Form CMS-10392 CO-OP FOA

U.S. Department of Health and Human Services
Centers for Medicare & Medicaid Services
Center for Consumer Information and Insurance Oversight

Consumer Operated and Oriented Plan [CO-OP] Program

Initial Announcement
Invitation to Apply

Funding Opportunity Number: OO-COO-11-001
CFDA: 93.545
Date: July 28, 2011
Applicable Dates:
Voluntary Letter of Intent to Apply:

As soon as possible

First Round Application Due Date:

October 17, 2011

Subsequent Quarterly Application Due Dates:
(until December 31, 2012)

December 31st
March 31st
June 30th
September 30th

Anticipated Notice of First Round Loan Awards:

January 12, 2012

Anticipated Notice of Subsequent Loan Awards:

approximately 75 days after each applicant
receives notice that its application is
complete

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a
collection of information unless it displays a valid OMB control number. The valid OMB control
number for this information collection is 0938-1139. The time required to complete a Start-up
Loan application and a Solvency Loan application is estimated to average 516 hours per
response. These estimates include the time to review instructions, search existing data resources,
gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this
form, please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer,
Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

1

Table of Contents
OVERVIEW INFORMATION ................................................................................................... 5
I. FUNDING OPPORTUNITY DESCRIPTION ....................................................................... 7
A. Purpose and Background ........................................................................................................ 7
B. Authority................................................................................................................................. 9
C. CO-OP Governance Requirements ......................................................................................... 9
D. Program Goals ........................................................................................................................ 9
E. Types of Awards ................................................................................................................... 10
1. Joint Start-up and Solvency Loans ................................................................................ 10
2. Solvency Loans................................................................................................................. 11
F. Milestones for joint Start-up and Solvency Loans and only Solvency Loans ...................... 13
G. Tax Exemption ..................................................................................................................... 14
H. Deeming of qualified health plans offered by CO-OPs. ...................................................... 14
II. AWARD INFORMATION ................................................................................................... 16
A. Type of Assistance ............................................................................................................... 16
B. Total Funding ....................................................................................................................... 16
C. Award Type .......................................................................................................................... 16
D. Anticipated Award Date ....................................................................................................... 16
E. Estimated Number of Awards............................................................................................... 16
F. The Period of Performance, Reporting Period and Monitoring Period ................................ 17
G. Repayment of Loans ............................................................................................................. 17
1. Repayment Terms .............................................................................................................. 17
2. Interest Rates. .................................................................................................................... 18
3. Failure to pay. .................................................................................................................... 18
H. Termination of Loan Agreement. ......................................................................................... 19
1. Termination of Loan Agreement by CO-OP ..................................................................... 19
2

2. CMS-initiated Termination with CO-OP Consent ............................................................ 19
3. Termination Due to Non-compliance ................................................................................ 20
4. Immediate Termination to Avoid Imminent Harm............................................................ 20
5. Compliance with State insurance regulation ..................................................................... 20
6. Appeal of termination ........................................................................................................ 20
7. Penalty payment ................................................................................................................ 21
8. Forfeiture of loan funding.................................................................................................. 21
III. ELIGIBILITY INFORMATION........................................................................................ 22
A. Eligible Applicants ............................................................................................................... 22
B. Exclusions from Eligibility................................................................................................... 23
C. Continued Eligibility of Loan Recipient .............................................................................. 23
D. Cost-sharing or Matching ..................................................................................................... 24
IV. APPLICATION AND SUBMISSION INFORMATION.................................................. 25
A. Address to Request Application Package ............................................................................. 25
1. Application Personnel........................................................................................................ 25
2. Instructions for Applications Submitted via http://www.grants.gov: ................................ 26
B. Content and Form of Application Submission ..................................................................... 29
C. Submission Dates and Times................................................................................................ 38
D. Intergovernmental Review ................................................................................................... 38
E. Eligible Costs ........................................................................................................................ 38
F. Funding Restrictions ............................................................................................................. 38
V. APPLICATION REVIEW AND SELECTION INFORMATION ................................... 40
A. Criteria .................................................................................................................................. 40
B. Review and Selection Process .............................................................................................. 45
C. Reconsiderations ................................................................................................................... 46
VI. AWARD ADMINISTRATION INFORMATION ............................................................ 47
3

A. Award Notices ...................................................................................................................... 47
B. Administrative and National Policy Requirements .............................................................. 47
C. Terms and Conditions........................................................................................................... 48
D. Reporting .............................................................................................................................. 48
1.

Overview ........................................................................................................................ 48

2.

Reporting Submissions................................................................................................... 50

E. Technical Assistance............................................................................................................. 53
VII. AGENCY CONTACTS ...................................................................................................... 54
Appendix A: Start-up Loan and Solvency Loan Application Check List ............................. 55
Appendix B: Preparing a Budget and Budget narrative in response to SF425A.................. 57

4

OVERVIEW INFORMATION
Agency Name: Department of Health and Human Services
Centers for Medicare and Medicaid Services
Center for Consumer Information and Insurance Oversight
Funding Opportunity Title: Consumer Operated and Oriented Plan [CO-OP] Program
Announcement Type: Initial
Catalog of Federal Domestic Assistance (CFDA) Number: 93.545
Note: This Funding Opportunity Announcement is being released following a Notice of
Proposed Rulemaking (NPRM) for the CO-OP program published in the Federal Register
on July 20, 2011, 76 Fed. Reg. 43237. The terms of the final CO-OP rule may differ from
the proposed terms in the NPRM. To the extent that the application or other requirements
for a loan change as a result of amendments that are reflected in the Final Rule , applicants
that submit applications prior to the publication of the Final Rule will be given an
opportunity to revise their application for a loan under this Funding Opportunity
Announcement, if necessary.
Key Dates:
Letter of Intent: It is requested, but not required, that an applicant submit a Letter of Intent at the
earliest possible date indicating the applicant’s intent to apply for joint Start-up and Solvency
Loans, or a Solvency Loan. The purpose of the Letter of Intent is to enable CMS to estimate the
number of applications and adequately prepare for application review. The Letter of Intent must
be signed by the Chief Executive Officer (CEO), Chief Financial Officer (CFO), or an officer of
the applicant’s Board of Directors. The signed Letter of Intent must be submitted electronically
in PDF format to Grants Management Officer Michelle Feagins at Michelle.Feagins@hhs.gov.
First Round Loans
• Grants.gov application due date: October 17, 2011
• Anticipated loan award date: January 12, 2012
Subsequent Loans
• After the first round application due date (October 17, 2011) applications will be accepted
quarterly up to and including December 31, 2012, according to the following due dates:
December 31;
March 31;
June 30;
5

September 30. Loan awards or a response to the application will be provided approximately 75
days after each applicant receives notice that its application is complete.
Repayment Period
Loan repayment requirements will be specified in the Loan Agreement and shall be consistent
with the terms of the Final Rule as well as with all relevant statutory, regulatory, and other
requirements. Repayment requirements will be consistent with State solvency regulations and
other similar State laws that may apply, as specified in section 1322(b)(3) of the Affordable Care
Act. Repayment periods will be separately calculated for each partial draw of the total loan
amount. Each draw against a Start-up Loan must be repaid within five years of the specific
drawdown date, and draws against a Solvency Loan must be repaid within fifteen years of the
specific drawdown date. See proposed 45 CFR §156.520(b)(1) and (2).
• An open information teleconference for applications of this funding opportunity announcement
will be held on August 10, 2011 at noon Eastern Daylight Time. (tentative date). Additional
information will be provided when the teleconference details are finalized.

6

I. FUNDING OPPORTUNITY DESCRIPTION
A. Purpose and Background
The Patient Protection and Affordable Care Act, Pub. L. No. 111-148, enacted on March 23,
2010, and the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152,
enacted on March 30, 2010, are collectively referred to in this announcement as the ―Affordable
Care Act.‖ The Department of Defense and Full-Year Continuing Appropriations Act, 2011,
Pub. L. No. 112-10, which amended the Affordable Care Act, was enacted on April 15, 2011.
Section 1322 of the Affordable Care Act created the Consumer Operated and Oriented Plan
program (CO-OP program) to foster the creation of new consumer-governed, private, nonprofit
health insurance issuers, known as ―CO-OPs.‖ In addition to improving consumer choice and
plan accountability, the CO-OP program also seeks to promote integrated models of care and
enhance competition in the Affordable Insurance Exchanges established under sections 1311 and
1321 of the Affordable Care Act.
The statute provides loans to capitalize eligible prospective CO-OPs with a goal of having at
least one CO-OP in each State. 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. Congress
provided budget authority of $3.8 billion for the program. The statute directs the Secretary to
give priority to applicants that will offer CO-OP qualified health plans on a Statewide basis, will
use integrated care models, and have significant private support.
The statute also directs the Secretary to take into account the recommendations of the CO-OP
Program Advisory Board established pursuant to section 1322(b)(4) of the Affordable Care Act
when awarding loans under the CO-OP program. The Advisory Board issued its
recommendations in the report released on April 15, 2010 that is found at:
http://cciio.cms.gov/resources/files/coop_faca_finalreport_04152011.pdf. The Advisory Board
developed four major principles for awarding loans:
(1) Consumer operation, control, and focus must be the salient features of the CO-OP and
sustained over time;
(2) Solvency and the financial stability of coverage should be maintained and promoted;
(3) CO-OPs should encourage care coordination, quality and efficiency to the extent feasible
in local provider and health plan markets; and
(4) Initial loans should be rolled out as expeditiously as possible so that CO-OPs can
compete in the Exchanges in the critical first open enrollment period.
To be eligible for a loan, an applicant must be a private nonprofit member organization and must
intend to become a CO-OP. Pursuant to section 1322(c)(2) of the Affordable Care Act, an
organization is not eligible for a loan if it was licensed by a State as a health insurance issuer as
of July 16, 2009 or it was a related entity or predecessor organization of such an issuer. An
organization is also not eligible for a CO-OP loan if the organization has as a sponsor a State or
local government, or any political subdivision or instrumentality of a State or local government.
7

See Section III of this Funding Opportunity Announcement for details about eligibility
requirements.
As proposed in section 156.515(c) of the NPRM1, an issuer supported by the CO-OP program
will offer at least one CO-OP qualified health plan at the silver level of benefits and one at the
gold level of benefits in every individual Affordable Insurance Exchange (Exchange) that serves
the geographic area in which it is licensed and intends to provide health care coverage. If an
applicant chooses to offer at least one plan in the small group market outside the Exchange, it
must commit to offering a CO-OP qualified health plan at both the silver and gold benefit levels
in each Small Business Health Options Program (SHOP) that serves the geographic regions in
which the organization offers coverage in the small group market. Additionally, section
1322(c)(1)(B) of the Affordable Care Act requires that ―substantially all‖ of the issuer’s
activities consist of the issuance of qualified health benefit plans in the individual and small
group markets in each State in which it is licensed to issue plans. To satisfy this provision,
section 156.515(c)(1) of the NPRM proposes that at least two-thirds of the contracts written by a
CO-OP must be CO-OP qualified health plans offered in the individual and small group markets
of the States in which the CO-OP is licensed. Section 1322(c)(4) of the Affordable Care Act
directs that a CO-OP’s profits be used to lower premiums, improve benefits, or for other
programs intended to improve the quality of health care delivered to its members. Additionally,
the Advisory Board recommended that revenue be used to expand enrollment, or otherwise
contribute to the stability of coverage offered by the CO-OP. These new consumer-run, private,
nonprofit insurers will be a vehicle for providing quality plans that are affordable, coordinated,
and responsive.
Several successful health insurance cooperatives currently exist around the country. However,
the establishment of additional health insurance member-based organizations has been impeded
by the difficulty of obtaining start-up capital and meeting reserve requirements under current
market conditions. The CO-OP program is designed to help overcome this barrier to entry in the
health insurance market by providing Start-up Loans and Solvency Grants to eligible applicants
to assist them with meeting State solvency requirements. However, section 1322(b)(3) requires
that such Solvency Grants be repaid in 15 years. To remain consistent with common
understanding, we use the word ―loans‖ throughout this announcement.
1

On July 20, 2011, CMS published in the Federal Register a notice of proposed rulemaking, 76 Fed. Reg. 43237,
including the proposed text of subpart F of part 156, 45 CFR § 156.500 - .520. Subpart F will not be effective until
after it is published as a Final Rule, which CMS anticipates will occur later this year. This Funding Opportunity
Announcement describes the provisions of subpart F, as currently proposed. Once subpart F is effective, the
provisions of subpart F will control over any contrary representations in this FOA.

