Few Surprises In Medicare Rules Issued for PSOs

The Health Care Financing Administration has defined provider-sponsored organizations for purposes of Medicare, clearing the way for PSOs to offer themselves as an option under Medicare+Choice beginning Jan. 1. The Federal Register published HCFA’s interim final rule April 14.

HCFA defines a PSO as an entity operated by a health care provider or group of affiliated providers that shoulders at least 70 percent of a beneficiary’s health care expenses. Providers must also share substantial financial risk, as defined by several criteria. If a plan meets the definition, it immediately gains an advantage over other managed care plans: A PSO needs to enroll only 1,500 members in urban markets or 500 in rural areas to participate in Medicare+Choice. Other types of managed Medicare plans must sign up 5,000 or 1,500 people respectively. The idea is to give PSOs a chance to compete right out of the blocks.

The Department of Health and Human Services must still decide on solvency standards for PSOs. At press time, those had not been set forth. HCFA says PSO Medicare definitions had to come before solvency standards could be issued.

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