Medicare provider-sponsored organizations: opportunities and challenges.
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Capitation Fee↗
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Assuring the solvency of provider-sponsored organizations.
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Employee Retirement Income Security Act↗
The great debate. Resolved, PSOs are going to be regulated. The question is, will they get what they want?
Insurers and others say that provider-sponsored organizations--better known as PSOs--are simply HMO wannabes and should be treated as such. Supporters counter that PSOs deserve a separate set of regulations. Both sides are scrambling to make their case as the debate moves from the offices of state legislators onto the national scene.
American Hospital Association↗
The market made them do it. Participants in the Medicare Choices project say they're nudging out the insurance middleman--and insuring their own survival. Panel discussion.
Medicare is experimenting again. This time HCFA wants to figure out ways to expand managed care options for the elderly. Under the Medicare Choices Demonstration Project, hospitals and health systems are developing and testing alternatives to standard Medicare HMOs. Dick Davidson, president of the American Hospital Association, sees these pilot programs as the precursors to provider-sponsored organizations building up a base of knowledge about what it means to manage risk. The AHA recently convened a meeting of organizations involved in the demonstration project and asked Hospitals & Health Networks executive editor Alden Solovy to lead a panel discussion on the lessons being learned.
Aged↗
"Fed" issues PSO solvency standards.
The federal government has issued the solvency standards that provider-sponsored organizations (PSOs) must meet to serve Medicare beneficiaries on a capitated basis. These standards are intended to make certain that PSOs are financially able to serve Medicare beneficiaries and protect them from financial harm should an organization go broke. More than a few of these organizations may lose a lot of money.
Bankruptcy↗
The Federal Trade Commission in action: the FTC's Robert F. Leibenluft. Interview by John K. Inglehart.
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Antitrust Laws↗
Physician-hospital organizations: the "training wheels" of tomorrow's provider-sponsored networks?
The formation of regional physician-hospital organizations will be the next step in the evolution of managed care. Regional PHOs will have advantage over single-hospital PHOs by covering a wider population and geographic area, offering greater cost-effectiveness, and being able to contract as a unified provider. This, in turn, will set the stage for the next step in the process: the development of provider-sponsored networks.
Community Networks↗
A new approach to managed care: the provider-run organization.
Behavioral managed care has been dominated by for-profit carve-out managed care organizations who deliver mental health and substance abuse services by reducing services and fees to the detriment of patients and providers. We offer a new model of managed care based on a provider-run, hospital-based approach in which provider groups contract directly with HMOs and eliminate the managed care organization intermediaries. This approach allows providers to maintain or regain control of the delivery of behavioral health services. A model is presented of an academically based organization which has achieved utilization patterns compatible with the demands of payors. Innovations in service delivery, network management and fiscal issues are reviewed.
Behavior Therapy↗
Reorganizing departments of psychiatry, hospitals, and medical centers for the 21st century.
Market forces are reshaping health care, transforming it from a public service into a product that is sold in a highly competitive marketplace. This transformation has been particularly disruptive for hospital departments of psychiatry and medical centers that were the early targets for managed care efforts at cost containment. To survive, health care institutions have embarked on a clinical and administrative re-engineering process. The author describes a series of steps for reconfiguring departments, hospitals, and medical centers as they enter the 21st century. The steps include identifying the leadership team, formulating a mission statement and strategic plan, creating a legal entity capable of achieving the organization's goals, drawing up an organizational chart, and developing the provider network. Other steps in the process include enhancing the continuum of services offered, developing administrative capability, dealing with managed care, paying attention to fundamental business practices, integrating psychiatric services into the health care system, and marketing psychiatric services.
Academic Medical Centers↗
Despite bailout, KPC facing bankruptcy.
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Bankruptcy↗
Medicaid managed care and the marketplace.
In 1994 and 1995, Tennessee, Hawaii, Rhode Island, and Oklahoma began massive expansions of Medicaid managed care, growing from three health plans covering a few enrollees to 27 plans covering the great majority a year later. Some firms aggressively pursued expansion, while others had very limited business objectives. Although established insurers often dominated the Medicaid markets, newly developed firms, some provider-sponsored, were also important. Despite the relatively low Medicaid capitation rates in the 1996-97 period, Medicaid plans in three states had an average 1% net profit margin.