8

An applicant may apply in this announcement for (1) joint Start-up and Solvency Loans;2 or (2)
only a Solvency Loan. The first option provides the recipient with both a Start-up Loan and a
Solvency Loan issued through a single application. Start-up Loans are intended to assist
applicants with the many start-up costs associated with establishing a new health insurance
issuer. Solvency Loans are intended to assist applicants with meeting the solvency requirements
of States in which the applicant seeks to be licensed to issue CO-OP qualified health plans.
B. Authority
Section 1322 of the Affordable Care Act directs the Secretary to establish the CO-OP program
that provides loans to foster the creation of member-governed qualified nonprofit health
insurance issuers to offer CO-OP qualified health plans in the individual and small group
markets in the States in which they are licensed to offer such plans.
C. CO-OP Governance Requirements
Pursuant to section 1322 of the Affordable Care Act, CO-OPs must be consumer-governed. The
minimum standards an organization must meet in order to be considered a CO-OP, including that
the organization be governed by a board of directors, all of whom must be elected by a majority
vote of the CO-OP’s members, are proposed to be described in 45 CFR part 156 subpart F.
Because it is impossible to meet this standard prior to actually enrolling members, the proposed
regulations allow a formation board of directors to govern the CO-OP until no later than one year
after the effective date on which the CO-OP provides coverage to its first member, at which time
the CO-OP must hold elections for the ―operational‖ board of directors.
Please see 45 CFR §156.515 for additional proposed CO-OP governance requirements. An
applicant for joint Start-up and Solvency Loans or only a Solvency Loan should refer to section
IV.B.7 for application instructions related to CO-OP governance.
D. Program Goals
Section 1322 of the Affordable Care Act created the Consumer Operated and Oriented Plan
program (CO-OP program) to foster the creation of new consumer-governed, private, nonprofit
health insurance issuers, known as ―CO-OPs.‖ In addition to improving consumer choice and
plan accountability, the CO-OP program also seeks to promote integrated models of care and
enhance competition in the Affordable Insurance Exchanges established under sections 1311 and
1321 of the Affordable Care Act.

2

This option is referenced throughout the FOA as ―joint Start-up and Solvency Loans.‖ Although an applicant will
submit only one application to apply for both a Start-up Loan and a Solvency Loan, and the loans will be awarded at
the same time, please note that they are two separate loans with different terms and conditions.

9

E. Types of Awards
1. Joint Start-up and Solvency Loans
Start-up Loans are intended to assist applicants with approved start-up costs associated with
establishing a new health insurance issuer, including but not limited to renting or purchasing
space for administrative and/or clinical operations, renting or developing administrative and
clinical information technology systems, renting or developing provider networks, hiring a
management team with adequate insurance expertise, hiring counsel and consultants to assist
with State licensure requirements, hiring actuaries, conducting community and prospective
member education, developing strategic plans to build enrollment, establishing and participating
in a private purchasing council.
Pursuant to section 1322(b)(2)(C)(ii) of the Affordable Care Act, loan recipients are prohibited
from using any funds received under this Funding Opportunity Announcement for carrying on
propaganda, or otherwise attempting, to influence legislation; or for marketing.
An applicant is not required to apply for a Start-up Loan. If an applicant has already
accomplished the tasks intended to be funded by the Start-up Loan, it may apply directly for a
Solvency Loan. Please see subsection 2 below for information on applying for only a Solvency
Loan and a description of the intended uses of the Solvency Loan.
If an applicant applies for a Start-up Loan, that application will also be considered an application
for a Solvency Loan. Loan recipients will be awarded joint Start-up and Solvency Loans at the
same time. However, funds available under the Solvency Loan will be available for drawdown
only when the loan recipient has met the conditions established in the Loan Agreement and all
other statutory, regulatory, and other requirements, including any relevant State insurance
regulations.
After the first drawdown of Start-up Loan funds, subsequent drawdowns will be conditioned on
the submission of evidence of the loan recipient’s successful completion of milestones described
in the loan recipient’s Business Plan and Loan Agreement. Please see subsection 2 below for
Solvency Loan disbursement restrictions and repayment parameters.
Loan recipients cannot be licensed until they meet State solvency and reserve requirements;
therefore, loan recipients may draw down the initial installment of their Solvency Loan before
they are licensed. No later than 36 months following the first drawdown of the Start-up Loan or
6 months following the first drawdown of the Solvency Loan, recipients must be licensed in each
State in which the loan recipient is offering a CO-OP qualified health plan and must offer at least
one CO-OP qualified health plan at the silver and gold benefit levels in every individual market
Exchange that serves the geographic regions in which the organization is licensed to operate and
if an applicant chooses to offer at least one plan in the small group market outside the Exchange,
10

it must offer at least one CO-OP qualified health plan at the silver and gold benefit level in each
SHOP that serves the geographic regions in which the organization offers coverage in the small
group market. These proposed standards are set forth at proposed 45 CFR §156.515. In addition,
loan recipients are directed to hold elections for the CO-OP’s operational board of directors
within one year of the effective date on which the CO-OP provides coverage to its first member.
Although it is not required, loan recipients are strongly encouraged to be operational by October
2013 so that on January 1, 2014, they will be able to provide coverage to members enrolled
through the Exchanges.
In addition to the deadline to become licensed and offer CO-OP qualified health plans as defined
in proposed 45 CFR §156.505 and the deadline to hold elections for the operational board of
directors, a loan recipient must implement all the standards to be a CO-OP, proposed at 45 CFR
§156.515, within 54 months following the first drawdown of the Start-up Loan or 18 months
following the first drawdown of the Solvency Loan. The lag time between when the loan
recipient (1) must be licensed and offering the specified health plans and (2) must meet all the
standards to be a CO-OP, proposed to appear at 45 CFR part 156 subpart F, is permitted so that
the CO-OP has time to meet governance requirements and the proposed provision that at least
two-thirds of the contracts issued by the CO-OP be qualified health plans offered in the
individual market or individual and small group markets of the States in which the CO-OP is
licensed.
2. Solvency Loans
Solvency Loans are intended to assist loan recipients with meeting the reserve requirements of
States in which the applicant seeks to be licensed to issue CO-OP qualified health plans.
Solvency Loans must be repaid. However, as proposed in section 156.520(a)(3) of the NPRM,
CMS will structure them in a manner that ensures the loan amount is recognized as contributing
to the State-determined reserve requirements or other solvency requirements (rather than debt)
consistent with the insurance regulations for the States in which the loan recipient will offer COOP qualified health plans. In order to assist CO-OPs in meeting State solvency and reserve
requirements, the loans will be structured so that premiums would go to pay claims and meet
cash reserve requirements before repayment to CMS. The goal of this provision is to satisfy the
reserve requirements of the individual insurance department in the States in which each CO-OP
seeks licensure.
As previously mentioned, applicants are not required to apply for a Start-up Loan in order to be
awarded a Solvency Loan. However, the same application is used to apply for joint Start-up and
Solvency Loans and for only a Solvency Loan (see section IV.B for application parameters. An
application for only a Solvency Loan must demonstrate that the applicant has already
accomplished the tasks intended to be funded under the Start-up Loan (e.g., the applicant should
11

submit proof that it has already developed a provider network). On the other hand, the direction
to submit a detailed business plan and budget are not prospective and must be included in the
Solvency Loan application. In short, an applicant for a Solvency Loan must demonstrate that it
can become licensed and fully operational within 6 months of receipt of the Solvency Loan.
CMS anticipates that Solvency Loan recipients may need to draw down the loan in multiple
phases. Applicants should request the total amount they anticipate requiring during the life of
the loan and not the amount for initial drawdown. After the first drawdown of Solvency Loan
funds, subsequent drawdowns will be conditioned on the submission of evidence of the loan
recipient’s successful completion of milestones described in the loan recipient’s Business Plan
and Loan Agreement. Milestones for drawdown of the Solvency Loan will be tied to enrollment
and plan benefit costs in the CO-OP. As enrollment increases, the CO-OP will be eligible to
draw down funds from its Solvency Loan as necessary to meet State and actuarially sound
financial requirements. Solvency Loan recipients will submit regular financial and program
reports to CMS until 10 years after the date of final loan repayment.
See Section II.G.2, ―Interest Rates,‖ for an explanation of the applicable interest rate that will be
charged to each loan recipient. For additional information on terms of repayment, please see
Section II. The terms of repayment will be further detailed in the Loan Agreement.
As proposed in 45 CFR § 156.515(c), no later than 36 months following the first drawdown of
the Start-up Loan or 6 months following the first drawdown of the Solvency Loan, the loan
recipient must be licensed in each State in which it is offering a CO-OP qualified health plan and
must offer at least one CO-OP qualified health plan at the silver and gold benefit levels in every
individual market Exchange that serves the geographic regions in which it is licensed to operate,
and if it chooses to offer at least one plan in the small group market outside the Exchange, it
must offer at least one CO-OP qualified health plan at the silver and gold benefit level in each
SHOP that serves the geographic regions in which the organization offers coverage in the small
group market. In addition, loan recipients will hold elections for the CO-OP’s operational Board
of Directors within one year of the effective date on which the CO-OP provides coverage to its
first member.
Although it is not required, loan recipients are strongly encouraged to complete the activities
funded by the Start-up Loans and begin to draw down on their Solvency Loans on a schedule
enabling them to be operational by October 2013 so that on January 1, 2014, they will be able to
serve members enrolled through the Exchanges.
In addition to the deadline to become licensed and offer the specified health plans and the
deadline to hold elections for the operational board of directors, a loan recipient must implement
all of the standards to be a CO-OP, proposed to appear at 45 CFR part 156 subpart F, within 18
12

months following the first drawdown of the Solvency Loan. The lag time between when the loan
recipient must (1) be licensed and offering the specified health plans and (2) meet all standards to
be a CO-OP, is permitted so that the CO-OP has time to meet governance requirements and the
provision that at least two-thirds of the contracts issued by the CO-OP be in the individual and
small group market.
F. Milestones for joint Start-up and Solvency Loans and only Solvency Loans
The loan recipient will be allowed to draw down funds awarded under (1) the joint Start-up and
Solvency Loans or (2) only the Solvency Loan (depending on which type(s) of loans the
recipient is awarded) as the recipient reaches milestones proposed in its application and finalized
in its Loan Agreement(s). An applicant for the relevant loan(s) must propose milestones and
corresponding loan drawdowns in its Business Plan. Examples of possible milestones would be
approval of Start-up Loan application, initial hiring of administrative, management, and
professional staff, acquiring workspace, contracting for administrative services, hiring
consultants and attorneys to assist with the licensure process, renting provider networks,
satisfying initial State deposits and solvency and reserve amounts, and achieving projected
enrollments. The milestones and drawdown plan, which may be modified by CMS in cases
where such modification may be warranted to maintain coverage for the CO-OP’s enrollees,
prevent market disruption, or serve another public purpose, will be included in the loan
recipient’s Loan Agreement. This approach provides the greatest flexibility to accommodate the
varying revenue needs of loan recipients while ensuring that loan money is not provided until it
is needed as evidenced by the achievement of the pre-determined milestones and supporting
documentation.
To facilitate CMS monitoring efforts under this program, loan recipients must notify CMS at
least one month in advance, when possible, if they have reason to believe that they will be unable
to meet any of their milestones. The form and type of this communication will be established as
part of the loan agreement. This advance notification will allow CMS to work with the loan
recipient and provide technical assistance, as appropriate, to help the loan recipient meet its
milestones and avoid non-compliance with its Loan Agreement.
Applicants for either the joint Start-up and Solvency Loans or only the Solvency Loan must
develop and submit a Business Plan that includes milestones according to the guidelines
described below. The award for the joint Start-up and Solvency Loans will be issued as two
separate loans from a single application.
An applicant applying for joint Start-up and Solvency Loans must provide a Business Plan that
includes milestones, corresponding proposed loan drawdown amounts and anticipated fund uses
for:
13

1. The 36-month period beginning with the first drawdown of Start-up Loan funds, leading to
the first drawdown of the Solvency Loan and culminating at the point the loan recipient is
offering the specified CO-OP qualified health plans in the individual Exchange(s);
2. The point when the loan recipient holds elections for its operational board of directors;
3. The point when the loan recipient meets the CO-OP minimum standards, proposed to appear
at 45 CFR part 156 subpart F, including all governance requirements and the provision that at
least two-thirds of the contracts issued by the CO-OP are in the individual and small group
markets; and
4. The points of additional drawdowns of the Solvency Loan and triggers for the drawdowns
(such as enrollment targets, coverage needs, or potential changes in the business or
regulatory climate).
Solvency Loans can only be used for limited purposes to support State solvency and reserve
requirements. An applicant applying only for a Solvency Loan must provide a Business Plan that
includes milestones, corresponding proposed loan drawdowns, and anticipated fund uses for:
1. The 6-month period beginning with the first drawdown of funds and culminating at the point
the CO-OP is offering the specified CO-OP qualified health plans in the individual
Exchange(s);
2. The point when the loan recipient holds elections for its operational board of directors;
3. The point when the loan recipient meets the CO-OP minimum requirements, proposed to
appear at 45 CFR part 156 subpart F, including all governance requirements and the
requirement that at least two-thirds of the contracts issued by the CO-OP are in the individual
and small group markets; and
4. The points of additional drawdowns of the Solvency Loan and triggers for the drawdowns
(such as enrollment targets, coverage needs, potential changes in the business or regulatory
climate or others).
Standards for an applicant’s Business Plan are described in more detail in Section IV.B.2.
G. Tax Exemption
Consistent with section 1322(h) of the Affordable Care Act, a CO-OP has the option but is not
required to apply for a tax exemption under section 501(c)(29) of the Internal Revenue Code of
1986.

H. Deeming of qualified health plans offered by CO-OPs.

14

Starting in 2014, individuals and small businesses will be able to purchase private health
insurance through State-based competitive marketplaces called Affordable Insurance Exchanges.
Exchanges will offer Americans competition, choice, and clout.
As proposed in §156.520(e) of the NPRM, Health plans offered by a loan recipient may be
deemed certified by CMS as a qualified health plan to participate in the Exchanges for up to 10
years following the life of any loan awarded to the loan recipient, consistent with section
1301(a)(2) of the Affordable Care Act. To be deemed as certified by CMS to participate in the
Exchanges, the loan recipient must comply with the standards for CO-OP qualified health plans
set forth pursuant to section 1311(c) of the Affordable Care Act, all State-specific standards
established by an Exchange for qualified health plans operating in that Exchange, and the
standards of the CO-OP program as set forth in the NPRM. If a loan recipient is deemed to be
certified or loses its deemed status and is no longer deemed as certified to participate in the
Exchanges, CMS or an entity designated by CMS will provide notice to the Exchanges in which
the loan recipient offers CO-OP qualified health plans.

