential cost savings system-wide from competitive
effects on other health care plans. Net benefits will depend on the extent to which CO-OP plans augment or substitute for other health care insurance
and services.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Qualitative: Costs include administrative burdens associated with applying for and complying with the terms of the loans.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal Government Costs.............. $210 million $190 million $230 million 2012 7 2012-31
$110 million $80 million $140 million 2012 3 2012-31
--------------------------------------------------------------------------------------------------------------------------------------------------------

VI. Other Requirements for Analysis of Economic Effects

The Regulatory Flexibility Act (RFA) requires agencies to determine
whether proposed rules would have a ``significant economic impact on a
substantial number of small entities'' and, if so, to prepare a
Regulatory Flexibility Analysis to identify options that could mitigate
the impact of the proposed regulation on small businesses.
All CO-OPs established under the program will be private nonprofit
organizations and hence qualify as small entities under the RFA. CMS
interprets the requirement as applying only to regulations with
negative impacts, but routinely prepares a voluntary Regulatory
Flexibility Analysis for regulations with significant positive impacts.
The positive economic impacts of the program on CO-OPs will clearly
be ``significant,'' particularly in the effects on thousands of small
businesses that are likely to purchase insurance through the Exchanges
and would benefit from the lower premium costs that CO-OPs will likely
create. Moreover, small businesses will have the opportunity to create
consortia to help sponsor CO-OPs and may actively pursue these savings.
In the light of the benefits to these small entities, the Department
has prepared a voluntary Regulatory Flexibility Analysis. The preceding
economic analysis, together with the remainder of this preamble,
constitutes that analysis.
Section 1102(b) of the Social Security Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. We do
not believe a regulatory impact analysis is required here because this
proposed rule would not have a direct effect on small rural hospitals
or other providers.
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that agencies assess anticipated costs and benefits before issuing any
rule whose mandates on State, local, or tribal governments in the
aggregate, or on the private sector, require spending in any 1 year of
$100 million in 1995 dollars, updated annually for inflation. This
proposed rule would impose no such mandates. Accordingly, no analysis
under UMRA is required.
Executive Order 13132 on Federalism establishes requirements that
an agency must meet when a proposed rule imposes substantial costs on
State and local governments, preempts State law, or otherwise has
Federalism implications. This proposed rule does not trigger these
requirements.

List of Subjects in 45 CFR Part 156

Administrative practice and procedure, Advertising, Advisory
committees, Brokers, Conflict of interest, Consumer protection, Grant
programs--health, Grants administration, Health care, Health insurance,
Health maintenance organization (HMO), Health records, Hospitals,
Indians, Individuals with disabilities, Loan programs--health,
Organization and functions (Government agencies), Medicaid, Public
assistance programs, Reporting and recordkeeping requirements, Safety,
State and local governments, Sunshine Act, Technical Assistance, Women,
and Youth.

For the reasons set forth in the preamble, the Department of Health
and Human Services proposes to further amend 45 CFR part 156, as
proposed to

[[Page 43248]]

be added at 76 FR 41866, July 15, 2011, as set forth below:

PART 156--HEALTH PLAN REQUIREMENTS UNDER THE PATIENT PROTECTION AND
AFFORDABLE CARE ACT, INCLUDING REQUIREMENTS RELATED TO EXCHANGES

1. The authority citation for part 156 continues to read as
follows:

Authority: Title I of the Affordable Care Act, Sections 1301-
1304, 1311-1312, 1321, 1322, 1324, 1334, 1342-1343, and 1401-1402.

2. Subpart F is added to read as follows:
Subpart F--Consumer Operated and Oriented Plan Program
Sec.
156.500 Basis and scope.
156.505 Definitions.
156.510 Eligibility.
156.515 CO-OP minimum standards.
156.520 Loan terms.

Subpart F--Consumer Operated and Oriented Plan Program

Sec. 156.500 Basis and scope.

This subpart implements section 1322 of the Affordable Care Act by
establishing the Consumer Operated and Oriented Plan (CO-OP) program to
foster the creation of new consumer-governed, private, nonprofit health
insurance issuers, known as ``CO-OPs.'' Under this program, loans are
awarded to encourage the development of CO-OPs. Applicants that meet
the eligibility standards of the CO-OP program may apply to receive
loans to help fund start-up costs and meet the solvency requirements of
States in which the applicant seeks to be licensed to issue CO-OP
qualified health plans. This subpart sets forth the governance
requirements for the CO-OP program and the terms for loans awarded
under the CO-OP program.

