Health and insurance regulators in Pennsylvania have proposed developing regulations for licensing physician-hospital organizations.
The proposed rules respond to requests from hospital and physician groups that want to establish risk-bearing PHOs.
"We've had numerous meetings with various organizations throughout the state wanting to assume much greater risk and wanting to control their own destiny without becoming an HMO," said Stephen Male, director of the state health department's healthcare financing bureau.
State regulators are concerned about the assumption of financial risk by PHOs from HMOs. Currently, the state has no direct regulatory authority over PHOs.
Regulators have approved one limited risk-bearing arrangement between Keystone Health Plan East in Philadelphia and Holy Redeemer Hospital and Medical Center in Meadowbrook, Pa., Male said. The arrangement enables the hospital to share in any surpluses but holds the HMO fully accountable for the disbursement of funds.
Until a regulatory approval process is established, the health and insurance departments have asked that physicians and hospitals who plan to enter such risk-bearing arrangements advise the state and seek its approval.
According to a recent survey by Ernst & Young, Iowa and Minnesota have created licensing mechanisms for PHOs, and at least nine other states are considering regulation.
Regulations being considered in Pennsylvania would require PHOs to meet certain minimum reserve requirements; they would be licensed as PPOs. Before the proposal moves ahead, it must be presented to the new Republican administration, led by Gov. Tom Ridge, Male said.