Capitation Fee↗
Providers as health insurers?
Health care providers, insurers and state regulators are preparing themselves for the next major battle in the managed care revolution. The fight will center on whether provider-sponsored networks and health maintenance organizations should meet the same regulatory requirements. Hundreds of billions of dollars are at stake, particularly lucrative Medicare contracts.
Health Maintenance Organizations↗
Insolvency risk in health carriers: innovation, competition, and public protection.
This paper reviews the framework of regulatory and managerial devices that have evolved in response to the special dangers to the public posed by insolvency of health carriers. These devices include "prudential" measures designed to decrease the likelihood of insolvency, and measures to "protect enrollees" in the event that insolvency occurs nevertheless. It also reviews the current debate over how this framework should be adapted to new forms of risk-bearing entities, especially provider-sponsored networks engaged in direct contracting with purchasers of coverage. Parallels to solvency concerns in the banking industry are explored.
Bankruptcy↗
Operation start-up.
When Mount Carmel Health System sized up the Medicare market in Columbus, Ohio, executives liked what they saw: Seniors trusted them more than insurers to run a managed care plan. Only six months later, their provider-sponsored plan opened for business under a HCFA pilot project. Here's how Mount Carmel pulled it off.
Aged↗
Preferred provider organizations one year later.
One year ago we conducted the first comprehensive national survey of preferred provider organizations (PPOs). Results of this study demonstrated that, contrary to popular belief, there did indeed exist a "generic" PPO with clearly defined characteristics. Furthermore, we found that this new form of health delivery organization was rapidly expanding. A new national survey, completed in September 1986, shows continued brisk growth in the number of persons eligible to use PPO services. Utilization review programs have become more stringent and increasingly focus on physician practice patterns. One striking finding is that joint ventures between provider-sponsored PPOs and commercial insurers are multiplying.
Cost Control↗
The Medicare mall. Will Washington like what it built?
"Shopping spree" doesn't begin to describe it. Next year, 38 million seniors will begin choosing their health care coverage from a menu crammed with options. Medicare Plus Choice means just that: HMOs, provider-sponsored plans, private-pay options, medical savings accounts, and more. It also means a bevy of new rules--and risks--for everyone.
Aged↗
Rural health network development: public policy issues and state initiatives.
Rural health networks are a potential way for rural health care systems to improve access to care, reduce costs, and enhance quality of care. Networks provide a means for rural providers to contract with managed care organizations, develop their own managed care entities, share resources, and structure practice opportunities to support recruitment and retention of rural physicians and other health care professionals. The results of early network development initiatives indicate a need for state officials and others interested in encouraging network development to agree on common rural health network definitions, to identify clearly the goals of network development programs, and to document and analyze program outcomes. Future network development efforts need to be much more comprehensive if they are to have a significant impact on rural health care. This article analyzes public policy issues related to integrated rural health network development, discusses current efforts to encourage network development in rural areas, and suggests actions that states may take if they desire to support rural health network development. These actions include adopting a formal rural health network definition, providing networks with alternatives to certain regulatory requirements, and providing incentives such as matching grants, loans, or technical assistance. Without public sector support for networks, managed care options may continue to be unavailable in many less densely populated rural areas of the country, and locally controlled rural health networks are unlikely to develop as an alternative to the dominant pattern of managed care expansion by large urban entities. Implementation of Medicare reform legislation could provide significant incentives for the development of rural health networks, depending on the reimbursement provisions, financial solvency standards, and antitrust exemptions for provider-sponsored networks in the final legislation and federal regulations.
Antitrust Laws↗
An assessment of the anticompetitive effects of preferred provider organizations.
Although preferred provider organizations (PPOs) sponsored by third parties are likely to offer benefits to society through increased competition, those sponsored by providers may generate a risk of anticompetitive collusion. Such cartellike collusion could result in price fixing, less aggressive utilization review, and restrictions on entry and innovation in the market. In this article, we provide guidance on the potential risks posed by provider-sponsored PPOs. We suggest that public policy should generally promote PPOs and remove regulatory barriers to their growth because of their cost containment potential. Policy design should, however, reflect an awareness of the potential anticompetitive outcomes of provider-sponsored PPOs and should promote antitrust oversight of their activities.
Economic Competition↗