Andy Slavitt, acting administrator at the Centers for Medicare & Medicaid (CMS), told the U.S. Senate Committee on Finance last week about the benefits -- as well as the current shortcomings -- of the nation's health co-ops.
Slavitt was greeted by some harsh remarks from committee Chairman Orrin Hatch (R-Utah) at the opening of the “Services on Healthcare Co-ops: A Review of the Financial and Oversight Controls” hearing.
“Supporters of the (Affordable Care Act) claimed it would both expand health coverage and bring down costs," Hatch (R-Utah) said. "Not surprisingly, as the health law has been implemented, reality has had a different story to tell."
Before asking Slavitt to address what could be done to improve the situation, Hatch criticized the law.
“Under the Affordable Care Act, insurance premiums are rising – at astronomical rates in some parts of the country – and options for patients and consumers are decreasing, seemingly by the day,” Hatch said.
Sen. Ron Wyden (D-OR), senior ranking member of the committee, said that there clearly is a need for health co-ops.
“More than a million people turned to co-ops for insurance in 2015 – including many deeply vulnerable people who needed access to top-notch care," Wyden said at the start of the hearing. "That tells me that there is big demand for co-ops, and lawmakers should be focused on making sure co-ops provide the services that consumers require.”
Of the 24 original health co-ops under the Affordable Care Act, only a dozen remain.
In defense of the co-ops that could not remain open, Wyden argued that co-op investments were “yanked away.”
“It’s no wonder some of them have run into trouble," Wyden said. "Congress ought to be looking for ways to strengthen co-ops and stoke private competition in insurance marketplaces nationwide so that consumers have more choices."
During his testimony, Slavitt explained that co-ops have played an important role in the health care marketplace under the Affordable Care Act by providing additional options for access to health care services. He remains optimistic that there is room for progress while the CMS continues monitoring and overseeing the co-ops.
He also said that the co-op application review process was “rigorous, objective and conducted with input and expertise from an independent party,” then the applications were sent to CMS for internal review. Out of 147 applications, 24 were accepted and funded.
Slavitt also explained that co-ops, like newcomers to any market, “especially the insurance market, face numerous pressures and must overcome multiple barriers, particularly in their early stages of operations.”
“The Federal Advisory Group found that many of the challenges the co-ops faced were the same as any new health insurance entity,” he said.
Since awarding both start-up and solvency loans, Slavitt reported that CMS has been closely monitoring and evaluating the co-ops to assess performance and compliance.
“Twelve co-ops are no longer selling coverage in the marketplace and are in various stages of winding down operations," Slavitt testified.
The remaining co-ops are being closely watched by CMS.
To address Hatch's question about future remedies, Slavitt explained that monitoring includes ongoing reporting to and interactions with CMS that include weekly, biweekly or monthly calls to monitor goals and challenges; periodic on-site visits; performance and financial auditing; and enhanced oversight plans and corrective action plans as part of the co-op monitoring and oversight process. He also said CMS has the ability to terminate a loan agreement with a co-op if it is not holding up to CMS and community standards.
Slavitt concluded his testimony by explaining how CMS will continue its rigorous, ongoing monitoring and oversight of co-ops.
“We will use every tool available to recoup federal dollars, where appropriate," he said.
CMS administrator testifies before Senate Finance Committee about co-op oversight
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