PSOs are coming sooner than you think
The Balanced Budget Act of 1997 requires the Health Care Financing Administration to develop standards for provider-sponsored organizations (PSOs), and includes a set of time tables for HCFA to follow while establishing PSO solvency standards through a negotiated rulemaking process. (See related story on p. 177 for examples of state legislation governing PSOs.) HCFA’s specific authorities, as well as their statutory deadlines, are outlined below.
• Jan. 1, 1998: HCFA must report its progress on the issue to the Department of Health and Human Services (HHS), and also must report on whether a consensus is likely before March 1, 1998. If not, HHS has the right to terminate the process and publish regulations promulgated by HCFA.
• April 1, 1998: HHS must publish regulations that HCFA’s negotiated rulemaking committee has produced. This rule will be effective immediately on an interim basis, but subject to change after a 60-day public notice period.
• April 1, 1998: HHS must issue final regulations on PSO solvency and capital adequacy. The HHS Secretary shall consult with interested parties and shall take into account (1) the delivery system assets of organizations and their ability to provide services directly to enrollees through affiliated providers; (2) alternative means of protecting against insolvency, including reinsurance, unrestricted surplus, letters of credit, guarantees, organizational insurance coverage, partnerships with other licensed entities, and valuation attributable to the ability of organizations to meet their service obligations through direct delivery of care; and (3) any standards developed by the National Association of Insurance Commissioners specifically for risk-based health care delivery organizations.
• Around May 15, 1998: The HHS Secretary appoints a negotiated rulemaking committee to draw up the regulations.
• Around May 25, 1998: The HHS Secretary appoints a facilitator for the Committee.
• Dec. 31, 1998: The HHS Secretary reports to several House committees an opinion on whether the PSO solvency waiver process should continue after Dec. 31, 2002.
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