Consumer Operated and Oriented Plan (CO-OP) Program

Frequently Asked Questions

Updated March 8, 2012

The information provided in these FAQs is based on the Final Rule and Funding Opportunity Announcement (FOA) for the CO-OP Program.

Please note: Letters of Support for prospective applicants must be included as a part of the application and should not be submitted separately.

Questions and Answers

Q1: Can the Centers for Medicare & Medicaid Services (CMS) provide additional guidance on the establishment of the Private Purchasing Council, such as:

1. Are there any limitations on functions performed beyond those mentioned in the statute?
2. Does a separate entity need to be established? If so, are there limitations on form, such as LLC, Partnership, Schedule C, or Non-Profit?
3. Could the council act as a management organization for multiple CO-OPs to achieve development or administrative efficiencies?
4. If a separate entity needs to be established, could external organizations own all or part of the council, if not otherwise subject to any of the predecessor or related entity regulations?

A1: The statute provides wide latitude in the operation of purchasing councils to buy services such as third-party administrative services, reinsurance or IT functions for CO-OPs that would result in lower administrative costs. The statute envisions that purchasing councils are formed by the CO-OPs as separate organizations. In addition, there is no barrier to a purchasing council providing management functions for a CO-OP or group of CO-OPs, but a CO-OP in its application would need to clearly describe the management functions performed directly by the CO-OP, what functions it anticipates delegating to a purchasing council or other third party, and what the effects would be on the overall management and governance of the CO-OP.

Q2: Please provide additional guidance on what is included in the 75 page limit.

1. Are the Excel spreadsheets for the pro-forma financial statements and other supporting models (i.e. bylaws) considered part of the 75-page limit, or can they be considered as attachments?
2. If an applicant intends to set up a multi-state CO-OP, are they limited to this 75 page limit?

A2: a. Under the Funding Opportunity Announcement of December 9, 2011, the application narrative may not exceed 75 pages. This includes: the application cover letter, the application abstract, the project narrative, and the business plan (not including pro forma financials, resumes, and any other supporting Excel documents).

This 75 page limit does not include: Standard Forms (i.e. SF 424), the feasibility study certification and analysis, organizational charts, position descriptions, resumes, pro forma financials and other business plan attachments, supporting excel documents, governance and licensure requirements, evidence of nonprofit status, relevant statutory and regulatory citations regarding state licensure, eligibility affidavit and application certification, affidavit(s) of criminal and/or civil proceedings, affidavit of eligibility to participate in federal programs, and evidence of private support. Applicants may upload these additional appendices as separate attachments.

b. If an applicant intends to set up a multi-state CO-OP, they are expected to discuss their overall feasibility study and business plan within the 75-page limit. However, applicants may use appendices to further describe their State specific feasibility studies and business plans.  Such appendices would not be included in the 75-page limit.

Q3: Is it acceptable to incorporate generic nonprofits that have the mission to develop a CO-OP plan but that do not have a stated explicit insurance purpose and are not incorporated as an insurance entity so as to meet timeline?

A3: As finalized at 45 CFR 156.515, applicants must be incorporated as a non-profit member organization.  However, applicants need not be incorporated or licensed as an insurance entity provided that the applicant entity is able to become a licensed issuer within the prescribed time period.  The applicant must be the entity that ultimately becomes a CO-OP.  Under the Final Rule, applicants should have a plan for achieving licensure and offering a qualified health plan in the Affordable Insurance Exchanges within three years of receiving Start-up Loan funds or within one year of receiving Solvency Loan funds.  
Q4: Must an eligible applicant be incorporated as a non-profit member organization specifically within the State it intends to organize a future CO-OP in order to be awarded a CO-OP loan?

A4: Under the Final Rule, an applicant is not required to be incorporated as a non-profit member organization in each State in which it intends to organize a CO-OP.  It must, however, be authorized to do business in any State where it intends to offer coverage. A successful applicant must eventually be licensed by the State insurance agency, either as a domicile issuer or a foreign issuer operating with an expansion license in every State in which it intends to provide health insurance coverage.

Q5: Is it permissible to set up a relationship between the sponsoring organization and the CO-OP entity whereby the sponsoring organization applies for the loan on behalf of the future CO-OP, with a plan for transitioning the loan to the CO-OP entity once created?

