1.) For the 11 CO-OPs that continued to operate, CMS  disbursed, as of November 2015, about $897 million (74 percent) of the  CO-OP program loans awarded. Initial CMS Monitoring Focused on CO-OPs’ Progress as Start-up Issuers

CMS’s initial activities to monitor the CO-OPs, starting when it began  awarding CO-OP loans in early 2012, tracked their progress in becoming  health insurance issuers (for example, establishing provider networks,  arranging appropriate office space, and filling key management positions)  and their compliance with program requirements (for example,  establishing governance subject to a majority vote of its members and  incorporating ethics and conflict-of-interest standards). CMS account managers maintained documentation of these  teleconferences electronically. CMS Expanded and Refined CO-OP Monitoring Activities as the Program Matured

As CO-OPs began enrolling members, CMS supplemented its initial  monitoring activities with additional tools to evaluate CO-OP performance  and sustainability. CMS officials told us that they expect to monitor CO-OPs that have  ceased operations to the extent possible. CMS officials also noted that the direct analysis may, at  times, be focused on particular areas of concerns. Long-term sustainability. Working capital. 6. To respond to issues identified at individual CO-OPs using the direct  analysis and risk assessment tools, as well as its other monitoring  activities, in November 2014, CMS formally established a framework,  known as an escalation plan, for evaluating and responding to concerns. Using a standard set of questions, the account manager assesses the  issue in light of five sets of considerations: (1) whether the issue was self- reported by the CO-OP and the frequency with which the CO-OP  experienced the same or other issues, (2) the potential impact on the  CO-OP’s state licensure and exchange participation, (3) the potential  impact on the CO-OP’s approved business plan, (4) the potential impact  on the CO-OP’s compliance with program requirements, and (5) the  potential impact on the CO-OP’s members and markets where it  participates. As of November 9, 2015,  CMS had required corrective action plans or implemented enhanced  oversight plans (or both) for 15 CO-OPs, of which 8 continue to  operate in 2016. Both CO-OPs ceased operations on, or  before, January 1, 2016. In addition, CMS  officials told us that, to the extent possible, they plan to monitor CO-OPs  that have ceased operations. CMS officials told us that their goal is to work with the  CO-OPs and their states’ departments of insurance to bring operations to  an end in a way that minimizes negative effects on members, as well as  to recover program loan funding to the extent possible. CO-OPs’ 2015 Premiums Were Generally Lower than Their 2014 Premiums and Other Issuers’ 2015 Premiums

		Most CO-OPs’ Premiums for 2015 Were Lower than Their 2014 Premiums

Our analysis showed that in most of the 20 states where CO-OPs offered  health plans on the exchange during both the 2014 and 2015 open  enrollment periods, the state-wide average monthly premium for a   30-year-old individual to purchase a CO-OP silver health plan was lower  for 2015 than for the previous year. Average CO-OP Premiums in 2015 Were Generally Lower than those for Other Issuers

In the 23 states where CO-OPs offered health plans on the states’ health  insurance exchanges in 2015, our analysis showed that the average  monthly premiums for CO-OP health plans in all tiers were lower than the  average monthly premiums for other health plans for 30-year-old  individuals in most rating areas. For all five tiers, the average premiums for CO-OP health  plans were lower than the average premiums for other health plans in  more than 75 percent of ratings areas where both a CO-OP and at least  one other issuer offered health plans. CO-OP Enrollment Doubled from 2014 to 2015, but Less than Half Was in CO-OPs Continuing in 2016, and Enrollment for Most CO-OPs Differed from Projections

The 22 CO-OPs that participated in the 2015 open enrollment period  together reported, as of June 30, 2015, enrollment of over 1 million— more than double the total enrollment reported at the same time the  previous year. As figure 7  shows, of the 11 CO-OPs that have ceased operations, 6 did not meet  their individual enrollment projections, while 5 CO-OPs exceeded their  projections. Our analysis, however, also found that 4 CO-OPs had not yet  reached a program benchmark of enrolling at least 25,000 members. According to CMS officials, exceeding this benchmark can be important  for CO-OPs, because that number of enrollees should better allow a  health insurance issuer to cover its fixed costs. CMS officials told us that  they are monitoring the CO-OPs’ enrollment with attention to this  benchmark. Agency Comments

We provided a draft of this report to HHS for comment. In its written  comments, which appear in appendix XV, HHS stated its commitment to  CO-OP beneficiaries and taxpayers in managing the CO-OP program,  noted the achievements of the CO-OP program to date, and described  developments in the department’s oversight activities. HHS also provided technical comments, which  we incorporated as appropriate. Rating area 14 includes Holmes and Wayne counties. Appendix XIII: Premiums for the Consumer Operated and Oriented Plans Relative to Premiums for Other Health Plans in Oregon