Sec. 156.505 Definitions.

The following definitions apply to this subpart:
Applicant means an entity eligible to apply for a loan described in
Sec. 156.520 of this subpart.
Consumer operated and oriented plan (CO-OP) means a loan recipient
that satisfies the standards in section 1322(c) of the Affordable Care
Act and Sec. 156.515 of this subpart within the timeframes specified
in this subpart.
CO-OP qualified health plan means a health plan that has in effect
a certification that it meets the standards described in subpart C of
part 156, except that the plan can be deemed certified by CMS or an
entity designated by CMS as described in Sec. 156.520(e).
Exchange has the meaning given to the term in proposed Sec.
155.20.
Formation board means the initial board of directors of the
applicant or loan recipient before it has begun accepting enrollment
and had an election by the members of the organization to the board of
directors.
Individual market has the meaning given to the term in proposed
Sec. 155.20.
Issuer means an insurance company, insurance service, or insurance
organization (including a health maintenance organization) which is
licensed to engage in the business of insurance in a State and which is
subject to State law which regulates insurance.
Member means an individual covered under health insurance policies
issued by a loan recipient.
Nonprofit member organization or nonprofit member corporation means
a nonprofit, not-for-profit, public benefit, or similar membership
entity organized as appropriate under State law.
Operational board means the board of directors elected by the
members of the loan recipient after it has begun accepting enrollment.
Predecessor, with respect to a new entity, means any entity that
participates in a merger, consolidation, purchase or acquisition of
property or stock, corporate separation, or other similar business
transaction that results in the formation of the new entity.
Pre-existing issuer means a health insurance issuer that was in
existence on July 16, 2009.
Qualified nonprofit health insurance issuer means a loan recipient,
which satisfies or can reasonably be expected to satisfy the standards
in section 1322(c) of the Affordable Care Act and Sec. 156.515 of this
subpart within the time frames specified in this subpart, until such
time as CMS determines the loan recipient does not satisfy or cannot
reasonably be expected to satisfy these standards.
Related entity means an entity that shares common ownership or
control with a pre-existing issuer or a trade association whose members
consist of pre-existing issuers, and satisfies at least one of the
following conditions:
(1) Retains responsibilities for the services to be provided by the
issuer;
(2) Furnishes services to the issuer's enrollees under an oral or
written agreement; or
(3) Performs some of the issuer's management functions under
contract or delegation.
SHOP has the meaning given to the term in proposed Sec. 155.20.
Small group market has the meaning given to the term in proposed
Sec. 155.20.
Solvency Loan means a loan provided by CMS to a loan recipient in
order to meet State solvency and reserve requirements.
Sponsor means an organization or individual that is involved in the
development, creation, or organization of the CO-OP or provides
financial support to a CO-OP.
Start-up Loan means a loan provided by CMS to a loan recipient for
costs associated with establishing a CO-OP.
State has the meaning given to the term in proposed Sec. 155.20.

Sec. 156.510 Eligibility.

(a) General. In addition to the eligibility standards set forth in
the CO-OP program Funding Opportunity Announcement (FOA), to be
eligible to apply for and receive a loan under the CO-OP program, an
organization must intend to become a CO-OP and be a nonprofit member
organization.
(b) Exclusions from eligibility. (1) Subject to paragraph (b)(2) of
this section, an organization is not eligible to apply for a loan if:
(i) The organization is a pre-existing issuer, a trade association
whose members consist of pre-existing issuers, a related entity, or a
predecessor of either; or
(ii) A State or local government, any political subdivision
thereof, or any instrumentality of such government or political
subdivision is a sponsor of the organization.
(2) The exclusion of pre-existing issuers in paragraph (b)(1)(i) of
this section does not exclude from eligibility an applicant that:
(i) Has as a sponsor a nonprofit organization that is not an issuer
or a trade association whose members consist of issuers and that also
sponsors a pre-existing issuer, provided that the pre-existing issuer
does not share any of its board or the same chief executive with the
applicant; or
(ii) Has purchased assets from a preexisting issuer provided that
it is an arm's-length transaction where neither party was in a position
to exert undue influence on the other.