15

II. AWARD INFORMATION
A. Type of Assistance
Loans.
B. Total Funding
Budget authority of $3.8 billion, less anticipated administrative, or other program costs.
C. Award Type
There are two types of loans available. Funds are available to support joint Start-up and Solvency
Loans, or only a Solvency Loan. The award amount will be based on the type of loan and the
specific needs of each applicant. In determining loan amounts, CMS will look for efficiencies
and evaluate whether the proposed budget is sufficient, reasonable, and cost effective to support
activities proposed in the application.
D. Anticipated Award Date
Loan awards or a response to the application will be provided approximately 75 days after each
applicant receives notice that its application is complete.
E. Estimated Number of Awards
We estimate that 51 applicants will be awarded joint Start-up and Solvency Loans or only
Solvency Loans because section 1322 of the Affordable Care Act envisions a viable CO-OP in
every State and the District of Columbia.
These numbers are estimates. The number of awards will vary according to the number of
applications and the size of awards. The estimated number of awards reflects the statutory goal
of the CO-OP program to establish a CO-OP in each State. It should be noted, however, that the
statue allows CMS to fund more than one qualified nonprofit health insurance issuer in any State
if the funding is sufficient to do so but is unlikely to fund CO-OPs that will directly compete
with each other for the same target market. If there is no applicant from a State, CMS may award
loans to encourage the expansion of a qualified nonprofit health insurance issuer from another
State to that State. Additionally, an applicant may apply for loans to establish a CO-OP in more
than one State.
For the purposes of this FOA, a ―State‖ means each of the 50 States and the District of
Columbia.
All awards (new and continuation) that are issued under this announcement are subject to the
availability of funds as well as satisfactory progress. In the absence of funding, CMS is under no
obligation to make awards under this announcement.
16

F. The Period of Performance, Reporting Period and Monitoring Period
1. “Period of Performance”: The period of performance means the period beginning on the
date that all parties have signed the Loan Agreement and ending on the date that is ten years
after the date on which the recipient makes the final repayment of all loans received. The
recipient will have to complete each specified milestone in order to draw down an installment of
the loan amount.
2. “Reporting Period”: The reporting period means the time during which the recipient must
submit program and financial reports to CMS. The reporting period runs simultaneously with
the performance period.
3. “Monitoring Period”: The monitoring period means the time during which the recipient is
subject to oversight by CMS, including site visits and requests for information initiated by CMS
that supplement required periodic reports. The monitoring period runs simultaneously with the
performance period.
G. Repayment of Loans
1. Repayment Terms
An applicant must demonstrate the intention and the ability to repay within the statutory
repayment window any and all loans received pursuant to this Funding Opportunity
Announcement, including applicable interest.
Loan repayment terms will be specified in the Loan Agreement and shall be consistent with the
terms of the Final Rule as well as with all relevant statutory, regulatory, and other requirements.
Repayment terms will be consistent with State solvency regulations and other similar State laws
that may apply, as specified in section 1322(b)(3) of the Affordable Care Act. Repayment
periods will be separately calculated for each partial draw of the total loan amount. Each draw
against a Start-up Loan must be repaid within five years of the specific drawdown date, and
draws against a Solvency Loan must be repaid within fifteen years of the specific drawdown
date.
The loan recipient must make loan payments consistent with the repayment schedule approved
by CMS and agreed to by the loan recipient until the loan is paid in full consistent with State
reserve requirements, solvency regulations, and requisite surplus note arrangements. The
repayment schedule may include a grace period, graduated repayments, or a balloon payment
(i.e., a large payment for either part or all of the loan amount near the end of the repayment
period).
CMS reserves the right to execute a loan modification or a workout with the loan recipient if
CMS determines that the loan recipient is unable to repay the loans as a result of State reserve
17

requirements, solvency regulations, or requisite surplus note arrangements or without
compromising coverage stability, member control, quality of care, or market stability. CMS will
only undertake to negotiate a loan modification or loan workout if, in the judgment of CMS, such
a modification or workout is in the best interest of consumers, the public, and the CO-OP
program, and such action is consistent with all statutory, regulatory, or other requirements.
In the case of a loan modification or workout, the repayment period for loans awarded pursuant
to this Funding Opportunity is the repayment period established in the loan modification or
workout, subject to the CO-OP’s ability to meet State reserve requirements, solvency
regulations, or requisite surplus note arrangements.
The loan recipient must return to CMS any loan amounts that are not used as described in the
Loan Agreement.
2. Interest Rates.
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 (provided that
interest shall not be less than 0%) on the amount of the drawdown unless: (1) the Start-up Loan
recipient fails to repay the Start-up Loan within the repayment period and has not executed a
loan modification agreement; (2) the Start-up Loan is terminated by CMS pursuant to sections
II.H.3 or II.H.4; or (3) the Start-up Loan recipient fails to comply with additional conditions to
be specified in the Loan Agreement. In such cases, penalty interest in subsection II.H.7 may
apply. The interest rate will be determined based on the date of the award.
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 (provided that
interest shall not be less than 0%) on the amount of the drawdown unless: (1) the Solvency Loan
recipient fails to repay the Solvency Loan within the repayment period and has not executed a
loan modification agreement; (2) the Solvency Loan is terminated by CMS pursuant to sections
II.H.3 or II.H.4; or (3) the Solvency Loan recipient fails to comply with additional conditions to
be specified in the Loan Agreement. In such cases, penalty interest in subsection II.H.7 may
apply. The interest rate will be determined based on the date of the award.
If the Loan Agreement is terminated by CMS pursuant to II.H.3 and II.H.4, the penalty
provisions of subsection II.H.7 apply.
3. Failure to pay.

18

If a loan recipient fails to make loan payments consistent with the repayment schedule or loan
modification or workout approved by CMS, CMS may use any and all remedies available under
law to collect the debt.
H. Termination of Loan Agreement.
If an organization’s loan is terminated:
CMS will make no additional disbursements to the organization;
CMS will notify the Internal Revenue Service of any Loan Agreement termination or
other program non-compliance that may result in the termination of a loan recipient’s taxexempt status under section 501(c)(29) of the Internal Revenue Code of 1986;
CMS will inform State regulators of any action by CMS to terminate a loan recipient’s
participation in the program.
CMS will notify the relevant Exchanges that the CO-OP is no longer deemed to be a COOP qualified health plan; and
The CO-OP must pay any applicable penalties and make any applicable repayments
consistent with the Loan Agreement, this Funding Opportunity Announcement, and
section 1322 (b)(2)(C)(iii) of the Affordable Care Act.
1. Termination of Loan Agreement by CO-OP
A loan recipient may terminate its Loan Agreement if:
a. The organization no longer believes that it can create a viable and sustainable CO-OP;
b. The organization provides documentation to CMS in support of such assertion; and
c. CMS approves the request for termination.
A loan recipient that terminates its Loan Agreement must inform CMS and its members of its
decision to terminate consistent with the terms specified in the Loan Agreement and State
insurance law. If a loan recipient’s Loan Agreement is terminated for any reason, the loan
recipient must comply with all applicable Federal and State insurance laws and regulations
relevant to its termination from the CO-OP program, including, but not limited to those
pertaining to notification to enrollees, licensure, and market participation.
2. CMS-initiated Termination with CO-OP Consent
CMS may request that a loan recipient terminate its Loan Agreement if CMS no longer believes
that the loan recipient can establish a viable and sustainable CO-OP that serves the interests of its
community and the goals of the CO-OP program.
The loan recipient must inform CMS of its response to the termination request within 30 days.
If the loan recipient decides not to terminate its Loan Agreement, it must provide documentation
to CMS demonstrating the viability of its business plan and provide a justification for why the
19

loan recipient should be permitted to continue participating in the CO-OP program. CMS
reserves the right to terminate the loan without the CO-OP’s consent if the CO-OP’s
documentation and justification do not persuade CMS that the loan recipient can establish a
viable and sustainable CO-OP that serves the interests of its community and the goals of the COOP program. Under these circumstances, the provisions in #6 below will apply.
3. Termination Due to Non-compliance
CMS may terminate the Loan Agreement with a loan recipient if the organization, its providers
and suppliers, or contracted entities performing services on its behalf:
a. Fail to meet quality and performance standards, including implementation milestones,
enrollment targets, consumer governance and responsiveness, as specified in the Loan
Agreement, or any other contractual obligation with CMS;
b. Are not in compliance with one or more provisions proposed in 45 CFR part 156 subpart F.
c. Engage in improper use of Federal funds;
d. Fail to reinvest profits for the benefit of the members;
e. Are unable to effectuate any changes as prescribed by subsequent regulation during the
agreement period after given the opportunity for a corrective action plan (CAP);
f. Engage in material noncompliance, or demonstrate a pattern of noncompliance with reporting
requirements;
g. Fail to submit an approvable CAP, fail to implement an approved CAP, or fail to improve
performance after the implementation of a CAP;
h. Violate any applicable laws, rules, or regulations that are relevant to the loan recipient’s
operations; or
i. Knowingly submit to CMS false, inaccurate, or misleading data or information related to the
CO-OP program application, governance information, quality data, financial data, and
enrollment data.
4. Immediate Termination to Avoid Imminent Harm
CMS may immediately terminate a Loan Agreement with a loan recipient if CMS has cause to
believe that the organization engages in, or has engaged in, criminal or fraudulent activities or
activities that cause material harm to the CO-OP’s members. If a loan recipient’s Loan
Agreement is terminated for this reason the loan recipient must immediately cease its operations
under the CO-OP program, consistent with State regulation.
5. Compliance with State insurance regulation
If a loan recipient’s Loan Agreement is terminated for any reason, the loan recipient must
comply with all State insurance regulation relevant to its termination from the CO-OP program.
6. Appeal of termination
20

A loan recipient with a Loan Agreement that is terminated pursuant to subsections 2, 3, or 4
above may appeal CMS’ decision to terminate within 30 days or the loan recipient’s receipt of
the notice of termination, consistent with the terms of its Loan Agreement.
7. Penalty payment
Pursuant to section 1322(b)(3) of the Affordable Care Act, if the Loan Agreement is terminated
by CMS pursuant to subsections II.H.3 or II.H.4, the loan recipient must repay to the Secretary
an amount equal to the sum of: 110 percent of the aggregate amount of loans received pursuant
to this Funding Opportunity; plus interest on the aggregate amount of loans received pursuant to
this Funding Opportunity for the period when the loans were outstanding at an interest rate equal
to the average interest rate on marketable Treasury securities of similar maturity The interest rate
will be determined at the date of award. CO-OPs that voluntarily terminate their loan
agreements pursuant to subsections H.1 and H.2 above, will not be subject to the penalty.
8. Forfeiture of loan funding
If a loan recipient’s Loan Agreement is terminated, the organization forfeits all unused loan
funds received under the CO-OP program. The loan recipient must repay any unused loan funds
to CMS:
a. Within 60 days following the resolution of any outstanding debts and run out of outstanding
claim obligations, consistent with State insurance regulations if its Loan Agreement is
terminated pursuant to subsections H.1, H.2, or H.3, above; or
b. Immediately following the resolution of any outstanding debts consistent with State
insurance regulations if its Loan Agreement is terminated pursuant to subsection H.4, above.
The remaining loan funds, interest, and if applicable, penalty, must be repaid in accordance with
the terms of the Loan Agreement.

21

III. ELIGIBILITY INFORMATION
A. Eligible Applicants
To be eligible to apply for a loan under the CO-OP program, an applicant must:
1. Intend to become a CO-OP;
2. Have formed a private nonprofit member organization (see Section IV.B for acceptable
evidence of nonprofit status); and
3. Submit in its loan application an Eligibility Affidavit and Application Certification signed by
the applicant’s chief executive officer or chief financial officer, or an officer of the
applicant’s Board of Directors, certifying the accuracy, completeness, and truthfulness of all
information contained in the loan application; and certifying that, if the applicant
organization is awarded loan(s) under this FOA, it will repay them according to the terms
laid out in this FOA, proposed to be described in 45 CFR part 156 subpart F, and in the Loan
Agreement issued when the award is announced. The signatory must be legally authorized to
bind the organization. For a description of the Eligibility Affidavit and Application
Certification, see Section IV.B.10.
4. Commit to offering a CO-OP qualified health plan at the silver and gold benefit levels in
every individual market Exchange that serves the geographic regions in which it is licensed
and intends to provide health care coverage;
5. If choosing to offer at least one plan in the small group market outside the Exchange, commit
to offering a CO-OP qualified health plan at both the silver and gold benefit levels in each
SHOP that serves the geographic regions in which the organization offers coverage in the
small group market; and
6. Commit that at least two-thirds of the contracts issued by the CO-OP will be CO-OP
qualified health plans offered in the individual market or individual and small group markets
of the States in which the CO-OP is licensed.
In addition to all other newly formed nonprofit applicant organizations, the following entities are
examples of entities that may be eligible to sponsor CO-OPs, provided that they meet the
eligibility criteria described above and do not meet the conditions described in subsection B
below:
1. A prospective applicant that was not licensed by its State as a health insurance issuer on July
16, 2009,but which has subsequently acquired a State license;
2. Self-funded and Taft-Hartley group health plans;
3. Church plans that were not licensed issuers on July 16, 2009; and
4. Three-share or multi-share programs not licensed by their State insurance regulator.

