Pendululum Joins National Alliance of Cooperatives

The National Alliance continues to provide updated knowledge for Cooperatives and collaboratives in healthcare and has invited Pendulum HealthCare Development Corporation to become a member.

The Alliance consists of some 30 CoOps that are in various stages of development nationwide. As Pendulum is working with the Rockford Organization for Smaller Enterprise (ROSE) and the Employers Coaltion on Health (ECOH) aswell as community members in the Rockford area to form a CoOp under the reform legislation Pendulum Health will benefit from particiaption and best practices of existing CoOps.

Consumer Operated and Oriented Plan

“The experience of health cooperatives in the United States has demonstrated that the most successful organizations have been those with strong links to high-performing, integrated delivery systems that have been able to provide high-quality integrated and coordinated health care.” *

From the earliest days of Cooperative Health Plans in Washington State and Oregon to Minnesota, Wisconsin and Michigan, we see that many successful HMOs and PPOs started as Cooperative entities with a shared vision for their organization’s employees and a need to solve rising care costs. Many of the Accountable Care Organizations now being planned or already operating represent the chassis for the formation of a CO-OP plan and many providers sponsoring these plans see the attractiveness of having a product for smaller employers as part of their means to increase market share in exchange for their efficiency.

“The Department of Health and Human Services can draw on the experience of successful health cooperatives as it lays the ground rules for the development of a substantial number of new organizations across the country. If these new entities are provided the tools and flexibility necessary to reach sustainable membership levels, attain adequate purchasing leverage in their markets, develop strong links with integrated care systems, manage risk appropriately, and follow a mission-driven roadmap to achieve high-quality and coordinated care, they have the potential to embody the key overarching goals of health reform. These include the delivery of high-quality, effective, and safe care to achieve the best possible health outcomes for populations; the design of care delivery that is in the best interests of patients; and the efficient use of resources” **

Key Provisions of the CO-OP Program

  • Organizations qualified to participate in the CO-OP program are those that are organized under state law as nonprofit, member corporations.
  • Priority will be given to plans that operate on a statewide basis, utilize integrated care models, and have significant private support.
  • The governance of the organizations must be subject to a majority vote of its members and the organizations are required to operate with a strong consumer focus, but they are not consumer-owned.
  • Profits must be used to lower premiums, improve benefits, or finance programs aimed at improving the quality of care to its members.
  • Any health insurance issuer that existed prior to July 16, 2009 may not qualify for the CO-OP program.
  • Grant or loan recipients under the CO-OP program are restricted from using the funds for marketing activities.
  • Representatives of federal, state, or local governments as well as representatives of insurance issuers that were in existence on July 16, 2009 cannot serve on cooperative boards.
  • Cooperatives may establish private purchasing councils that may enter into collective purchasing arrangements for items and services. But the councils are precluded from setting payment rates for health care facilities or providers that are participating in health insurance coverage provided by the plans.
  • The secretary of HHS is precluded from participating in any negotiation between cooperatives, or a purchasing council, and any health care facilities or providers including drug manufacturers, pharmacies, or hospitals. The secretary may not establish pricing structures for reimbursement of health benefits provided by the qualified health plans.

Provisions of the Affordable Care Act Relevant to CO-OPs

  • New health cooperatives will enter a vastly different insurance marketplace in 2014 compared with the one that exists currently, and one that is potentially more favorable to them.
  • The Affordable Care Act will bring sweeping change to the individual and small-group markets through:
    • the establishment of state insurance exchanges that will offer qualified health plans, including health cooperatives;
    • an individual requirement to have health insurance;
    • new insurance market regulations including prohibition of rating based on health status;
    • a federally determined essential benefit package with defined levels of cost-sharing;
    • sliding scale premium and cost-sharing credits for low and moderate income families;
    • small business tax credits (starting in 2010 and continuing through 2016);
    • insurer cost controls such as federal and state review of unreasonable premium increases and medical loss ratio requirements

Pendulum’s Role

Pendulum HealthCare Development Corporation has developed an operational plan and infrastructure for providers to launch and operate a successful CO-OP in their region that offers both commercial market share and the ability to expand the bundled payment of savings being implemented by the ACO for Medicare. We believe that as smaller employers suffer the bulk of rate increases and the fact the government will subsidize some participants in the CO-OP through the exchange that local providers can compete in this arena and develop a unique sustainable advantage in the marketplace.

*Sara Collins Ph.D Testimony before the Centers for Medicare and Medicaid CO-OP Program Advisory Board January 13th 2011 on behalf of Commonwealth Fund . ** Ibib