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New HHS rule allows co-ops to more easily raise capital, tightens use of special enrollment periods

The federal government plans to make it easier for theconsumer operated and oriented plans to raise capital and unveiled certainchanges to further tighten access to its special health insurance enrollmentperiods.

In an interim final rule,the U.S. Department of Health and Human Services said individuals who movepermanently to a new location will not be eligible to seek coverage duringspecial enrollment periods if they have not been enrolled for at least one dayin the 60 days preceding the permanent move. However, the special enrollmentperiod option will remain available for individuals who move to the U.S. fromoutside the country or from a U.S. territory.

"This ensures that individuals are not moving for thesole purpose of obtaining health coverage outside of the open enrollmentperiod," the Centers for Medicare and Medicaid Services said in anannouncement.

The agency also noted that special enrollment periods willbe available under only six specific circumstances: loss of other qualifyingcoverage; changes in household due to marriage or birth; a permanent move to anew home; changes in eligibility for financial help; defined types of errorsmade by marketplaces or plans; and other specific cases of cycling betweenMedicaid and the Marketplace or leaving Americorps coverage.

In a bid to shore up reserves of co-ops, the new rule allowsthem to form relationships with investors and engage in capital transactions"in a manner common in the private sector."

The rule also eases restrictions on co-op board membership,lifting an earlier rule that a majority of voting directors must be members ofthe co-op. While a majority of a co-op board will still be elected by itsmembers, all directors need not be elected by co-op members.

Also, the federal government may allow an insolvent co-op toconvert or sell policies to a for-profit or non-consumer operated entity under"appropriate circumstances" to preserve coverage for its enrollees.Under a loan agreement with co-ops, such transactions can currently prompt thefederal government to accelerate loan repayment or terminate the loan agreement.

"Any sale, conversion, or other change to contractterms with cost implications to the government would be reviewed by CMS priorto implementation," the agency said.

The new regulations will be effective May 11 and the agencywill accept comments until July 5.