22

B. Exclusions from Eligibility
As stated in section 156.510(b) of the NPRM, an organization is not eligible to apply for a loan if
either of the following conditions is met:
1. The organization is a pre-existing issuer, a trade association whose members consist of preexisting issuers, a related entity, or a predecessor of either, or that have defaulted tax or nontax obligations from the Federal government.
a. A pre-existing issuer means an insurance company, insurance service, or insurance
organization (including an HMO) which is licensed to engage in the business of
insurance in a State and which is subject to State law which regulates insurance, that was
in existence on July 16, 2009.
b. A related entity means an entity that shares common ownership or control with a preexisting issuer or a trade association whose members consist of pre-existing issuers, and
satisfies at least one of the following conditions:
i. Retains responsibilities for the services to be provided by the issuer;
ii. Furnishes services to the issuer’s enrollees under an oral or written agreement; or
iii. Performs some of the other issuer’s management functions under contract or
delegation.
c. A predecessor, with respect to a new entity, means any entity that participates in a
merger, consolidation, purchase or acquisition of property or stock, corporate separation,
or other similar business transaction that results in the formation of the new entity.
2. A State or local government, any political subdivision thereof, or any instrumentality of such
government or political subdivision is a sponsor of the organization.
a. Sponsor means an organization or individual that is involved in the development,
creation, or organization of the CO-OP or provides financial support to the CO-OP.
The exclusion of pre-existing issuers does not exclude from eligibility an applicant that:
a. Has as a sponsor, as defined in B.2.a. above, a nonprofit organization that is not an issuer
or a trade association whose members consist of issuers and that also sponsors a preexisting issuer, provided that the pre-existing issuer does not share any of its board or the
same chief executive with the applicant; or
b. Has purchased assets from a pre-existing issuer provided that it is an arm’s length
transaction where neither party was in a position to exert undue influence on the other.
C. Continued Eligibility of Loan Recipient
In order to remain eligible to draw down funds loaned under this FOA, the loan recipient must:

23

1. Comply with all the provisions of section 1322 of the Affordable Care Act, those proposed to
appear at 45 CFR part 156 subpart F, and those of the Loan Agreement by the deadlines
specified;
2. Meet the milestones described in its Business Plan and Loan Agreement, or notify CMS of its
inability to meet the applicable milestone at least one month in advance and receive approval
to continue to draw down;
3. Notify CMS at least one month in advance of any significant changes to its governance
structure and receive confirmation that the proposed changes will not affect its continued
eligibility;
4. Comply with the reporting, monitoring, and recordkeeping requirements described in part VI
of this FOA.
5. Ensure that any contract between the CO-OP and a contractor for administrative, information
technology, or clinical services includes provisions that protect consumer control of the
organization. All contracts for services that affect the CO-OP’s activities that are integral to
the provision of health care coverage must be approved by the board of directors;
6. Ensure that the CO-OP must use any revenue in excess of its expenses to lower premiums,
improve benefits, or for other programs intended to improve the quality of health care
delivered to its members. This standard does not preclude the CO-OP from using revenue or
profits to conduct marketing, repay loans awarded under this subsection, meet State solvency
requirements, or accumulate reasonable and sufficient reserves, as determined by State
insurance laws and regulations or CMS, to provide for enrollment growth, financial stability,
and stable coverage for its members;
7. Require any contractors to comply with the loan recipient’s obligations related to the
contractor’s scope of work under its Loan Agreement; and
8. Implement measures to prevent, detect, correct, and promptly report to CMS any potential
fraud, waste, and abuse committed by the loan recipient, its employees, and its contractors.
These measures include the development and implementation of internal compliance plans.
D. Cost-sharing or Matching
Cost-sharing or matching is not required. However, applicants are encouraged to secure private
support, including but not limited to committed funding, committed in-kind support, letters of
intent from key stakeholders or partners (e.g., provider groups) to participate in the CO-OP or its
formation, and letters of support from key community leaders. In addition to mentioning it in the
Project Narrative, an applicant should include any evidence of private support as an attachment.
Please see Section IV.B for more information.

24

IV. APPLICATION AND SUBMISSION INFORMATION

A. Address to Request Application Package
This announcement serves as the application package for a loan under the Consumer Operated
and Oriented Plan (CO-OP) Program. It contains all the instructions to enable a potential
applicant to apply. The application should be written primarily as a narrative with the
supplemental materials submitted as directed and with the addition of standard forms required by
the Federal government.
It is requested, but not required, that an applicant submit a Letter of Intent at the earliest possible
date indicating the applicant’s intent to apply for joint Start-up and Solvency Loans, or a
Solvency Loan. The purpose of the Letter of Intent is to enable CMS to estimate the number of
applications and adequately prepare for application review. The Letter of Intent must be signed
by the Chief Executive Officer (CEO), Chief Financial Officer (CFO), or an officer of the
applicant’s Board of Directors. The signed Letter of Intent must be submitted electronically in
PDF format to Grants Management Officer Michelle Feagins at Michelle.Feagins@hhs.gov.
Application materials will be available for download at http://www.grants.gov. HHS requires
applications for all announcements to be submitted electronically through http://www.grants.gov.
Although applications must be submitted via http://www.grants.gov, this funding opportunity is a
loan program. For assistance with http://www.grants.gov, which is available 24 hours a day, 7
days a week, except on Federal Holidays, contact support at http://www.grants.gov or call 1-800518-4726. At http://www.grants.gov, applicants will be able to download a copy of the
application packet, complete it off-line, and then upload and submit the application. This
Funding Opportunity Announcement can also be viewed on HHS’s website at
http://www.hhs.gov.
1. Application Personnel
a. Project Officer
Every applicant must designate a Project Officer. The Project Officer implements work
plans to ensure that the project goals and objectives are achieved in an efficient and
timely manner. The Project Officer will be responsible for submitting completed required
performance and financial reports on time as required in the Notice of Award (NoA)
and/or Loan Agreement. The applicant should select a senior manager to serve as the
Project Officer.
b. Authorized Organizational Representative (AOR)
25

Every applicant must designate an Authorized Organizational Representative (AOR). The
AOR is an individual with the authority to act on the applicant’s behalf. In signing an
application for a loan, the AOR agrees that the applicant will assume the obligations
imposed by applicable State and Federal statutes and regulations and other terms and
conditions of the applicable Loan Agreement. The AOR may be held accountable for the
appropriate use of funds and the performance of the supported project or activities. The
applicant should select the chief executive officer, the chief financial officer, or an officer
of its Board of Directors to serve as the AOR.
2. Instructions for Applications Submitted via http://www.grants.gov:
You can access the electronic application for this project on http://www.grants.gov. You
must search the downloadable application page by the CFDA number found on the cover
page of this funding opportunity announcement.
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. We strongly recommend that you do not wait until the application due
date to begin the application process through http://www.grants.gov because of the time
delay.
All applicants and sub-recipients must have a Dun and Bradstreet (D&B) Data Universal
Numbering System (DUNS) number. The DUNS number is a nine-digit identification
number that uniquely identifies business entities. Obtaining a DUNS number is easy and
free. To obtain a DUNS number, access the following website:
http://www.dunandbradstreet.com or call 1-866-705-5711. This number should be
entered in the block with the applicant's name and address on the cover page of the
application and in Item 8c on the Form SF 424, Application for Federal Assistance. The
name and address in the application should be exactly as given for the DUNS number.
The applicant and sub-recipients must also register in the Central Contractor Registration
(CCR) database in order to be able to submit the application. Applicants are encouraged
to register early. An applicant should allow a minimum of five days to complete the CCR
registration. Information about CCR is available at http://www.ccr.gov. The central
contractor registration process is a separate process from submitting an application. In
some cases, the registration process can take approximately two weeks to be completed.
Therefore, registration should be completed in sufficient time to ensure that it does not
impair your ability to meet submission deadlines. Registration in the CCR must be
updated annually.

26

The AOR must register with Grants.gov for a username and password. AORs must
complete a profile at http://www.grants.gov/applicants/apply_for_grants.jsp using their
organization’s DUNS Number to obtain their username and password. AORs must wait
one business day after registration in CCR before entering their profiles in Grants.gov.
When an AOR registers with Grants.gov to submit applications on behalf of an
organization, that organization’s E-Biz POC will receive an email notification. The email
address provided in the profile will be the email used to send the notification from
Grants.gov to the E-Biz POC with the AOR copied on the correspondence.
The E-Biz POC must then login to Grants.gov (using the organization’s DUNS number
for the username and the special password called ―M-PIN‖) and approve the AOR,
thereby providing permission to submit applications.
The applicant must submit all documents electronically in PDF format or Microsoft
Excel, including all information included on the SF 424 and all necessary assurances and
certifications, and all other attachments.
Prior to application submission, Microsoft Vista and Office 2007 users should review the
Grants.gov compatibility information and submission instructions provided at
http://www.grants.gov. Click on ―Vista and Microsoft Office 2007 Compatibility
Information.‖
After electronically submitting its application, the applicant will receive an automatic
acknowledgement from http://www.grants.gov that contains a Grants.gov tracking
number. CMS will retrieve your application from Grants.gov. Please be advised that the
automatic acknowledgement may not be instantaneous. There could be a delay in
receiving this information.
After CMS retrieves your application from Grants.gov, a return receipt will be emailed to
the applicant contact. This will be in addition to the validation number provided by
Grants.gov.
Each year organizations and entities registered to apply for Federal awards through
http://www.grants.gov will need to renew their registration with the Central Contractor
Registry (CCR). You can register with the CCR online; registration will take about 30
minutes to complete (http://www.ccr.gov).
Applications cannot be accepted through any email address. Full applications can only be
accepted through http://www.grants.gov. Full applications cannot be received via paper mail,
courier, or delivery service, unless a waiver is granted per the instructions below.

27

All loan applications must be submitted electronically and be received through
http://www.grants.gov by 11:59 pm Eastern Standard Time on the respective due date for the
application cycle in which the applicant wants to participate. First-round loans will be due
October 17, 2011 and subsequent applications will be accepted quarterly until December 31,
2012 according to the following due dates: December 31, March 31, June 30, September 30.
All applications will receive an automatic time stamp upon submission and applicants will
receive an automatic e-mail reply acknowledging the application’s receipt.
The applicant must seek a waiver at least ten days prior to the application deadline if the
applicant wishes to submit a paper application. Applicants that receive a waiver to submit paper
application documents must follow the rules and timelines that are noted below.
In order to be considered for a waiver application, an applicant and sub-recipients must adhere to
the timelines for both Central Contractor Registry (CCR) and Grants.gov registration, as well as
request timely assistance with technical problems.
Applicants should search for the application package in Grants.gov by entering the CFDA
number. This number is located on the first page of this announcement.
Paper applications are not the preferred method for submitting applications. However, if you
experience technical challenges while submitting your application electronically, please
contact Grants.gov Support directly at: www.grants.gov/customersupport or (800) 518-4726.
Customer Support is available to address questions 24 hours a day, 7 days a week (except on
Federal holidays).
Upon contacting Grants.gov, obtain a tracking number as proof of contact. The tracking
number is helpful if there are technical issues that cannot be resolved and a waiver from the
agency must be obtained.
If it is determined that a waiver is needed, the applicant must submit a request in writing
(emails are acceptable) to Grants Management Officer Michelle Feagins, at
Michelle.Feagins@hhs.gov, with a clear justification for the need to deviate from our
standard electronic submission process.
If the waiver is approved, the application should be sent directly to the Division of Grants at
the below address by the application due date:
Attn: Michelle Feagins
Department of Health and Human Services
Hubert H. Humphrey Building
28

Room 737F
200 Independence Ave., S.W.
Washington, DC 20201
To be considered timely, applications must be sent on or before the published deadline date.
Also, all DUNS and CCR requirements must be fulfilled by applicants and sub recipients when
submitting paper applications. However, a general extension of a published application deadline
that affects all applicants or only those applicants in a defined geographical area may be
authorized by circumstances that affect the public at large, such as natural disasters (e.g., floods
or hurricanes) or disruptions of electronic (e.g., application receipt services) or other services,
such as a prolonged blackout.

