HCFA publishes interim solvency rule
The Health Care Financing Administration (HCFA) published its interim rule May 7 in the Federal Register1 on financial solvency requirements for provider-sponsored organizations (PSO). The solvency rule closely resembles recommendations made earlier this year by a 15-member government panel, which included representatives of HCFA, hospitals, insurers, managed-care plans, and physicians. As in the panel's recommendations, the interim rule would require PSOs to have $1.5 million in net worth, at least half of which must be in cash, before they could legally begin operations.
The rule also lays out the circumstances under which a PSO can seek a waiver from state insurance requirements and apply to the federal government for a PSO license. The most likely trigger would be a 90-day deadline for the state to act on a PSO application, after which the PSO could apply to the federal government. A final rule on PSO solvency standards could be published as part of a larger regulation later in June.
Reference
1. Medicare: Provider-sponsored organizations; waiver requirements and solvency standards, 63 Federal Register 25,360-25,379 (May 7, 1998).
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