US PSOs Viable, Says HRET Research

Some US health systems and large medical groups are well-positioned toset up Medicare provider-sponsored organizations if the Provider Sponsored Organization Act of 1997 (HR 475 and S146) is enacted, says the Hospital Research and Educational Trust. PSOs would contract directly with the federal government to provide services to Medi-care beneficiaries, bypassing insurers which, their proponents say, would raise quality and cut administrative costs.

HRET vice president for research Gloria Bazzoli says Medicare PSOs would not need some core functions for operating in the commercial market under capitation, eg plan benefit design or experience with state insurance regulations, because Med-icare would dictate the plan's design and regulations would come from federal, not state, government. Her research found that most provider organizations would be able to undertake provider relations, utilization management, actuarial assessment, claims and payment administration, management of information systems for administration and patient care functions, capital reserve management, member enrollment and tracking, and member relations. However, they have less experience in health plan marketing and negotiations with health plan purchasers.