B. Content and Form of Application Submission
The applicant has the choice of applying through one application for joint Start-up and Solvency
Loans (issued as two separate loans), or applying for only a Solvency Loan. It is assumed that
any applicant needing a Start-up Loan will also need to apply for a Solvency Loan. However, an
applicant may have already accomplished the tasks funded under a Start-up Loan, and therefore
may only need to apply for a Solvency Loan. Regardless of the applicant’s choice, the
application parameters are the same and are described below.
An applicant may apply for loans to establish a CO-OP in one or more States in conformity with
State insurance regulation in every State in which it intends to operate.
Please be aware of the following:
Officers, employees and contractors of the Centers for Medicare and Medicaid
Services may only use the information disclosed or obtained from this announcement,
for the purposes of, and to the extent necessary in (1) carrying out this program
including, but not limited to the awarding of CO-OP loans, program monitoring and
oversight, and program integrity activities; and (2) for complying with other
requirements of Federal law.
This restriction does not limit the Office of Inspector General’s authority to fulfill the
Inspector General’s responsibilities in accordance with applicable Federal law.
This restriction does not limit the authority of other departments of the Federal
Government to conduct program oversight and program evaluation.
Each joint Start-up Loan and Solvency Loan application or just Solvency Loan application must
include all contents described below, in conformity with the following specifications:
The total size of all uploaded files may not exceed 75 pages.
29

o This 75-page limit does not include the Standard Forms, organizational charts,
position descriptions, biographies, resumes, or list of the relevant statutory citations.
o In addition, the applicant should provide in Microsoft Excel a copy of the pro forma
financial statements and any other supporting models used in the development of
forecasts for enrollment, regulatory capital requirements, or other key drivers of the
business plan.
All material other than Microsoft Excel documents must be typed in Times New Roman
12 point font, on 8 ½ x 11 inches plain white paper with 1 inch margins. All narrative text
should be single spaced. All pages of narrative text should be numbered.
The 15 member CO-OP Program Advisory Board convened four times in 2011 (January 13,
February 7, March 14, and April 15) to listen to expert panels and members of the public on
how best to assure that sustainable CO-OPs are established. The Chair divided the Board into
four subcommittees to address specific issues in greater detail and formulate proposed
recommendations on the following topics: governance, finance, infrastructure, and process,
criteria and compliance. The Advisory Board incorporated these recommendations in its final
report presented at the April 15 meeting. These recommendations have served as the guide post
for creating the CO-OP application requirements and preferences below.
The following documents are necessary for an application for either joint Start-up and Solvency
Loans or only a Solvency Loan:
1) Standard Forms
The following forms must be completed with the electronic signature of an applicant’s Chief
Executive Officer or Chief Financial Officer or an officer of the applicant’s Board of
Directors and enclosed as part of the application:
SF424: Official Application for Federal Assistance (see note below)
SF424A: Budget Information Non-Construction
SF424B: Assurances Non-Construction Programs
SF LLL: Disclosure of Lobbying Activities
Project Site Locating Form(s)
Lobbying Certification Form (HHS checklist, 5161)
Note: On SF-424 ―Application for Federal Assistance‖:
Item 15 ―Descriptive Title of Applicant’s Project.‖ Please indicate in this section the
name of this funding opportunity announcement: Consumer Operated and Oriented Plan
[CO-OP] Program.
30

Check box ―C‖ to item 19, as Review by State Executive Order 12372 does not apply to
these loans.
2) Application Cover Letter
The one page cover letter must provide the following information:
A statement indicating whether the applicant is applying for both a Start-up Loan and
Solvency Loan or only a Solvency Loan;
Applicant entity name, phone, address, email (if applicable), internet address (if
applicable);
Project Officer name, phone, address, and email;
Value of private financial support (if any); and
Loan amount(s) requested.
The cover letter must be signed by the Chief Executive Officer (CEO), Chief Financial
Officer (CFO), or an officer of the applicant’s Board of Directors and should be addressed to
Grants Management Officer Michelle Feagins.
3) Application Abstract
Provide a summary of the application (2 pages maximum). Because the abstract is often
distributed to the public and Congress, it should be clear, accurate, and concise without
relying on references to other parts of the application, and should not contain proprietary
information.
Place the following at the top of the abstract:
A statement indicating whether the applicant is applying for both a Start-up Loan and
Solvency Loan or only a Solvency Loan;
Applicant entity name, phone, address, email (if applicable), internet address (if
applicable); and Program applying under, including CFDA number;
Project Officer name, phone, address, and email;
Congressional district(s) served; and
Projected date(s) for accepting applications for enrollment into the CO-OP.
The abstract narrative should include:
A brief history of the applicant organization;
A brief description of the populations served by the project;
A brief description of the target market;
Separate totals of the amount of start-up and solvency funding requested;
31

Date when the applicant will provide health insurance coverage in the Affordable
Insurance Exchanges;
Total projected enrollment over the life of the loan; and
A brief description of any other relevant information, including the proposed impact of
the funding.
4) Project Narrative
An applicant must provide in a narrative format a brief description of its mission, governance
structure, and its operational, financial, enrollment, and administrative strategies. The
narrative should also include a brief explanation of the applicant’s plan to transform its
formation board of directors to an operational board of directors that meets the provisions
proposed at 45 CFR part 156 subpart F. Finally, the narrative should state briefly the
applicant’s plan for assembling a provider network. The project narrative should be concise
and refer to the relevant sections of the application for more detail on topics covered by these
other sections.
5) Feasibility Study
The applicant must submit a feasibility study, supported by actuarial analysis, which
examines the likelihood of success for the CO-OP envisioned and the applicant’s ability to
repay the loan. The feasibility study should address the target market, products to be offered,
regulatory scheme, market impact, financial solvency, economic viability, State solvency
requirements and other regulations, and any other key factors. The feasibility study should
identify and justify any key assumptions. It should also include pro forma financial
statements with sensitivity testing for alternative enrollment scenarios and other changes in
business assumptions. The professional responsible for preparing the feasibility study must
certify its accuracy and objectivity.
6) Business Plan
An applicant must submit a detailed business plan containing at least the items described
below. The business plan is the most important component of the application, and is
weighted at 62% of the application review score.
A. Management Team
An applicant must identify its management team, explain their qualifications and
experience, and submit an organizational chart and detailed position descriptions,
including the qualifications required for each position. An applicant must also submit the
resumes of all current and nominated members of:
32

The applicant’s development team and management team (including but not limited
to: the Chief Executive Officer, the Chief Financial Officer, the Project Officer, and
the Authorized Organizational Representative);
The formation board of directors proposed to be defined at 45 CFR § 156.505;
Key organizational sponsors and supporting stakeholders;
Any other key employed personnel (including consultants); and
A company history and letters of reference for contractors performing operational
functions for the applicant.
B. Provider Arrangements, Target Market and Products
The applicant must provide a detailed description of the applicant’s target market,
including:
The geographic area, population, and relevant health demographics;
The number of issuers and plans already operating in the target market area by market
size (individual and small group,);
A description of the types of plans that the applicant intends to offer in the Affordable
Insurance Exchanges;
A profile of the cohorts or types of subscribers the CO-OP will target in its
enrollment strategy; and
An explanation of why these plans are appropriate for the target market.
The applicant should explain its process for determining accurate and appropriate pricing
of premiums. The applicant should describe the provider market in the target area,
including a description of discrete service areas. The applicant must submit its
implementation plans, contracting strategy, and timelines for obtaining provider services
or building a provider network. The applicant must describe its proposed methods for
provider payment. If applicable, the applicant should describe any plans to use integrated
care models. By ―integrated care model,‖ we mean a model of coordinated or
collaborated health care that improves efficiency, access, quality, or reduces
fragmentation of care. Integrated care models may differ in how health care is
coordinated depending on local market and provider resource conditions.
C. Budget and Budget Narrative
The applicant must submit a budget with appropriate budget line items and a narrative
that identifies the needed funding to accomplish the goals and milestones of the
development period through the licensure and opening of CO-OP enrollment. (Note: The
funding available through the Solvency Loan may only be used to augment regulatory
capital and will be reflected on the pro forma cash flow and balance sheets.)
33

An applicant should complete the SF 424A (budget form) and create a budget narrative.
A sample budget narrative is provided in Appendix D of this Funding Opportunity
Announcement. The budget narrative must distinguish Start-up Loan funds from other
funding sources (as applicable), and must identify areas of private support. The budget
narrative must also distinguish between funding that is administered directly by the
applicant from funding that will be subcontracted to other partners.
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. Details will include the
following:
Estimated budget total;
Total estimated funding requirements and a break down for each line item
expenditure, including, but not limited to the following:
o Personnel;
o Consultants;
o Fringe benefits;
o Contractual costs, including subcontract contracts;
o Equipment;
o Supplies;
o Travel;
o State licensing requirements; and
o All other costs necessary to execute the applicant’s business plan and comply with
State licensing requirements.
D. Enrollment Strategy, Enrollment Forecast, and Regulatory Capital Projections
The applicant must submit its plan to build enrollment and market share, supported by
certified actuarial analysis, over the life of the loan. Any actuarial analysis should
include a certification by the actuary that certifies the accuracy of the report and identifies
methodology used was certifies all methods used are consistent with accepted industry
standards.
Enrollment Strategy: Narrative of how applicant will achieve its enrollment targets
including communication channels to the target membership and key approaches to
building awareness and understanding of the CO-OP model.
Enrollment Forecast: Quantitative forecast of the enrollment totals and composition
for the first 20 years of the CO-OP. Forecast numbers should be detailed, and tie to
the key activities of the business plan. Assumptions used to forecast enrollment in
the out-years should be documented and justified. In addition to the base case

34

forecast, this section should include alternative scenarios upon which sensitivity
analysis can be built.
Regulatory Capital Requirements Forecast: The applicant should provide an
estimation of the annual total regulatory capital requirements associated with each of
the base case and alternative enrollment forecasts.
E. Loan Funding and Repayment Schedule
The applicant will provide a proposed schedule for the timing and amounts of all loan
draws and repayments, including interest. For the Start-up Loan funding, this schedule
should tie directly to key activities in the business plan and line items on the budget.
Disbursement of such funds will be subject to the objective and documented completion
of key milestones. For the Solvency Loan, this schedule should tie to the regulatory
capital requirement forecast. The timing and amounts of repayment must not exceed the
maximum repayment periods as set forth in section II.G.1 of this FOA. Applicants are
encouraged to propose repayment schedules reflective of their organization’s growth and
increasing financial strength following the initial start-up phase.
F. Pro Forma Financials
The applicant must submit pro forma financials covering the period from award through
the life of the loan(s). Forecast numbers should be detailed and tie to the key activities of
the business plan, including clearly articulated assumptions underlying forecasts of
revenues and costs over time. The financials will include:
Cash Flow Statement that summarizes all sources and uses of cash including but not
limited to the loan awards, any third party financial awards or support, start-up
development costs, as well as the on-going business operations of the CO-OP;
Balance Sheet that reflects the year end assets and liabilities of the CO-OP including
core regulatory capital; and
Income Statement that reflects the annual income or losses of the CO-OP consistent
with their business operations and governance.
G. Operations
In addition to the items identified above, the applicant should submit the following to
explain its plan for becoming operational:
A timeline of key activities related to membership development;
A detailed plan for implementing the applicant’s financial management system;
A detailed plan and timeline for building or renting a secure and scalable Information
Technology (IT) system capable of supporting administrative functions (e.g.,
enrollment, cost-sharing reductions, billing, claims payment, pharmacy benefit,
35

premium collection, provider payment, and consumer services) and clinical functions
(e.g., quality and outcome metrics, clinical decision-making support, case and disease
management, etc.). The plan and timeline should indicate that the IT system will
secure private information and facilitate compliance with HIPAA privacy standards;
If applicable, a detailed plan and timeline describing any innovative technology
and/or compliance with Health Information Technology (HIT) Standards, such as the
Healthcare Technology Information Panel Standards;
A timeline of key activities and contracts required to be able to accept applications for
enrollment and provide coverage;
A detailed description of staffing needs and a timeline demonstrating how staffing
will be added over time;
The applicant’s strategy for bearing risk, including the percent of risk it plans to bear
and its plan to purchase reinsurance and/or share risk with providers (if applicable);
Wherever possible, these items should be included in the business plan expressed as
milestones and linked to the funding schedule and pro forma financials.
7) Governance and Licensure
The applicant must submit its bylaws, which must contain provisions addressing the
governance standards, proposed at 45 CFR § 156.515. The bylaws must describe:
The applicant’s plan for transforming the formation board of directors into the CO-OP’s
subsequent operational board of directors to ensure that the majority of the operational
board members are CO-OP members and that all members of the operational board are
elected by the membership of the CO-OP;
The applicant’s plan to include consumers and potential members in the development
phase of the CO-OP;
The nomination and election process for the operational board; and
Conflict of interest safeguards for the operational board.
The applicant should also submit evidence in the initial application that it has engaged
directly with its State regulators to ensure that it meets State requirements as quickly as
practicable and adequately protects its members from disruptions in coverage or inability to
pay providers.
8) Evidence of Nonprofit Status:
The applicant must submit a copy of the organization’s official certificate of organization or
similar document, e.g., articles of incorporation, showing the State or tribal seal that clearly
establishes nonprofit status.
36

