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1. E-mail: healthcaregroup@earthlink.net “Keeping the Promise” HEALTHY AMERICAN HEALTH CARE GROUP, INC. One Commerce Ctr-1201 Orange Street Wilmington, Delaware 19899 Telephone Number: 877-256-4166 Fax Number: 888-244-0544 Clinton Mayes, MBA Report to APHCA Meeting September 27, 2012

2. Overview of Affordable Care Act’s CO-OP Program • THE CONSUMER OPERATED AND ORIENTED PLAN (CO-OP) • http://cciio.cms.gov • The ACA (Section 1322) created the Consumer Operated and Oriented Plan (CO-OP) program to foster the creation of new consumer-governed nonprofit health plans. • To encourage the establishment of a CO-OP in each State, the program has a $3.4 billion appropriation to subsidize loans for eligible prospective CO-OPs. • • The CO-OP program will provide Start-up Loans and Solvency Loans to eligible nonprofit organizations.

3. Overview • January 2011--30-35 people at first CO-OP meeting in DC • Plus OMB; HHS; CCIIO • Section 1322—http://aahm.net • 501(c) (29)? • Loans-Start up-repayment in 5 yrs; • Loans Solvency –repayment in 15 years.

4. Currently Funded CO-OP’s20 States awarded $1,560,856,720 Minutemen Health, Inc.Service Area: MassachusettsAward Amount: $88,498,080Award Date: August 31, 2012 Minuteman Health, Inc. (MHI) is sponsored by Tufts Medical Center and Vanguard Health Systems, two hospital systems that intend to participate in the MHI network. MHI’s mission is to deliver efficient, quality healthcare financing to their future membership. They propose to initially provide regional coverage in eastern and central Massachusetts and expand to offer statewide coverage by July 2014. Community Health Alliance Mutual Insurance CompanyService Area: TennesseeAward Amount: $73,306,700Award Date: August 31, 2012 Community Health Alliance Mutual Insurance Company (CHA) is sponsored by Healthcare 21 Business Coalition (HC21), a member of the National Business Coalition on Health, and LBMC Employment Partners (LBMS), a professional services organization providing financial, accounting services, and Professional Employer Organization (PEO) services to small employers in Tennessee. CHA’s mission is to create new health insurance options expected to meet the medical, wellness, and financial needs of insurance consumers in Tennessee. CHA is planning on offering its insurance plans state-wide. Additionally, Midwest Members Health (MMH) has changed its name to CoOportunity Health and will continue to provide insurance coverage to individuals in Iowa and Nebraska under the terms of its original loan agreement. In addition to this new award, the following applicants were awarded CO-OP loans in previous rounds: Compass Cooperative Health NetworkService Area: ArizonaAward Amount: $93,313,233Award Date: June 8, 2012 Compass Cooperative Health Network (CCHN) is sponsored by prominent local experts in insurance, chronic disease coordination, use of health information technology to better coordinate care, and business startup.  Compass Cooperative Health Network (CCHN) plans to offer health insurance coverage statewide over time in Arizona. Colorado Health Insurance Cooperative, Inc. (CHI)Service Area: ColoradoAward Amount: $69,396,000Award Date: July 27, 2012 The Colorado Health Insurance Cooperative, Inc. (CHI) is sponsored by the Rocky Mountain Farmers Union Educational and Charitable Foundation, Inc. (RMFU Foundation), which houses educational and outreach programs, and a regional cooperative development center. A significant component of CHI’s plan is to create chapters in communities throughout the state in an effort to fully engage members in the business of the CO-OP. CHI intends to offer benefit plans designed for individuals and employers inside and outside the Colorado Health Benefit Exchange. The CO-OP is committed to offering a qualified health plan at the Silver and Gold benefit levels in both the individual and Small Business Health Options Program (SHOP) Exchange markets. CHI also plans to offer at least one Value Based Plan (VBP) in the small group market. CHI is planning on marketing its insurance programs on a state-wide basis.