A5: No, under the Final Rule, the nonprofit entity that will become the CO-OP after receiving funds will need to submit the application. As stated in response to Question #4, applicants need not be incorporated as an insurance entity provided that the applicant entity is able to become a licensed issuer within the prescribed time period.

Q6: What does CMS expect applicants to have in place with vendor partners at the time of the application (i.e. Letters of Intent with networks, reinsurers, etc.)?

A6:  Consistent with the Funding Opportunity Announcement, we expect that applicants will either have identified strategic operational partners or be able to describe a plan for developing specific partnerships with provider networks, reinsurers, etc., and provide documentation of existing relationships with vendor partners. This could be demonstrated with a Letters of Intent or Support. It is not expected that formal obligations will be in place at the time of application or that negotiations will be completed.

Q7: What happens if the CO-OP time-line changes as a result of State Department of Insurance (DOI) concerns?

A7: Consistent with recommendations of the CO-OP Advisory Board, CO-OPs should begin discussions with the State DOI as soon as possible and prior to submitting an application in order to be able to provide solvency information as required in the application and comply with any State requirements that will be essential to formation, operation, and licensure of the CO-OP. Successful applicants will have three years from the first drawdown of Start-up Loans to work with their State DOI to become licensed in order to offer qualified health plans.  Successful applicants will be unable to draw down solvency loan funds until such funds are required by the State DOI to complete the licensure process.

Q8: Would the standard in the Final Rule that two-thirds of contracts must be in the individual or small group markets, prevent a CO-OP from offering coverage to large groups or medical groups or hospitals that want to offer the coverage to their employees? Is a Medicaid or Medicare contract counted as one contract?

A8: Under the Final Rule, as long as two-thirds of the policies and contracts issued by a CO-OP in each State are qualified health plans in the individual or small group markets, the CO-OP is not prevented from offering coverage to large groups or medical groups that want to offer coverage to their employees. Each insurance policy or contract that an issuer sells constitutes a single activity regardless of the group size.  For example, a firm of 40 insured workers and an individual Exchange enrollee each count as single activity.  Therefore, a Medicaid or Medicare contract or an employer group contract would be counted as one single activity.

Q9: Can a business plan and budget include funding for private purchasing council administration and governance activities?

A9: According to the Funding Opportunity Announcement, the costs of establishing private purchasing councils as provided for in section 1322(d) of the Affordable Care Act may be considered start-up costs.

Q10: How is “part of State or local government and …medical practice groups” defined in the Final Rule?  Would a hospital that is a separate, private, not-for-profit entity that provides training for medical students of a State university medical school be prohibited from sponsoring a CO-OP?  Could such a hospital or related entity sponsor a CO-OP so long as the chief executive and board members are not shared?

A10:  Consistent with the Final Rule, a private, non-profit hospital that provides training to State university medical students or residents, but does not receive funding other than as payment for services from an instrumentality of a State or local government may sponsor a CO-OP.

The Final Rule clarifies that a CO-OP may receive limited grants (less than 40% of its total funding, excluding CO-OP loans) and other funding from a State or local government as long as the CO-OP or its sponsor is not controlled by a governmental entity.

Q11: Would a conversion to a for-profit entity be prohibited in all situations?  What if the CO-OP Members voted in favor of such a conversion if it meant that coverage would be preserved?  What happens if, after several years of operations, the CO-OP needs additional financial support and the most suitable alternative is private equity?  Would a conversion be prohibited?

A11: Under the Final Rule, a CO-OP conversion to a for-profit entity is prohibited in all circumstances.

Q12: Is the (Treasury rate minus 1%) a fixed or adjustable rate for the loan repayment?

A12: According to the Funding Opportunity Announcement, Start-up Loan recipients will be charged an interest rate equal to the average interest rate on marketable Treasury securities of similar maturity minus 1 percentage point (but no less than 0%), at the time of award. This interest rate will be determined at the time of the award and remain fixed for the life of the loan.

Similarly, Solvency Loan recipients will be charged an interest rate equal to the average interest rate on marketable Treasury securities of similar maturity minus 2 percentage points (but no less than 0%), at the time of award. This interest rate will be determined at the time of the award and remain fixed for the life of the loan.