9) List of Relevant Statutory and Regulatory Citations Regarding State Licensure
The applicant must include a list of relevant statutory and regulatory citations governing
State licensure as a health insurance issuer.
10) Eligibility Affidavit and Application Certification
An applicant must provide a sworn Eligibility Affidavit and Application Certification signed
by the Chief Executive Officer (CEO), Chief Financial Officer (CFO), or an officer of the
applicant’s Board of Directors; the signatory must be legally authorized to bind the
corporation. The Eligibility Affidavit and Application Certification must state that the
applicant is eligible to apply for a Solvency Loan and, if applicable, a Start-up Loan and
meets all eligibility criteria proposed to appear at 45 CFR Part 156 subpart F.
The Eligibility Affidavit and Application Certification must also certify the accuracy,
completeness, and truthfulness of any information contained in the loan application and any
other materials submitted to CMS.
11) Affidavit(s) of Criminal and/or Civil Proceedings
All members of the applicant’s Formation Board, as well as the applicant’s Chief Executive
Officer, if any, and the applicant’s Chief Financial Officer, if any, must submit an
Affidavit(s) of Criminal and/or Civil Proceedings describing the involvement of the attesting
individual as a party in any criminal or civil proceeding, or the individual’s involvement in
any process, including but not limited to administrative proceedings, relating to fraud or
misuse of funds, or failure to pay for coverage where obligated. Absent such involvement,
the attesting individual must submit an affidavit stating that he or she has never been a party
to any such proceedings or processes.
12) Affidavit of Eligibility to Participate in Federal Programs
All members of the applicant’s Formation Board, as well as the applicant’s Chief Executive
Officer, if any, and the applicant’s Chief Financial Officer, if any, must submit an affidavit
attesting that he or she has never been debarred from participating in a federal program and
also agreeing to ensure that no employee, contractor, or agent of the applicant has ever been
debarred from participating in a federal program.
13) Evidence of Private Support
The applicant should include evidence of any committed funding, committed in-kind support,
letters of intent from key stakeholders (e.g., provider groups) to participate in the CO-OP or
its formation, or letters of support from key community leaders.
37

C. Submission Dates and Times
All loan applications must be submitted electronically and be received through
http://www.grants.gov by 11:59 pm Eastern Standard Time on October 17, 2011, and on the
quarterly application due dates thereafter: December 31, 2011; March 31, 2012; June 30, 2012;
September 30, 2012; and December 31, 2012.
D. Intergovernmental Review
Applications for these loans are not subject to review by States under Executive Order 12372,
―Intergovernmental Review of Federal Programs‖ (45 CFR 100). Please check box "C" to item
19 of the SF 424 (Application for Federal Assistance) as Review by State Executive Order 12372
does not apply to these loans.
E. Eligible Costs
Eligible start-up costs include but are not limited to accounting, legal, actuarial, and managerial
services, administrative personnel, IT systems, office space, and similar costs. It also includes
the costs of community outreach and education and the costs of educating CO-OP members on
the rights and responsibilities of member governance. The costs of establishing private
purchasing councils as provided for in section 1322(d) of the Affordable Care Act may also be
considered start-up costs.
The costs of preparing the feasibility study and business plan required under sections IV.B.5 and
IV.B.6 of this FOA to be submitted with the application will be considered eligible costs for
Start-Up Loans up to a total amount of $100,000. Loans for these costs will only be provided to
applicants who are awarded Start-Up Loans.

F. Funding Restrictions
Use of CO-OP Program funds will be governed by the regulations proposed to appear at 45 CFR
part 156 subpart F. Funds lent under the Consumer Operated and Oriented Plan [CO-OP]
Program may not be used for any of the following:
1. To carry on propaganda and other activities attempting to influence legislation at the
Federal, State, or local level of government;
2. To conduct marketing. ―Marketing‖ means activities that promote the purchase of a
specific health care plan or explain a product’s benefit structure, whether targeted at new
or current members;
3. To meet matching requirements of any other Federal program;
38

4. To cover excessive executive compensation;
5. To fund activities unrelated to CO-OP planning and establishment, including but not
limited to staff retreats and promotional giveaways

39

V. APPLICATION REVIEW AND SELECTION INFORMATION
A. Criteria
CMS relied on the law, proposed rule for CO-OPs, proposed rule for Exchanges on standards for
qualified health plans, and the final report of the CO-OP Advisory Board to establish the review
criteria for this FOA. The Advisory Board’s final report is available at:
http://cciio.cms.gov/resources/files/coop_faca_finalreport_04152011.pdf. For a discussion of the
Advisory Board selection and process, see preamble to the proposed 45 CFR part 156, subpart F,
published in the Federal Register on July 20, 2011, 76 Fed. Reg. 43237.
The review criteria for applications are based on a total of 100 points in the following areas:
1. Statutory Preferences (16 points)
The statutory preferences enacted in section 1322(b)(2)(A)(ii) of the Affordable Care Act will be
given as follows:
a. Integrated Care (5 points)
Extent and reasonableness of applicant’s plan to implement an integrated care model
as defined above in Section IV.B.6B (discussion of business plan). Extent to which
provider arrangements will encourage greater care integration, coordination, use of
medical homes and/or accountable care organizations, quality, and/or; innovation in
proposed reimbursement model and likelihood that the model will lead to improved,
more efficient care than is available in the target market(s);
b. Offering COOP Qualified Health Plan on a Statewide Basis (6 points)
Degree to which applicant may be able to operate State-wide over time; and
c. Evidence of Private Support (5 points)
Extent of committed funding, committed in-kind support, 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.
2. Project Narrative (4 points)
The Project Narrative should demonstrate that the applicant:
Is a well-organized entity with capable leadership and staff;
Clearly understands, and demonstrates the capacity to comply with, the standards of the
CO-OP program as outlined in this FOA, section 1322 of the Affordable Care Act, the
CO-OP regulation proposed to appear at 45 CFR part 156 subpart F, and other relevant
Federal statutes, regulations, and guidance;
40

Has specific knowledge of the provider and insurance markets in the areas in which it
proposes to operate;
Reasonably expects to positively affect the target market by offering consumers greater
choice and control, care coordination, quality, efficiency, and more competitive pricing;
The mission of the plan is consumer-focused;
Will have an adequate provider network. The applicant should describe how it will define
and assemble a provider network using ratios of providers to enrollees, geographic area
served by professionals and institutions in its network, and other measures;
Is capable of beginning start-up activities promptly, meeting all required timeframes, and
doing so responsibly and in an organized manner;
Will be able to repay its loans within the required timeframes; and
Has substantive private support.
3. Business Plan (62 points total as indicated below)
The Business Plan will be evaluated based on the following items:
a. Qualifications of Management Team and Key Personnel (10 points)
Extent to which proposed key program personnel, including proposed contractors, are
qualified by training and/or experience to carry out the project;
Appropriateness of training and/or experience required of project staff;
Extent to which the applicant has identified all key roles necessary for successful COOP development and implementation;
Extent to which the position descriptions clearly and adequately describe an
organization capable of leading, managing, and implementing the project;
b. Provider Arrangements, Target Market and Products (8 points)
Extent to which applicant has addressed criteria contained in section IV.B.6.B, including
but not limited to:
Extent to which the applicant has reached out to providers for guidance or to discuss
contracting;
Adequacy of proposed provider network and contracting services;
Reasonableness of timeline for obtaining provider services or building a provider
network; and
Description of how providers will be reimbursed.
c. Budget and Budget Narrative (12 points)

41

Extent to which applicant has addressed criteria contained in section IV.B.6.C, including
but not limited to:
Reasonableness and cost-effectiveness of the proposed budget in relation to the
objectives, the complexity of the activities, and the anticipated results; and
Reasonableness of the proposed schedule for Solvency Loan and Start-up Loan
drawdown(s).
d. Enrollment Strategy, Enrollment Forecasts, and Regulatory Capital Projections (12
points)
Extent to which applicant has addressed criteria contained in section IV.B.6.D, including
but not limited to:
Evidence of thorough actuarial analysis in business plan and feasibility study;
Extent to which the enrollment strategy is likely to achieve the target enrollment
figures in accordance with its timeline;
Evidence that the applicant clearly understands its target membership and the ways in
which it can most effectively educate them about CO-OPs;
Thoroughness and reasonableness of financial projections including enrollment,
expenditures, income, and sensitivity testing for alternative enrollment scenarios and
other changes in assumptions;
Thoroughness and reasonableness of the description of milestones that will trigger
and justify each drawdown of funds, tentative dates for these achievements, and the
evidence to demonstrate that the conditions for drawdown have been satisfied;
Probable accuracy of estimates of enrollment over the life of the loan and likelihood
that enrollment will be sufficient to create a financially viable CO-OP;
Reasonableness of anticipated capital needs over life of the loan;
Strength of contingency plans (if any) for private and/or public funding sources;
Commitment to pricing of premiums to ensure stable coverage; and
Extent to which the business plan reflects a strategy to include a risk charge to fund
additional reserve and solvency requirements based on expanding enrollment from
revenues and reduce dependence on Solvency Loans as enrollment grows and
premiums increase over time.
e. Loan Funding and Repayment Schedule (5 points)
Extent to which applicant has addressed criteria contained in section IV.B.6.E, including
but not limited to:

42

Likelihood that applicant will adhere to proposed repayment schedule for the joint
Start-up and Solvency Loans or the Solvency Loan, and reasonableness of that
schedule.
f. Pro Forma Financials (10 points)
Extent to which applicant has addressed criteria contained in section IV.B.6.F, including
but not limited to:
Strength of projections of the applicant’s financial model over the life of the loan,
including all revenues, costs, or other financial requirements;
Reasonableness of key assumptions; and
Strength of actuarial analysis and other supporting evidence.
g. Operations (5 points)
Extent to which the applicant demonstrates that it is ready to begin activities
promptly;
Reasonableness and appropriateness of the applicant’s risk bearing strategy;
Reasonableness of the applicant’s implementation plan and expected timeline for:
developing a provider network;
membership development;
implementing a financial management system;
initiating activities and contracts necessary to accept applications for enrollment
and provide coverage;
hiring adequate and competent staff, both clinical and non-clinical;
implementing provider and member call centers;
establishing a process for resolving consumer inquiries and complaints;
implementing a process to monitor and improve quality of care for enrollees,
including a process for analyzing administrative and clinical complaints to
improve quality of care and operations;
Extent to which the applicant will use information technology and other
infrastructure that promotes coordination of care, enables evaluation of care
outcomes, and provides for feedback to relevant management to improve care,
responsiveness to consumers, and administrative efficiency;
Extent to which the information technology systems and other infrastructure secure
confidential information, including but not limited to personally identifiable
information, and facilitate compliance with HIPAA privacy standards; and
Extent to which the information technology systems and other infrastructure are
secure, adaptable, scalable, and can add functionalities over time, for example, to:
43

incorporate clinical data, handle enrollment growth, add business functions, and
achieve meaningful use of Health Information Technology (HIT).
4. Governance and Licensure (10 points)
Extent to which the applicant plans to include consumers in the development phase of the
CO-OP and in the transition from the formation board to the operational board;
Extent of communication and planning with State insurance regulators and progress
towards licensure;
Clarity and consumer-centeredness of the bylaws’ nomination and election process for
the operational board;
Effectiveness of the bylaws’ conflict of interest safeguards for the formation board and
operational board;
Extent to which the bylaws protect consumer governance over time and ensure that
incentives to dilute consumer control are eliminated;
Extent to which the applicant places the plan member at the center of all activities and
creates opportunities for member engagement in addition to electing and/or serving on
the operational board; and
Thoroughness and reasonableness of the strategy and timeline for:
meeting the standards for a qualified health plan issuer; and
achieving licensure as a health insurance issuer by the State insurance regulating
entity.
5. Feasibility Study (8 points)
Extent to which applicant has addressed criteria contained in section IV.B.5, including but not
limited to
Thoroughness of the target market analysis and of the factors necessary for the
prospective CO-OP’s success; and
Evidence of thorough actuarial analysis in business plan and feasibility study;

44

B. Review and Selection Process
As recommended by the Advisory Board, an objective review panel of qualified external experts
with applicable knowledge and experience will review all eligible applications. CMS will make
the award decision.3
The review process will include the following:
1. Applications will be screened to determine eligibility for further review using the criteria
detailed in Section III, Eligibility Information, of this Funding Opportunity
Announcement. Applications that fail to meet the eligibility standards as detailed in this
Funding Opportunity Announcement or that do not include the required forms will not be
reviewed. Applications received after an application due date will be subject to review
after the application due dates for the next round of applications.
2. Procedures for assessing the technical merit of loan applications have been instituted to
provide for an objective review of applications and to assist the applicant in
understanding the standards against which each application will be judged. To assist
CMS in reviewing applications and awarding loans and grants, CCIIO will obtain the
services of one or more contractors to provide, establish, and manage qualified expert,
objective panels responsible for reviewing the applications received under the CO-OP
program and providing recommendations to CMS staff on the reasonableness of the
application; financial models and business plan; the applicant’s ability to meet the
regulatory standards and milestones for development; the likely long-term sustainability
of the plan; and adherence to the health policy goal of consumer operation and
orientation. For each application that is recommended to receive funding, the contractor
will provide a recommended loan amount and a schedule of disbursements for each
applicant based on the information provided in the application and supporting
documentation. Specifically, the contractor(s) will be responsible for reviewing all
aspects of each application for funding against standards in the standards in the NPRM
and the guidelines and metrics in this FOA.
The review criteria are used to evaluate and rank applications. Critical indicators have
been developed for each review criterion to assist the applicant in presenting pertinent
information related to that criterion and to provide the reviewer with a standard for
evaluation. Review criteria, according to which all applications will be evaluated, are
outlined above with specific detail and scoring points. Applicants should pay strict
3

―External expert‖ means an expert who is not an employee of CMS or any other component of HHS and who is
hired as a contractor specifically to review the loan applications.