5. HealthyCTService Area: ConnecticutAward Amount: $75,801,000Award Date: June 8, 2012 HealthyCT is sponsored by the Connecticut State Medical Society (CSMS) and the CSMS-IPA (a statewide Independent Practice Association), and plans to offer high-quality, coordinated medical care with strong physician-patient relationships at its foundation.  HealthyCT will encourage the use of patient-centered medical homes in providing health insurance coverage statewide. CoOportunity Health (formerly Midwest Members Health)Service Area: Iowa and NebraskaAward Amount:  $112,612,100Award Date: February 21, 2012 CoOportunity Health is sponsored by the Iowa Institute, a community organization. They plan to provide health insurance coverage throughout Iowa and Nebraska.  Kentucky Health Care CooperativeService Area: KentuckyAward Amount: $58,831,500Award Date: June 22, 2012 Kentucky Health Care Cooperative is sponsored by a coalition of business leaders, providers and community organizations who plan to improve health outcomes throughout the Commonwealth of Kentucky by providing better access to high quality care at an affordable cost. The Cooperative will participate in Kentucky’s Health Insurance Exchange, as well as in the individual and small group marketplace. Maine Community Health Options (MCHO)Service Area: MaineAward Amount: $62,100,000Award Date: March 23, 2012 Maine Community Health Options is sponsored by Maine Primary Care Association, which is a membership organization comprised of Maine’s community, tribal, migrant, and homeless health centers.

6. I. Concept and Feasibility • CO-OP---Non-profit; no ownership rights!! • By-Laws should define members, consumers, and patients; • “No marketing “ rule; • Quickly need membership of 25,000; • Goal is 5% market share; • Rent infrastructure-IT, claims, network, etc.; • Federal loans for Capital requirement , accepted by State DOI; Growth Capital • Premium rates (Individuals and Small Groups) must be adequate to generate NET Income.

7. II. The Role of the Consumer in Consumer Operated and Oriented Plans (CO-OPs) • Majority consumer Board • Open meetings - annual; • No conflicts of interest; • Mission driven—non-profit • --To foster the creation of new, consumer-governed nonprofit health plans that will: • – Operate with a strong consumer focus and greater plan accountability and Provide high quality, low cost, coordinated care. • --CO-OPs will enhance competition in the Exchanges and provide additional plan choices for consumers and small businesses. • See FQHC’s for 51% Board model.

8. Operational Board Composition A majority of the voting directors on the operational board must be CO-OP members. • How many director positions (less than half), if any, should be open to or reserved for persons who are not CO-OP members? Directors may not be representatives of any federal, state or local government, or of any pre-existing insurer. Citations: 45 CFR § 156.515(b)(1)(vi) and (v)

9. Operational Board Reserved Positions Less than half the director positions may be reserved for persons with specialized expertise, experience, or affiliation (for example, providers, employers, and unions). • Should any director positions be so reserved, or should such directors simply be recruited as necessary?  Nonvoting directors are allowed on the operational board. • How many directors, if any, should be nonvoting? • Should all or any of the nonvoting director positions be reserved for persons with specialized expertise, experience, or affiliation? Citations: 45 CFR § 156.515(b)(2)(ii) to (iv)

10. Operational Board Standards Board must be subject to ethics, conflict of interest, and disclosure standards that: • Protect against insurance industry involvement and interference. • Ensure each director acts in the sole interest of the CO–OP, its members, and its local geographic community as appropriate • Ensure each director avoids self dealing, and acts prudently and consistently with the terms of the CO–OP’s governance documents and applicable law. There should be a provision deeming a director to have resigned for lack of participation (e.g., failure to attend half the meetings in a calendar year)? Citations: 45 CFR § 156.515(b)(3)

11. Officers of HAHCG • Officers • Cynthia Newhall, Chairman , Mississippi • Lucius Black, Vice Chairman, Illinois • Carolyn Mayes, Secretary, DC area • Milton Patton, Treasurer, Georgia

12. Planning Committee

13. III. Starting-up New Nonprofit Health Plans • Sources of risk capital: Preferred Stock; Debentures; subordinate LOC; Foundations and Gov Grants/Loans. • Infrastructure/IT; Policies and Procedures; • Market affinity—CHC’s invested with membership; --Consumer Advocacy; Marketing Plan; Patient centered medical home(NCQA) • Two Major problems: Capital and Network!!!

14. CO-OP Profit Standards Surplus revenue must be used to: • Lower premiums; • Improve benefits; • Improve the quality of health care delivered to its members; • Repay loans awarded by the CO-OP program; and/or • Accumulate reasonable and sufficient reserves to provide for enrollment growth, financial stability, and stable coverage for its members.

15. CO-OP Standardsfor Health Plan Issuance Market of Operation: A CO-OP must issue 2/3 of contracts in the individual or small group markets. • A CO-OP must offer at least one qualified health plan in the individual Exchange at each of the silver and gold benefit levels within 36 months of receiving a Start-up Loan or 1 year of receiving a Solvency Loan. • If a CO-OP offers small group coverage, it must offer at least one qualified health plan at each of the silver and gold benefit levels in the SHOP Exchange. • CO-OPs cannot offer health coverage in a State until the State has in effect (or the Secretary has implemented for the State) the market reforms required by part A of title XXVII of the Public Health Service Act.