Q13: Can a person that is a member of an existing health cooperative that is an existing licensed issuer be on the Board of Directors (BOD) of a CO-OP or otherwise involved with the governance of that CO-OP?

A13:  Under the Final Rule, a member of an existing health cooperative that is a licensed issuer may serve on the BOD of a CO-OP or otherwise participate in the governance of a CO-OP if the member is not a representative of the existing health cooperative.  Therefore, the member cannot participate on the CO-OP’s BOD if he or she is an employee of the existing health cooperative or otherwise serves as a “representative” of the organization. A “representative” means an individual who stands or acts for an organization or group of organizations through a formal agreement or financial compensation such as a contractor, broker, lobbyist, official, or employee. The member must not serve in a position that would create a conflict of interest or allow the existing health cooperative to exert undue influence on the governance of the CO-OP.

Q14: Can an employee from a current health insurance issuer also be an employee for a CO-OP?

A14: Consistent with the Final Rule, an employee may work for both a current health insurance issuer and a CO-OP, provided that the employee does not serve in a position of leadership or management for either organization that would create a conflict of interest or allow the current health insurance issuer to exert undue influence on the governance or activities of the CO-OP.

Q15. After receiving the Letters of Intent (LOI) to apply for CO-OP loans, will CMS be releasing this information publicly?  

A15: Because the loan award process is competitive, CMS does not anticipate publicly posting the names or locations of organizations that submit a Letter of Intent (LOI).

Q16: Will CMS approve Start-Up Loan modifications necessary to satisfy the capital requirements associated with unexpected rapid growth or high enrollment?

A16: Consistent with the FOA, applicants should estimate their funding needs as accurately as possible in the business plan submitted as a part of the application. Applicants should not assume that loan modifications will be available to provide additional funding.

Q17: Will CMS allow applicants to submit detailed budgets only for the limited Start-Up period and less detailed forecasts for the periods after that?

A17: Consistent with the FOA, the budget and budget narrative must account for all uses of Start-Up Loan funds and cover the full period through which start-up funds are expended.  The budget template attached to the funding opportunity announcement (FOA) is intended to be a sample of what CO-OP applicants should provide with their business plans. Applicants are expected to submit a budget plan for Start-Up and Solvency Loans with as much specificity as is feasible, with the expectation that CO-OPs will be updating their business plan as they become operational.

Q18:  What would preclude a CO-OP from offering insurance prior to 2014?

A18:  As described in Section 1322(c)(6) of the Affordable Care Act, an entity cannot be a qualified nonprofit health insurance issuer unless it “does not offer a health plan in a State until that 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.”

Q19: Can an organization partner with an existing health insurance issuer to develop a CO-OP?

A19:  As a statutory requirement under section 1322(c)(2)(A)the Affordable Care Act, if an organization is a health insurance issuer that was in existence on July 16, 2009, a related entity, or any predecessor of either ( pre-existing issuer), that organization is not eligible for loans under the CO–OP program and cannot become a CO–OP.  The Final Rule also prohibits pre-existing issuers from sponsoring a CO-OP.

Q20:  Will CMS allow a Third Party Administrator develop a CO-OP?

A20:  Consistent with the statute and Final Rule, a Third Party Administrator may develop a CO-OP unless the Third Party Administrator was also a licensed health insurance issuer on July 16, 2009.

Q21:  If CMS is unlikely to fund applicants with overlapping service areas and two applicants submit Letters of Intent (LOI) to apply for funds, is the first applicant’s application held until the second applicant’s application is reviewed?

A21:  The statute permits the funding of multiple CO-OPs in any State, provided that there is sufficient funding to capitalize at least one CO-OP in each State.  Consistent with the FOA, we expect applications to be reviewed within approximately 75 days of notice of an application being complete.  Accordingly, applications will be evaluated on their own merits, and awards will be made in the time-table outlined in the FOA. Final award decisions will be made by a CMS program official. In making these decisions, the CMS program official will take into consideration: recommendations of the external reviewers; reviews for programmatic compliance; the reasonableness of the size of the loan request and anticipated results of funding the application; ability to repay the loan, and the likelihood that the proposed project will result in the benefits expected.  