Sec. 156.515 CO-OP standards.

(a) General. A CO-OP must satisfy the standards in this section in
addition to all other statutory, regulatory, or other requirements.
(b) Governance requirements. A CO-OP must meet the following
governance requirements:
(1) Member control. A CO-OP must implement policies and procedures
to foster and ensure member control of the

[[Page 43249]]

organization. Accordingly, a CO-OP must meet the following the
requirements:
(i) The CO-OP must be governed by an operational board with all of
its directors elected by a majority vote of the CO-OP's members;
(ii) All members must be eligible to vote for each director on the
organization's operational board;
(iii) Each member of the organization must have one vote in the
elections of the directors of the organization's operational board;
(iv) Elections of the directors on the organization's operational
board must occur no later than one year after the effective date on
which the organization provides coverage to its first member;
(v) Elections of the directors on the organization's operational
board must be contested so that the number of candidates for vacant
positions on the operational board exceeds the number of vacant
positions; and
(vi) The majority of the voting directors on the operational board
must be members of the organization.
(2) Standards for board of directors. The operational board for a
CO-OP must meet the following standards:
(i) Each director must meet ethical, conflict-of-interest, and
disclosure standards including that each director act in the sole
interest of the CO-OP;
(ii) Each director has one vote unless he or she is a non-voting
director;
(iii) Positions on the board of directors may be designated for
individuals with specialized expertise, experience, or affiliation (for
example, providers, employers, and unions);
(iv) Positions on the operational board that are designated for
individuals with specialized expertise, experience, or affiliation
cannot constitute a majority of the operational board even if the
individuals in those positions are members of the CO-OP. This provision
does not prevent any individual from seeking election to the
operational board based on being a member of the CO-OP; and
(v) Limitation on government and issuer participation. No
representative of any Federal, State or local government (or of any
political subdivision or instrumentality thereof) and no representative
of any organization described in Sec. 156.510(b)(1)(i) of this subpart
may serve on the CO-OP's formation board or operational board.
(3) Ethics and conflict of interest protections. The CO-OP must
have governing documents that incorporate ethics, conflict of interest,
and disclosure standards. The standards must protect against insurance
industry involvement and interference. In addition, the standards must
ensure that each director acts in the sole interest of the CO-OP and
its members, avoids self dealing, and acts prudently and consistently
with the terms of the CO-OP's governance documents and applicable State
and Federal law. At a minimum, these standards must include:
(i) A mechanism to identify potential ethical or other conflicts of
interest;
(ii) A duty on the CO-OP's executive officers and directors to
disclose all potential conflicts of interest;
(iii) A process to determine the extent to which a conflict exists;
(iv) A process to address any conflict of interest; and
(v) A process to be followed in the event a director or executive
officer of the CO-OP violates these standards.
(4) Consumer focus. The CO-OP must operate with a strong consumer
focus, including timeliness, responsiveness, and accountability to
members.
(c) Standards for health plan issuance. A CO-OP must meet several
standards for the issuance of health plans in the individual and small
group market.
(1) At least two-thirds of the policies or contracts for health
insurance coverage issued by a CO-OP in each State in which it is
licensed must be CO-OP qualified health plans offered in the individual
and small group markets.
(2) Loan recipients must offer a CO-OP qualified health plan at the
silver and gold benefit levels, defined in section 1302(d) of the
Affordable Care Act, in every individual market Exchange that serves
the geographic regions in which the organization is licensed and
intends to provide health care coverage. If offering at least one plan
in the small group market, loan recipients must offer a CO-OP qualified
health plan at both the silver and gold benefit levels, defined in
section 1302(d) of the Affordable Care Act, in each SHOP that serves
the geographic regions in which the organization offers coverage in the
small group market.
(3) Within the earlier of thirty-six months following the initial
drawdown of the Start-up Loan or 6 months following the initial
drawdown of the Solvency Loan, loan recipients must be licensed in a
State and offer at least one CO-OP qualified health plan at the silver
and gold benefit levels, defined in section 1302(d) of the Affordable
Care Act, in the individual market Exchanges and if the loan recipient
offers coverage in the small group market, at the silver and gold
benefit levels, defined in section 1302(d) of the Affordable Care Act,
in the SHOPs. Loan recipients may only begin offering plans and
accepting enrollment in the Exchanges for new CO-OP qualified health
plans during the open enrollment period for each applicable Exchange.
(d) Requirement to become a CO-OP. Loan recipients must meet the
standards of Sec. 156.515 of this subpart no later than fifty-four
months following initial drawdown of the Start-up Loan or eighteen
months following the initial drawdown of a Solvency Loan.