16. Loan Overview

17. Loan Overview Key elements include: •Well-organized and capable leadership and staff; •Integrity of member governance; •Understanding of the target market; •Robust and credible business plan with measurable milestones for durability in the market; •Adequate provider network; •Ability to begin start-up activities promptly; and •Ability to repay loans within the required timeframes.

18. Benefits of Participating in theCO-OP Program • CO-OP plans may be deemed certified to participate in the Exchanges for 2 years and recertified every 2 years for up to 10 years after their loans have been repaid • A CO-OP may apply for a tax exemption under section 501(c)(29) of the Internal Revenue Code, although it is not required to do so.

19. IV. Elements of Success: Perspectives of Member-Run Nonprofit Health Plans • Present: Group Health Co-op Wisconsin—85k members; • Health Partners Minneapolis-1.3M members; • Group Health Washington State-450k members. • Mission, Passion, Integrity and community focused; • Goal 5-10% market share; • Strong By-Laws; • Be competitive;member experience; PCMH; cost-containment. • Flexibility in product design-allow innovation. • Market where you have a strong Provider Network

20. V. New Nonprofit Health Insurers: Perspectives from State Regulators • Same licensure and solvency as other health plans; • Will be looking for strong consumer protections; • Time (2014)is wasting—6-12 mos for licensure plus non-profit status; • Challenges: Network & rates; Professional management; Adverse selection; Push back from other health plans.

21. Questions and comments from the audience • Fed and States should work in tandum, ie-one process; • Fast Track for CO-OP’s; • State should require networks to offer their best rates to CO-OP’s; • Fed should provide Planning grant NOW!;

22. Recommendations • Time is of the essence –We need to complete all task and stay on track per Business Plan; • Seek out Technical Assistance from legacy CO-OP’s (Group Health, etc.) and Vendors for ASO(claims, IT, etc.) and advisory board; • Identify Investors and community stakeholders; • Start to identify Board (Community based) and staff; • Start to identify Provider Network:ACO, FQHC, others.

23. Techniques for Success • Here are some of the techniques that our CO-OP health care system will encourage our providers to adopt: • ¶Assigning small teams — consisting of a doctor, a nurse, and various medical, behavioral and • administrative assistants — to be responsible for groups of 1,400 or so patients. The team members sit in • the same small work area and communicate easily. When a patient calls, the nurse decides whether a faceto- • face visit with a doctor or other health care provider is required or whether counseling by phone is • sufficient. The doctors are left free to deal with only the most complicated cases. They have no private • offices and the nurses have no nursing stations to which they can retreat. • ¶Integrating a wide range of data to measure medical and financial performance. Southcentral’s “data mall” • coughs up easily understood graphics showing how well doctors and the teams they lead are doing to • improve health outcomes and cut costs compared with their colleagues, their past performance and national • benchmarks, and it provides them with action lists of what they can do to improve and mentors to guide • them. That almost always spurs the laggards. One doctor whose team ranked well behind 10 others in • scheduling annual eye exams for diabetics jumped to first place within two months once she became aware • of how poorly her team was performing. • ¶Focusing on the needs and convenience of the patients rather than of the institution or the providers. The • facilities feature rooms where providers and families can chat as equals on comfortable chairs, in sharp • contrast to examination rooms where a doctor looms over a patient. Every patient visit is carefully planned • so the patient can get in and out quickly without being delayed because, say, a needed lab test result is not • available. • ¶Building trust and long-term relationships between the patients and providers. • ¶Changing from a reactive system in which a sick patient seeks medical care to a proactive system that • reaches out to patients through special events, written and broadcast communications, and telephone calls • to keep them healthy or at least out of the hospital and clinics.

24. CMS Recommendations • The Advisory Board focused on four major priorities in the award of loans: • (1)Consumer operation, control, and focus must be the salient feature of the CO-OP and must be sustained over time; • (2)Solvency and financial stability of coverage must be maintained and promoted; • (3)To the extent feasible in local provider and plan markets, COOPs should encourage greater care integration and promote payment incentives to improve efficiency and quality; • (4)Loans should be distributed by the end of 2011/early 2012 to maximize CO-OPs’ opportunity for competitive success and ability to repay loans.

25. Questions???Percent of adults who went to ER in past two years for condition that could have been treated by regular doctor if available

26. Clinton Mayes, MBAVice President and COOFamily Health Care Clinic, Inc.Phone: (601) 825-7280;  Fax: (601) 825-8130Email: cmayes@familyhealthcareclinic.com Healthy American Health Care Group, Inc. E-mail: healthcaregroup@earthlink.net