Q22: Does the prohibition in the statute on provider rate setting by a private purchasing council prevent CO-OPs from arranging for their provider contract rates to be used by other CO-OPs for out-of-network care?

A22: Under the statute, CO-OPs will be allowed to establish private purchasing councils.  As described in the statute, private purchasing councils may not “set payment rates for health care facilities or providers participating in health insurance coverage provided by qualified nonprofit health insurance issuers,” and relevant antitrust law continues to apply.  However, CO-OPs “may establish a private purchasing council to enter into collective purchasing arrangements for items and services other than those directly with health care providers  that increase administrative and other cost efficiencies, including claims administration, administrative services, health information technology, and actuarial services.”

CO-OPs should work with State insurance regulators to establish service areas that meet all applicable State laws.  

Q23:  Can the CO-OP use a management services organization to provide services for the benefit of the CO-OP, including providing executives for the organization?

A23:  Consistent with the Final Rule, a CO-OP must demonstrate that the management is controlled by the CO-OP members and is accountable to them. Applicants must show how they will achieve this accountability when transitioning from the Formation Board to Operational Board. Boards are permitted to include experts who are not plan members in order to obtain knowledge in areas such as finance, actuarial functions, and medical management.

Q24:  Does CMS have any objection to a CO-OP paying reasonable fees to the members of the formation board of directors (BOD) or to the members of the operational board of directors (BOD)?

A24: The statute, Final Rule, and FOA do not prohibit reasonable compensation. Applicants should consider that salaries will affect the size of the loans and premium rates in their business plan, which will be evaluated to ensure that they are viable in the CO-OP’s target market.

Q25:  Does the 80% individual/small group Medical Loss Ratio (MLR) requirement under the Affordable Care Act is, apply to CO-OPs, especially in the early years of their development?

A25: Under the statute, the Medical Loss Ratio (MLR) standards that appear in Section 2718 of the Public Health Service Act apply to CO-OPs.  These rules include a “credibility adjustment” when the insurer’s medical loss ratio for a market within a State is based on less than 75,000 people enrolled for an entire calendar year. The credibility adjustment, recommended by the National Association of Insurance Commissioners (NAIC) and adopted in the regulation, addresses the statistical unreliability of experience based on a small number of people covered.  In addition, consistent with NAIC recommendations, certain insurers that have newly joined the insurance market may be able to delay reporting their medical loss ratio until the next year.  When 50% or more of an insurer’s premium income accounts for policies that have not been effective for an entire calendar, they are eligible to delay reporting until the following year. A fact sheet on MLR standards is available here: http://www.healthcare.gov/news/factsheets/medical_loss_ratio.html.

Q26: Does CMS determine if a CO-OP is tax-exempt at the State level?

A26:  Under the statute and Final Rule, an applicant and a CO-OP must be “organized under State law as a nonprofit, member corporation,” which is defined as “a nonprofit, not-for-profit, public benefit, or similar membership entity organized as appropriate under State law.”  State tax-exempt status is not an eligibility criterion; it is possible that an organization may be a nonprofit organization but not tax-exempt under State law.

Q27:  Does an existing non-profit entity have to form a separate entity to apply for funds and become a CO-OP?

A27:  First, as a statutory requirement under the Affordable Care Act, a health insurance issuer that was in existence on July 16, 2009 cannot sponsor a CO-OP. Under the Final Rule, the applicant must be the entity that will eventually become a CO-OP.  Unless the sponsor wants to become a CO-OP, it should form a separate entity.

Q28: Can a CO-OP be founded by a consumer-run nonprofit self-insured Multiple Employer Welfare Arrangement (MEWA) that does not have an insurance license, but that is currently licensed in its domiciliary state as a non-profit, self-funded MEWA?

A28:  Under the statute and Final Rule, entities not licensed as issuers on July 16, 2009 are permitted to apply.  If a MEWA was licensed as an issuer in a State on July 16, 2009, it cannot receive a loan under the CO-OP program.

Q29: If an applicant is applying to operate in multiple States, are separate loan applications required? If an application covers more than one State, can the $100,000 available for preparing the business plan and feasibility study be multiplied by the number of States?