The state-wide average monthly premium for the two consumer operated  and oriented plans’ (CO-OP) silver health plans for 30-year-old individuals  in Oregon increased from 2014 to 2015 and, for the one CO-OP that  continued to operate in 2016, increased again from 2015 to 2016.
Why GAO Did This Study

The Patient Protection and Affordable Care Act established the CO-OP program and provided loans that helped create 23 CO-OPs to offer qualified health plans to individuals and small employers. While the program seeks to increase competition and improve accountability to members, questions have arisen about their long-term sustainability and their effects on health insurance markets, particularly as 12 CO-OPs ceased operations on or before January 1, 2016.
In April 2015, GAO issued its first report examining the status of CO-OP premiums, enrollment, and program loans in 2014 ( GAO-15-304 ). As one CO-OP ceased operations in early 2015, GAO was asked to review the CO-OP program again. This report examines (1) how CMS monitors the CO-OPs' performance and sustainability; (2) how CO-OP premiums changed from 2014 to 2015, and in 2015, how they compared to premiums for other health plans; and (3) how CO-OP enrollment changed from 2014 to 2015, and in 2015, how it compared to projections. GAO analyzed 2014 and 2015 premium and enrollment data from CMS, states, and the National Association of Insurance Commissioners; and reviewed applicable regulations, policies, procedures, and documentation of CMS monitoring activities. GAO also interviewed CMS officials.
In commenting on a draft of this report, the Department of Health and Human Services stated its commitment to CO-OP beneficiaries and taxpayers, and provided technical comments, which GAO incorporated as appropriate.

What GAO Found

The Centers for Medicare & Medicaid Services' (CMS) monitoring of the consumer governed, nonprofit health insurance issuers—known as consumer operated and oriented plans (CO-OPs)—evolved as the CO-OP program matured, and as 12 of the 23 CO-OPs ceased operations on or before January 1, 2016. CMS's initial monitoring activities, starting when it began to award CO-OP program loans in early 2012, focused on the CO-OPs' progress as start-up issuers and their compliance with program requirements. Since then, CMS refined and expanded its monitoring to evaluate CO-OP performance and sustainability. CMS officials use enrollment and financial data to identify CO-OPs for which actual performance differed substantially from what was expected. CMS officials also perform routine assessments of each CO-OP's risk in various areas, such as working capital and management. To evaluate and respond to financial or operational issues identified at CO-OPs, CMS formalized a framework that it called an escalation plan. Under this plan, CMS may require that a CO-OP take corrective actions or the agency may implement an enhanced oversight plan based on its evaluation of the issue. As of November 2015, CMS used its escalation plan to evaluate and respond to issues at 18 CO-OPs, including 9 of the CO-OPs that have ceased operations. CMS officials told GAO that they plan to work with states' departments of insurance to continue monitoring CO-OPs that have ceased operations to the extent possible in order to minimize any negative impact on members and, if possible, recover loans made through the program.
GAO found that in 14 of the 20 states where CO-OPs offered health plans during both 2014 and 2015, the average CO-OP premiums for 30-year-old individuals purchasing silver health plans—the most commonly selected plan—were lower in 2015 than the average premiums for such plans in 2014. In the 23 states where CO-OPs offered health plans during 2015, the average premiums for all CO-OP health plans were lower than those for other issuers in more than 75 percent of rating areas—geographical areas established by states and used, in part, by issuers to set premium rates. Across the 23 states, average silver health plan premiums were lower for CO-OPs than other issuers in 31 percent to 100 percent of rating areas.
In addition, GAO found that the combined enrollment for the 22 CO-OPs that offered health plans in 2015 was over 1 million as of June 30, 2015, more than double the enrollment of a year earlier. More than half of these members were in CO-OPs that ceased operations. GAO also found that the combined enrollment for all 22 CO-OPs in 2015 exceeded their projections for 2015 by more than 6 percent. Of the 11 CO-OPs that have ceased operations, 6 did not meet their individual enrollment projections for 2015. Among the 11 CO-OPs that continue to operate in 2016, 4 CO-OPs had not yet reached a program benchmark of enrolling at least 25,000 members. CMS officials told GAO that exceeding this benchmark represents a level of enrollment that should better allow an issuer to cover its fixed costs; CMS officials told GAO that they are monitoring the CO-OPs' enrollment with attention to this benchmark.