45

attention to addressing all review and selection criteria, as they are the basis upon which
the reviewers will evaluate their applications.
3. After applications have been reviewed, applicants may be contacted by the external
reviewers or by a CMS program official for an interview. This interview may be
conducted in person, by telephone, or by videoconference, at the discretion of CMS.
CMS may also request that an applicant submit additional documentation to assist in
evaluation of its application.
4. 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.
CMS reserves the right to conduct pre-award negotiations with potential loan recipients.
C. Reconsiderations
An applicant may request reconsideration of a loan application determination. To request
reconsideration of an application, the applicant must submit its request in writing to CMS within
30 days of receipt of the determination. An applicant may only request reconsideration of a
specific application once. Any determination made by CMS as result of reconsideration is final
and will not be subject to further administrative review or appeal. Reconsideration will be
subject to the application review and selection process described in subsection B of this section.
Nothing in this section prohibits an applicant from submitting a new loan application at a later
date.

46

VI. AWARD ADMINISTRATION INFORMATION
A. Award Notices
Successful applicants will receive a Notice of Award and a Loan Agreement signed and dated by
the CMS Grants Management Officer. The Notice of Award and the Loan Agreement are the
documents authorizing the loan award and will be sent through the U.S. Postal Service or via
electronic mail to the loan recipient as listed on the SF 424. The Loan Agreement must be signed
and returned to CMS by the Chief Executive Officer of the applicant organization, or by an
officer of the applicant organization’s Board of Directors. The signed Loan Agreement should
be submitted to the attention of Grants Management Officer Michelle Feagins at:
Health and Human Services
Hubert H. Humphrey Building
Room 737F
200 Independence Ave., SW
Washington, DC 20201
Any communication between CMS and applicants prior to issuance of the Notice of Award and
the Loan Agreement is not an authorization to begin performance of a project. Unsuccessful
applicants will be notified within 30 days of the final funding decision and will receive a
disapproval letter via U.S. Postal Service or electronic mail.
B. Administrative and National Policy Requirements
The following standard requirements apply to applications and awards under this FOA:
1. All CO-OPs receiving awards under this funding opportunity must comply with all applicable
Federal statutes relating to nondiscrimination including, but not limited to:
a. Title VI of the Civil Rights Act of 1964;
b. Section 504 of the Rehabilitation Act of 1973;
c. The Age Discrimination Act of 1975; and
d. Title II Subtitle A of the Americans with Disabilities Act of 1990.
2. All equipment, staff, other budgeted resources, and expenses must be used exclusively for the
project identified in the applicant’s original application or agreed upon subsequently with CMS
and may not be used for any prohibited uses.
3. Consumers and other stakeholders must have meaningful input into the planning,
implementation, and evaluation of the project. All loan budgets must include some funding to
facilitate participation on the part of individuals who have a disability or long-term illness and
their families. Appropriate budget justification to support the request for these funds must be
included.
47

C. Terms and Conditions
Subaward Reporting and Executive Compensation: Awards issued under this FOA are subject to
the reporting requirements of the Federal Funding Accountability and Transparency Act
(FFATA) of 2006 (Pub. L. 109-282), as amended by section 6202 of Public Law 110-252 and
implemented by 2 CFR Part 170. Recipients must report information for each first-tier subaward
of $25,000 or more in Federal funds and executive total compensation for the recipient’s and
subrecipient’s five most highly compensated executives as outlined in Appendix A to 2 CFR Part
170. Information about the Federal Funding and Transparency Act Subaward Reporting System
(FSRS) is available at http://www.fsrs.gov.
All prime recipients will be required to provide a DUNS number in order to be able to register in
FSRS as a prime user. If your organization does not have a DUNS number, you will need to
obtain one from Dun & Bradstreet. Call D&B at 866-705-5711 if you do not have a DUNS
number. Once you have obtained a DUNS Number from D&B, you must then register with the
Central Contracting Registration (CCR) at http://www.ccr.gov. Organizations must report
executive compensation as part of the registration profile at http://www.ccr.gov by the end of the
month following the month in which this award is made, and annually thereafter. After you have
completed your CCR registration, you will be able to register in FSRS as a prime user.
Please Note: The implementation of subaward and executive compensation reporting for
Federal Financial assistance issued as loans in the FSRS system has been deferred to a later
date. Loan recipients will be notified when reporting requirements under FFATA
described in this subsection C become applicable.
D. Reporting
1. Overview
CMS will monitor and assess the performance of loan recipients in meeting the terms and
parameters of the Loan Agreement. Each loan recipient must conform to the standards and
responsibilities established in it application, including the business plan and contractual
obligations as specified in the Loan Agreement, for 10 years following the life of the loan.
In addition CMS will monitor the loan recipient’s use of loan amounts awarded to ensure that the
loan recipient uses Federal funds in a manner consistent with section 1322 of the Affordable
Care Act, the provisions of proposed 45 CFR part 156 subpart F, this FOA, and the recipient’s
loan agreement. CMS will also monitor the loan recipient’s:
Financial management;
Responsiveness to member grievances;
Maintenance of consumer control; and
48

Quality of care.
In monitoring the loan recipient, CMS may use a combination of the methods described below,
as appropriate. CMS may institute any and all applicable corrective actions plans (CAPs) or
sanctions specified in the Loan Agreement, up to and including termination, if it determines that
a loan recipient is utilizing Federal funds for prohibited activities.
The loan recipient will be re-evaluated during and after the CAP implementation period to
determine if the loan recipient has continued to use Federal funds for prohibited activities.
CMS may prohibit the drawdown of any loan amounts if CMS determines that the loan recipient
has continued to use Federal funds for activities prohibited by section 1322 of the Affordable
Care Act, provisions proposed in 45 CFR part 156, subpart F, this FOA, or its loan agreement,
during or after the CAP.
CMS may use a range of methods to monitor and assess the performance of loan recipients
including but not limited to any of the following:
1. Analysis of specific financial data required by the Loan Agreement and provided by
the loan recipient, including aggregated annual and quarterly reports;
2. Site visits;
3. Analysis of member and/or provider complaints; and
4. Audits.
Enhanced oversight plan
CMS may place a loan recipient on an enhanced oversight plan if the loan recipient
underperforms or has difficulty meeting program milestones identified in its Loan Agreement,
and these problems are chronic or significant. Under an enhanced oversight plan, CMS conducts
stronger and more frequent review of the loan recipient’s operations and financial status. CMS
may require the loan recipient to develop and implement a CAP. In addition, CMS may provide
technical assistance if CMS determines that doing so would improve the performance of the loan
recipient and increase the likelihood of loan repayment.
Data submission
To support CMS’ monitoring efforts, the loan recipient must submit, within the timeframes
established by CMS in the FOA, Loan Agreement, and other guidance, financial reports,
enrollment data, quality data, governance and election information, annual independently audited
financial statements, in accordance with any State financial reporting requirements, and other
data required by CMS to monitor the performance of the loan recipient.
49

2. Reporting Submissions
Recipients of joint Start-up and Solvency Loans or only Solvency Loans will submit the
reports listed in this subsection until the end of the repayment period. For 10 years following
the date of the final loan repayment, a loan recipient will submit certain elements of the semiannual progress report annually. The duration of the repayment period, and therefore the
duration of the reporting period, will be specific to each loan recipient, depending on how
long the loan recipient takes to repay its loans.
All successful applicants under this announcement must comply with the following reporting
and review activities:
a. Quarterly Federal Financial Report (FFR)
Each loan recipient must submit a quarterly electronic SF 425 via the Payment
Management System. The report identifies cash transactions and expenditures against the
authorized funds for the loan. Failure to submit the report may result in the inability to
access loan funds. The SF 425 Certification page should be faxed to the PMS contact at
the fax number listed on the SF 425, or it may be submitted to the:
Division of Payment Management
HHS/ASAM/PSC/FMS/DPM
PO Box 6021
Rockville, MD 20852
Telephone: (877) 614-5533
Additional information on financial reporting requirements will be provided in the Loan
Agreement.
Please note: The financial reporting requirements demonstrating repayment may
differ from the current SF 425. In the event of any modification to the reporting
requirements, the loan recipient will be given ample notice and opportunity to
comply.
b. Quarterly Financial Report
In addition to submitting the SF 425, each loan recipient must submit a quarterly
financial report including information such as, but not limited to:
A statement that the loan recipient is in compliance with all relevant State
licensure requirements appropriate for its stage of development or an explanation
of any deficiencies and steps being taken to resolve them; and
Financial statements including balances sheets, income statements, and statements
of cash flow.
c. Semi-annual Progress Report
50

Loan recipients must provide the Program Officer information such as, but not limited to:
Progress on the goals, objectives, milestones, and activities identified in its
Business Plan and the Loan Agreement;
Accomplishments, barriers, and lessons learned;
Data on the loan recipient’s responsiveness to member grievance, maintenance of
consumer control, and quality of care;
Updated financial projections and pro forma;
An updated Business Plan including supporting actuarial analyses; and
One of the semi-annual reports must include an independently audited financial
annual report.
CMS reserves the right to restrict funds for activities related to milestones not met. More
details of the report will be outlined in the Loan Agreement and loan recipients will be
provided with a reporting template.
d. Corrective Action Plan (CAP)
If CMS concludes that a loan recipient has not complied with the requirements proposed
at 45 CFR part 156 subpart F or in its Loan Agreement, CMS may require the loan
recipient, via a notice of violation, to submit a CAP and implement the CAP as approved
by CMS.
1. The loan recipient must submit, for CMS approval, a CAP by the deadline
indicated on the notice of violation.
2. The CAP must specify the actions that the loan recipient will take to ensure that
the loan recipient, its members, its providers and suppliers, and contracted entities
performing services or functions on behalf of the loan recipient, will correct any
deficiencies and remain in compliance with program requirements.
3. CMS will monitor the loan recipient’s performance during the CAP process.
4. Failure to submit, obtain approval for, or implement a CAP may result in
termination of the Loan Agreement, as may failure to demonstrate improved
performance upon completion of the CAP.
e. Enhanced Oversight Plan
CMS may place a loan recipient in an enhanced oversight plan if the loan recipient
consistently underperforms or repeatedly has difficulty in meeting program milestones
and benchmarks, as identified in its Loan Agreement. Under an enhanced oversight plan,
CMS will conduct more detailed and more frequent review of the loan recipient’s
operations and financial status. CMS may require the loan recipient to develop and
implement a corrective action plan (CAP). In addition, CMS may provide technical
51

assistance if CMS determines that doing so will improve the performance of the loan
recipient and increase the likelihood of loan repayment.
f. Transparency Act Reporting Requirements
New awards issued under this funding opportunity announcement are subject to the
reporting requirements of the Federal Funding Accountability and Transparency Act
(FFATA) of 2006 (Pub. L. 109–282), as amended by section 6202 of Public Law 110–
252 and implemented by 2 CFR Part 170. Recipients must report information for each
first-tier sub award of $25,000 or more in Federal funds and executive total compensation
for the recipient’s and sub recipient’s five most highly compensated executives as
outlined in Appendix A to 2 CFR Part 170 (available online at www.fsrs.gov).
Competing Continuation awardees may be subject to this requirement and will be so
notified in the Notice of Award.
Please Note: The implementation of subaward and executive compensation
reporting for Federal Financial assistance issued as loans in the FSRS system has
been deferred to a later date. Loan recipients will be notified when reporting
requirements under FFATA described in this subsection C become applicable.
g. Audit Requirements
Recipients must comply with audit requirements of the Office of the Management and
Budget (OMB) Circular A-133. Information on the scope, frequency, and other aspects
of the audits can be found on the Internet at http://www.whitehouse.gov/omb/circulars.
The loan recipient must agree, and must require its providers, suppliers, and contracted
entities performing services or functions on behalf of the loan recipient to agree, that
HHS, the Comptroller General, the OIG or their designees have the right to audit, inspect,
evaluate, examine, and make excerpts, transcripts, and copies of any books, records,
documents, and other evidence of the loan recipient, and its members, providers and
suppliers, and contracted entities related to their scope of work that pertain to—
1. The loan recipient’s compliance with program requirements; and
2. The ability of the loan recipient to repay loan funds to CMS.
CMS may conduct onsite performance reviews and site visits. The timing of any
performance review and any site visit is at the discretion of CMS.
h. Maintenance of records
An applicant will meet the standards for records contained in this FOA and its Loan
Agreement. A loan recipient must agree, and must require its providers, suppliers, and
contracted entities performing functions or services on behalf of the loan recipient to
agree to the following:
52

1. To maintain and give HHS, the Comptroller General, OIG, or their designees access to
all books, contracts, records, documents, and other evidence sufficient to enable the audit,
evaluation, and inspection of the loan recipient’s compliance with program requirements;
2. To maintain such books, contracts, records, documents, and other evidence for a period
of 10 years from the final date of the repayment period or from the date of completion of
any audit, evaluation, or inspections, whichever is later, unless –
a. CMS determines there is a special need to retain a particular record or group of
records for a longer period and notifies the loan recipient at least 30 days before
the normal disposition date;
b. There has been a termination, dispute, or allegation of fraud or similar fault
committed by the loan recipient, its providers, suppliers, or contracted entities that
perform functions or services on its behalf, in which case the loan recipient must
retain records for an additional 6 years from the date of any resulting final
resolution of the termination, dispute, or allegation of fraud or similar fault;
c. There is a reasonable possibility of fraud or similar fault by the loan recipient or
its members, providers and suppliers, or contracted entities performing services or
functions on behalf of the loan recipient, in which CMS may inspect, evaluate,
and audit the loan recipient at any time while the loan funds are in repayment; and
3. Notwithstanding any arrangements between or among a loan recipient and its
members, providers and suppliers, and contracted entities performing functions or
services on its behalf, the loan recipient must have ultimate responsibility for adhering to
and otherwise fully complying with all terms and conditions of its Loan Agreement with
CMS, and all requirements of this FOA.
E. Technical Assistance
Technical assistance and support will be provided to organizations that apply for or are awarded
a loan as available and deemed appropriate by CMS.