Sec. 156.520 Loan terms.

(a) Overview of Loans. (1) Applicants may apply for the following
loans under this section: Start-up Loans and Solvency Loans.
(2) All loans awarded under this subpart must be used in a manner
that is consistent with the FOA, the loan agreement, and all other
statutory, regulatory, or other requirements.
(3) Solvency Loans awarded under this subsection will be structured
in a manner that ensures that the loan amount is recognized by State
insurance regulators as contributing to the State-determined reserve
requirements or other solvency requirements (rather than debt)
consistent with the insurance regulations for the States in which the
loan recipient will offer a CO-OP qualified health plan.
(b) Repayment period. The loan recipient must make loan payments
consistent with the approved repayment schedule in the loan agreement
until the loan is paid in full consistent with State reserve
requirements, solvency regulations, and requisite surplus note
arrangements. Subject to their ability to meet State reserve
requirements, solvency regulations, or requisite surplus note
arrangements, the loan recipient must repay its loans and, if
applicable, penalties within the repayment periods in paragraphs
(b)(1), (2), or (3) of this section.
(1) The contractual repayment period for Start-up Loans and any
associated penalty is five years following each drawdown of loan funds
consistent with the terms of the loan agreement.
(2) The contractual repayment period for Solvency Loans and any
associated penalty is fifteen years following each drawdown of loan
funds consistent with the terms of the loan agreement.
(3) Changes to the loan terms, including the repayment periods, may
be executed if CMS determines that the loan recipient is unable to
repay the loans as a result of State reserve requirements, solvency
regulations, or requisite surplus note arrangements or without
compromising coverage stability, member control, quality of care, or
market stability. In the case of

[[Page 43250]]

a loan modification or workout, the repayment period for loans awarded
under this subpart is the repayment period established in the loan
modification or workout. The revised terms must meet all other
regulatory, statutory, and other requirements.
(c) Interest rates. Loan recipients will be charged interest for
the loans awarded under this subpart. Interest will be accrued starting
from the date of drawdown on the loan amounts that have been drawn down
and not yet repaid by the loan recipient. The interest rate will be
determined based on the date of award.
(d) Failure to pay. Loan recipients that fail to make loan payments
consistent with the repayment schedule or loan modification or workout
approved by CMS will be subject to any and all remedies available to
CMS under law to collect the debt.
(e) Deeming of CO-OP qualified health plans. Health plans offered
by a loan recipient may be deemed certified as a CO-OP qualified health
plan to participate in the Exchanges for up to 10 years following the
life of any loan awarded to the loan recipient under this subpart,
consistent with section 1301(a)(2) of the Affordable Care Act. An
Exchange must recognize a health plan offered by a loan recipient as an
eligible participant of the Exchange if it is deemed certified by CMS
or an entity designated by CMS. To be deemed as certified to
participate in the Exchanges, the loan recipient must comply with the
standards for CO-OP qualified health plans set forth pursuant to
section 1311(c) of the Affordable Care Act, all State-specific
standards established by an Exchange for qualified health plans
operating in that Exchange, and the standards of the CO-OP program as
set forth in this subpart. If a loan recipient is deemed to be
certified or loses its deemed status and is no longer deemed as
certified to participate in the Exchanges, CMS or an entity designated
by CMS will provide notice to the Exchanges in which the loan recipient
offers CO-OP qualified health plans.
(f) Conversions. The loan recipient shall not convert or sell to a
for-profit or non-consumer operated entity at any time after receiving
a loan under this subpart. The loan recipient shall not undertake any
transaction that would result in the CO-OP implementing a governance
structure that does not meet the standards in this subpart.

(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

Dated: July 15, 2011.
Marilyn Tavenner,
Principal Deputy Administrator and Chief Operating Officer, Centers for
Medicare & Medicaid Services.
Approved: July 15, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2011-18342 Filed 7-18-11; 11:15 am]
BILLING CODE 4120-01-P