A29: Consistent with the Final Rule and FOA, submitting multiple applications for CO-OPs operating in multiple States depends on the management team and governance of each CO-OP.  Separate loan applications can be submitted if the CO-OPs are independently organized under State law, the management teams differ, or the CO-OPs are independent and governed by separate boards of directors by State but share the same sponsor. An applicant intending to create a single CO-OP that operates in more than one state need only submit a single loan application.

The FOA specifies that, for applicants “approved to operate in more than one State, an additional $50,000 attributable to the cost of preparing feasibility studies and business plans per additional State in which the applicant is approved to operate will be considered eligible costs for Start-Up Loans for up to four additional States amounting to a maximum of $300,000.”

Q30: We anticipate filing as an applicant for two States initially.  Each of these States will have a separate legal entity. Should we anticipate making two applications, even though we anticipate sharing administrative and management functions between the two legal entities? If we do file two applications, how could we best reflect this in the budget narrative and forms?

A30: If the applicant intends to create a single CO-OP that operates in more than one State, it need only submit a single loan application.  On the other hand, if the two entities will be functioning as separate CO-OPs with separate governing boards but are sharing some services in common, an applicant filing for a CO-OP in two States should file two applications. The application should indicate the names and locations of the applicants sharing services in the project narrative. The budget narrative should clearly describe how expenses for shared services will be allocated between the two applicants.  

Q31: Which parts of our application can we mark proprietary to protect the identity of potential managers and other sensitive information such as enrollment strategy?  Are there specific areas that we may or may not designate as confidential?  

A31: In accordance with the Department’s Freedom of Information Act (FOIA) implementing regulation at 45 C.F.R. § 5.65(c), you may designate part or all of the information you submit as exempt from disclosure under Exemption 4 of the FOIA if you believe the information is commercial or financial information that is confidential or privileged.  If there is a FOIA request for your submitted information, we will follow the pre-disclosure notification procedures found at 45 C.F.R. § 5.65(d)-(e) to seek your input on the applicability of Exemption 4 before disclosure is made.  If the information has previously been published or made generally available to the public, it will not be considered confidential or privileged for purposes of Exemption 4.  For more information on the applicability of Exemption 4, please visit http://www.justice.gov/oip/foia_guide09/exemption4.pdf.

Q32: Can interest be earned on Solvency Loans awarded under the CO-OP program?

A32: The statute, Final Rule, and FOA require that reserves are held in appropriate accounts structured and invested in compliance with standards approved by State insurance regulatory agencies.

Q33: Is there any limitation on using the infrastructure created with CO-OP Start-Up or Solvency-Loans to serve non-exchange business?  

A33:  Neither the statute nor the Final Rule restricts loans to only lines of business operating in the Exchanges. CO-OPs are further required to offer plans “in every individual market Exchange that serves the geographic regions in which the organization is licensed and intends to provide health care coverage,” and, if the CO-OP serves the small group market, to offer plans “in each SHOP that serves the geographic regions in which the organization offers coverage in the small group market.” The Final Rule requires that “at least two-thirds of the policies or contracts for health insurance coverage issued by a CO–OP in each State in which it is licensed must be CO–OP qualified health plans offered in the individual and small group markets.”

Q34:  If an individual has family coverage through the CO-OP (either through the individual's employer or the individual's purchase of a non-group policy), are the individual's dependents (e.g. spouse) also members with the right to vote and serve as a director?  

A34:  The Final Rule defines a member as an “individual covered under health insurance policies issued by a loan recipient.”  However, voting rights are limited to members over 18 years old. This definition of “member” does not permit the plan to exclude adult dependents (e.g. spouses) from governance because every adult covered by the CO OP must be eligible to vote and serve on the board of directors in order to ensure that decisions are made in the best interest of all covered lives.

Q35: Can the Solvency Loans be requested over a ramp-up period (i.e. 2014 through 2016)?

A35: As stated in the FOA, applicants should request the total amount they anticipate requiring during the life of the loan. However, as further stated in the FOA, “CMS anticipates that Solvency Loan recipients may need to draw down the loan in multiple phases.”  

Q36: Can applications be supplemented after submission?