53

VII. AGENCY CONTACTS
Programmatic Contact
Programmatic questions about the CO-OP Program can be directed to:
Anne Bollinger
Center for Consumer Information and Insurance Oversight
Centers for Medicare and Medicaid Services
(301) 492-4395
Anne.Bollinger@cms.hhs.gov
Grants Management Official/Business Administration
Michelle Feagins
Grants Management Officer
Health and Human Services
Hubert H. Humphrey Building
Room 737F
200 Independence Ave., SW
Washington, DC 20201
Michelle.Feagins@hhs.gov

54

Appendix A:
Start-up Loan and Solvency Loan Application Check List
This appendix serves as an organizational tool to assist the applicant in preparing the application
package. The applicant should refer to Section IV of this FOA to determine what content and
attachments are required for each item below.
Recommended Contents



Letter of Intent (submit prior to official application)

Required Contents











Standard Forms (Grants.gov) (with an electronic signature)








SF 424: Official Application for Federal Assistance
SF-424A: Budget Information
SF-424B: Assurances-Non-Construction Programs
SF-LLL: Disclosure of Lobbying Activities
Project Site Location Form(s)
Lobbying Certification Form (HHS checklist, 5161)

Application Cover Letter
Application Abstract
Project Narrative
Feasibility Study
Business Plan, including the following attachments and sections









Management Team and Key Personnel (including resumes)
Provider Arrangements, Target Market and Products
Budget and Budget Narrative
Enrollment Strategy, Enrollment Forecast, and Regulatory Capital
Projections
Loan Funding and Repayment Schedule
Pro Forma Financials
Operations

Governance and Licensure
55








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
Evidence of Private Support

56

Appendix B:
Preparing a Budget and Budget narrative in response to SF425A

Introduction
This guidance is offered for the preparation of a budget request. This guidance will facilitate the
review and approval of a requested budget by insuring that the required or needed information is
provided. This is to be for done for each 12 month period. Applicants should be careful to only
request funding for activities that will be funded by the Consumer Operated and Oriented Plan
[CO-OP] Program. Any other funding provided by CMS should not be supplanted by the CO-OP
Program. In the budget request, applicants should distinguish between activities that will be
funded under this FOA and activities funded with other sources and must identify areas of
private support. Please refer to Section IV of this FOA for more information on the Budget and
Budget Narrative.
A.

Salaries and Wages
For each requested position, provide the following information: name of staff member
occupying the position, if available; annual salary; percentage of time budgeted for this
program; total months of salary budgeted; and total salary requested. Also, provide a
justification and describe the scope of responsibility for each position, relating it to the
accomplishment of program objectives.

Sample budget
Personnel
Total $______
CO-OP Program Start-up Loan $______
Funding other than CO-OP Program Start-up Loan $______
Sources of Funding

Position Title and Name

Annual

Project Coordinator

Time

Months

Amount Requested

$45,000 100%

12 months

$45,000

$28,500

12 months

$14,250

Susan Taylor
Finance Administrator

50%
57

John Johnson
Outreach Supervisor

$27,000

100%

12 months

$27,000

(Vacant*)

Sample Justification
The format may vary, but the description of responsibilities should be directly related to
specific program objectives.

Job Description: Project Coordinator - (Name)
This position directs the overall operation of the project; responsible for overseeing the
implementation of project activities, coordination with other agencies, development of
materials, provisions of in service and training, conducting meetings; designs and directs
the gathering, tabulating and interpreting of required data, responsible for overall
program evaluation and for staff performance evaluation; and is the responsible
authority for ensuring necessary reports/documentation are submitted to HHS. This
position relates to all program objectives.

B.

Fringe Benefits
Fringe benefits are usually applicable to direct salaries and wages. Provide information
on the rate of fringe benefits used and the basis for their calculation. If a fringe benefit
rate is not used, itemize how the fringe benefit amount is computed.

Sample Budget
Fringe Benefits
Total $______
CO-OP Program Start-up Loan $______
Funding other than CO-OP Program Start-up Loan $______
Sources of Funding

25% of Total salaries = Fringe Benefits
58

If fringe benefits are not computed by using a percentage of salaries, itemize how the
amount is determined.

Example: Project Coordinator — Salary $45,000

Retirement 5% of $45,000

=

$2,250

FICA 7.65% of $45,000

=

3,443

Insurance

=

2,000

Workers’ Compensation

=

______

Total:

C.

Consultant Costs
This category is appropriate when hiring an individual to give professional advice or
services (e.g., training, expert consultant, etc.) for a fee but not as an employee of the loan
recipient. Hiring a consultant requires submission of the following information to HHS
(see Required Reporting Information for Consultant Hiring later in this Appendix):

1.

Name of Consultant;

2.

Organizational Affiliation (if applicable);

3.

Nature of Services to be Rendered;

4.

Relevance of Service to the Project;

5.

The Number of Days of Consultation (basis for fee); and

6.

The Expected Rate of Compensation (travel, per diem, other related expenses)—list
a subtotal for each consultant in this category.

If the above information is unknown for any consultant at the time the application is
submitted, the information may be submitted at a later date as a revision to the budget. In
59

the body of the budget request, a summary should be provided of the proposed consultants
and amounts for each.
D.

Equipment
Provide justification for the use of each item and relate it to specific program objectives.
Maintenance or rental fees for equipment should be shown in the ―Other‖ category. All IT
equipment should be uniquely identified. As an example, we should not see a single line
item for ―software‖. Show the unit cost of each item, number needed, and total amount.

Sample Budget
Equipment
Total $______
CO-OP Program Start-up Loan $______
Funding other than CO-OP Program Start-up Loan $______
Sources of Funding

Item Requested

How Many

Unit Cost Amount

Computer Workstation

2 ea.

$2,500

$5,000

Fax Machine

1 ea.

600

600

Total $5,600
Sample Justification
Provide complete justification for all requested equipment, including a description of how
it will be used in the program. For equipment and tools which are shared among
programs, please cost allocate as appropriate. Applicants should provide a list of
hardware, software and IT equipment which will be required to complete this effort.
Additionally, they should provide a list of non-IT equipment which will be required to
complete this effort.

E.

Supplies
Individually list each item requested. Show the unit cost of each item, number needed, and
total amount. Provide justification for each item and relate it to specific program
60

objectives. If appropriate, General Office Supplies may be shown by an estimated amount
per month times the number of months in the budget category.

Sample Budget
Supplies
Total $______
CO-OP Program Start-up Loan $______
Funding other than CO-OP Program Start-up Loan $______
Sources of Funding

General office supplies (pens, pencils, paper, etc.)
12 months x $240/year x 10 staff

=

Educational Pamphlets (3,000 copies @) $1 each)

=

$2,400

$3,000

Educational Videos (10 copies @ $150 each)

=

$1,500

Word Processing Software (@ $400—specify type)

=

$ 400

Sample Justification
General office supplies will be used by staff members to carry out daily activities of the
program. The education pamphlets and videos will be purchased from XXX and used to
illustrate and promote safe and healthy activities. Word Processing Software will be used
to document program activities, process progress reports, etc.

F.

Travel
Dollars requested in the travel category should be for staff travel only. Travel for
consultants should be shown in the consultant category. Travel for other participants,
advisory committees, external reviewers , etc. should be itemized in the same way
specified below and placed in the “Other” category.

61

In-State Travel—Provide a narrative justification describing the travel staff members will
perform. List where travel will be undertaken, number of trips planned, who will be
making the trip, and approximate dates. If mileage is to be paid, provide the number of
miles and the cost per mile. If travel is by air, provide the estimated cost of airfare. If
per diem/lodging is to be paid, indicate the number of days and amount of daily per diem
as well as the number of nights and estimated cost of lodging. Include the cost of ground
transportation when applicable.

Out-of-State Travel—Provide a narrative justification describing the same information
requested above. Include CMS meetings, conferences, and workshops, if required by
CMS. Itemize out-of-state travel in the format described above.

Sample Budget
Travel (in-State and out-of-State)
Total $______
CO-OP Program Start-up Loan $______
Funding other than CO-OP Program Start-up Loan $______
Sources of Funding

In-State Travel:
1 trip x 2 people x 500 miles r/t x .27/mile

=

$

270

2 days per diem x $37/day x 2 people

=

148

1 nights lodging x $67/night x 2 people

=

134

25 trips x 1 person x 300 miles avg. x .27/mile =

2,025
_____

Total

$ 2,577

Sample Justification
The Project Coordinator and the Outreach Supervisor will travel to (location) to attend an
eligibility conference. The Project Coordinator will make an estimated 25 trips to local
outreach sites to monitor program implementation.
62

Sample Budget
Out-of-State Travel:
1 trip x 1 person x $500 r/t airfare

= $500

3 days per diem x $45/day x 1 person

=

135

1 night’s lodging x $88/night x 1 person =

88

Ground transportation 1 person

50

=

______
Total

$773

Sample Justification
The Project Coordinator will travel to CMS, in Baltimore, MD, to attend the CMS
Conference.

G.

Other
This category contains items not included in the previous budget categories. Individually
list each item requested and provide appropriate justification related to the program
objectives.

Sample Budget
Other
Total $______
CO-OP Program Start-up Loan $______
Funding other than CO-OP Program Start-up Loan $______
Sources of Funding
Telephone
($

per month x

months x #staff)

= $ Subtotal
63

Postage
($

per month x

months x #staff)

= $ Subtotal

Printing
($

per x

documents)

= $ Subtotal

Equipment Rental (describe)
($

per month x

months)

= $ Subtotal

Internet Provider Service
($___ per month x ___ months)

= $ Subtotal

Sample Justification
Some items are self-explanatory (telephone, postage, rent) unless the unit rate or total
amount requested is excessive. If not, include additional justification. For printing costs,
identify the types and number of copies of documents to be printed (e.g., procedure
manuals, annual reports, materials for media campaign).

H.

Contractual Costs
CO-OP Loan recipients must submit to CMS the required information establishing a thirdparty contract to perform program activities (see Required Information for Contract
Approval later in this Appendix).

1.

Name of Contractor;

2.

Method of Selection;

3.

Period of Performance;

4.

Scope of Work;

5.

Method of Accountability; and

6.

Itemized Budget and Justification.

64

If the above information is unknown for any contractor at the time the application is
submitted, the information may be submitted at a later date as a revision to the budget.
Copies of the actual contracts should not be sent to CMS, unless specifically requested. In
the body of the budget request, a summary should be provided of the proposed contracts
and amounts for each.

I.

Total Direct Costs

$________

Show total direct costs by listing totals of each category.

J.

Indirect Costs

$________

To claim indirect costs, the applicant organization must have a current approved indirect
cost rate agreement established with the cognizant Federal agency. A copy of the most
recent indirect cost rate agreement must be provided with the application.

Sample Budget
The rate is ___% and is computed on the following direct cost base of $__________.

Personnel

$

Fringe

$

Travel

$

Supplies

$

Other $____________
Total

$

x ___% = Total Indirect Costs

If the applicant organization does not have an approved indirect cost rate agreement, costs
normally identified as indirect costs (overhead costs) can be budgeted and identified as
direct costs.

65

REQUIRED REPORTING INFORMATION FOR CONSULTANT HIRING
This category is appropriate when hiring an individual who gives professional advice or provides
services for a fee and who is not an employee of the loan recipient. Submit the following
required information for consultants:
1.
2.
3.

4.
5.
6.

7.

Name of Consultant: Identify the name of the consultant and describe his or her
qualifications.
Organizational Affiliation: Identify the organization affiliation of the consultant, if
applicable.
Nature of Services to be Rendered: Describe in outcome terms the consultation to be
provided including the specific tasks to be completed and specific deliverables. A
copy of the actual consultant agreement should not be sent to CMS.
Relevance of Service to the Project: Describe how the consultant services relate to
the accomplishment of specific program objectives.
Number of Days of Consultation: Specify the total number of days of consultation.
Expected Rate of Compensation: Specify the rate of compensation for the consultant
(e.g., rate per hour, rate per day). Include a budget showing other costs such as travel,
per diem, and supplies.
Method of Accountability: Describe how the progress and performance of the
consultant will be monitored. Identify who is responsible for supervising the
consultant agreement.

REQUIRED INFORMATION FOR CONTRACT APPROVAL
All contracts require reporting the following information to CMS.
1.
2.

3.
4.

5.

6.

Name of Contractor: Who is the contractor? Identify the name of the proposed
contractor and indicate whether the contract is with an institution or organization.
Method of Selection: How was the contractor selected? State whether the contract is
sole source or competitive bid. If an organization is the sole source for the contract,
include an explanation as to why this institution is the only one able to perform
contract services.
Period of Performance: How long is the contract period? Specify the beginning and
ending dates of the contract.
Scope of Work: What will the contractor do? Describe in outcome terms, the specific
services/tasks to be performed by the contractor as related to the accomplishment of
program objectives. Deliverables should be clearly defined.
Method of Accountability: How will the contractor be monitored? Describe how the
progress and performance of the contractor will be monitored during and on close of
the contract period. Identify who will be responsible for supervising the contract.
Itemized Budget and Justification: Provide an itemized budget with appropriate
justification. If applicable, include any indirect cost paid under the contract and the
indirect cost rate used.

66