A36: No. As required in the FOA, all loan applications must be submitted electronically as complete and be received through http://www.grants.gov by 11:59 p.m.  Eastern Time on October 17, 2011, or by 8:00pm Eastern Time on the quarterly application due dates thereafter: January 3, 2012, April 2, 2012, July 2, 2012, October 1, 2012 and December 31, 2012. It is important to make sure that applications are complete at the time of submission according to the requirements set forth in the FOA. Appendix A on page 55 of the FOA serves as an organizational tool to assist the applicant in preparing a complete application package.  Applicants are strongly encouraged not to wait until the due date to submit their application package in case of technical or other unforeseen difficulties.  Applicants should register on grants.gov at least one month prior to the due date to be sure that they have registration numbers and other information needed to submit an application  Incomplete or late applications will not be considered for award in that submission round.

Q37: Can the application ask for a range of funding (minimum/max with two different plans for growth?)

A37: As indicated in the FOA, an applicant should submit its most accurate projection of its funding needs based on its expected growth trajectory as reflected in its business plan.

Q38: How long does the grants.gov registration process take if our organization has never used this process before?

A38:  The time required to complete the registration process varies by applicant and it is possible that it may take over a month.  Therefore, we strongly encourage you to start this process as early as possible.  In order to use grants.gov you will be required to have an Employee Identification Number (EIN) and a Data Universal Numbering System (DUNS) number; you also will need to register with the Central Contractor Registration (CCR) database.  For specific information about these various numbers and databases please go to http://www.grants.gov/applicants/applicant_faqs.jsp.

Q39: The FOA encourages applicants to secure private support, including but not limited to, committed funding, committed in-kind support, letters of intent from key stakeholders or partners, and letters of support from key community leaders. Do letters of support from key community leaders need to be submitted with my application?

A39: Yes. The funding opportunity announcement states that an applicant should include any evidence of private support (which includes letters of support from key community leaders) as an attachment when submitting a completed application on grants.gov. All materials should be submitted with the application to grants.gov. If letters of support for an applicant are sent directly to CMS, we cannot guarantee that they will be considered as part of that application.

Q40: The Funding Opportunity Announcement lists “Evidence of Private Support” as a required document under the Start-up Loan and Solvency Loan Application Check List on page 56. However, the Review Criteria listed on page 40 of the FOA states that “Evidence of Private Support” is a statutory preference and not a requirement. If an applicant does not have any evidence of private support, do they need to provide this document?

A40:  No. As stated in the Amended FOA released on December 9, 2011, evidence of private support is a recommended document.  Evidence of private support should only be provided if an applicant has private support such as committed funding, or committed in-kind provision of services. As discussed in Q39, evidence of private support also includes letters of intent from key stakeholders (e.g., provider groups) to participate in the CO-OP or its formation, and/or letters of support from key community leaders.  Applicants who do not have private support should indicate this in their application.

Q41: Who is conducting the external review process for CO-OP applications?

A41: To assist CMS in awarding CO-OP loans, we have obtained services from Deloitte Consulting, LLP to establish, and manage qualified expert, objective technical panels responsible for reviewing applications and providing recommendations to CMS staff.  The technical review panels review all applications to determine applicant eligibility. As stated in the FOA, the final award decisions are made by CMS program officials with private insurance expertise and who are walled off from CMS CO-OP program staff.

Q42: How many applications did CMS receive for the CO-OP program on October 17th and January 3, 2012 and what States do these applications cover?

A42: Consistent with established Departmental policy in the administration of a competitive award process, CMS does not anticipate publicly posting the names or locations of organizations that submit an application. This information will be posted for successful applicants that receive loans. We can say that applications received reflect proposals to operate in most states, with multiple applications for a number of states. However, applicants should keep in mind that all materials submitted to CMS are subject to the Freedom of Information of Act (FOIA), 5 USC § 552.  Certain information in the materials may be exempt from release (for example confidential business information and personal privacy information), as outlined in the FOIA and in the Department’s FOIA regulation. Individuals who wish to submit a FOIA request for CMS records may do so by utilizing the following link to the CMS FOIA webpage: /foia/.

Q43: If a representative of a for-profit health care provider sits on the Board of Directors of a pre-existing Issuer, is the for-profit health care provider barred from sponsoring a CO-OP?

A43: No. The health care provider could sponsor a CO-OP as long as the representative of the provider resigns from the Board of Directors of the issuer.  The CO-OP board cannot have any members that also represent pre-existing issuers that are a related entity to the for-profit sponsoring organization.

Q44: Can Start-up Loans be used to fund costs associated with clinical functions and/or physical construction of offices and facilities?

A44: No. Start-up Loans cannot be used to fund costs associated with construction of facilities, including clinical facilities, nor can Start-up Loans be used for clinical expenses, such as salaries of or payments to treating providers, provider clinical space or administrative staff associated with clinical functions, or clinical equipment. CO-OPs should be self-sustaining, meaning these costs are paid for by member premiums and reflected in the reimbursement to providers.  However, start-up funds can be used to develop integrated administrative and clinical IT and to provide other functions typically associated with the business of insurance such as quality improvement and disease management programs.

Q45: After submitting my application via www.grants.gov - Opens in a new window , I received an error message saying that “one or more of my documents failed to upload.” How should I resolve this issue?

A45:  At the http://www.grants.gov website, you will find information about submitting an application electronically through the site. Technical support is available 24 hours a day, 7 days a week [1-800-518-4726 or support@grants.gov]. We strongly recommend that that all applicants register and receive their DUNS number as early as possible.  In addition, we strongly recommend that applicants begin the process of uploading the application through www.grants.gov - Opens in a new window as early as possible because technical difficulties in the application submission that cannot be resolved within the deadline may result in your application being denied review until re-submitted in the next application submission cycle. Applicants can submit their applications at any time up to the deadline.

In addition, please follow this guidance to ensure that you upload your application successfully:

• The applicant must submit all documents electronically in PDF format or Microsoft Excel (Please use Microsoft Office 2007), including all information included on the SF 424 and all necessary assurances and certifications, and all other attachments.
• Please upload each required and recommended document from the Start-up Loan and Solvency Loan Application Check List as a separate attachment. The checklist can be found on page 55 of the Funding Opportunity Announcement.
• Please include a table of contents page with your application that lists all required and recommended documents in your submission. The table of contents should list each attachment with a brief explanation of what the document is and how many pages it contains (including the number of worksheets within an Excel workbook).
• Please include a header at the top of each attachment clearly indicating what the document is. For example, the Feasibility Study (a required document) should have a header at the top of each page of the document that says “Feasibility Study” as well as the name of the applicant organization. If a document cannot have a header (i.e. one of the Standard Forms or the resumes) please use a cover page for this attachment indicating what the file is.
• Please use a file name for each attachment that indicates what the document is. For example, the Feasibility Study should be saved as “ABC CO-OP. Feasibility Study.PDF” and not saved as “Attachment A.”
• Please use page numbers for the application and separate page numbers for each Attachment.  For example, the page numbers in the feasibility study should be labeled “Feasibility Study, page 
• Please do not save files or zipped files that are embedded within a PDF or Excel file. Please save all documents as a separate PDF or Excel file and upload them separately.

Q46: The Funding Opportunity Announcement lists “Evidence of Nonprofit Status” as a required document under the Start-up Loan and Solvency Loan Application Check List on page 56. What type of evidence is needed to prove that an applicant has obtained nonprofit status in their State?

A46: In order to fulfill this requirement, the applicant must submit a copy of the organization’s official certificate of organization or similar document, such as articles of incorporation, showing the State or tribal seal that clearly establishes that nonprofit status has been conferred or recognized by the appropriate State department or official. Applicants must submit evidence of nonprofit status that is certified or approved as provided under State law or the entire application will be rejected. Rejected applicants can re-apply in the next round. An application for nonprofit status submitted to the State but that has not been approved and certified by the State is not sufficient.

Q47: Are Multiple Employer Welfare Arrangements (MEWAs) eligible to apply for CO-OP loans?

A47. Consistent with the FOA and the Final Rule section 156.510, MEWAs are eligible to apply for a loan under the CO-OP Program if they are not pre-existing issuers and they meet all eligibility requirements.  Therefore, if on July 16, 2009, a MEWA was licensed as an issuer in a State and was subject to State law that regulates insurance, it is not eligible to become or sponsor a CO-OP. The laws for MEWAs vary from State to State; accordingly, some MEWAs may be eligible to apply to be a CO-OP and others may not.