The first Medicare-only provider-sponsored organization, part of a HCFA demonstration project that began Jan. 1, has attracted more than 1,500 participants in less than two months, while three more PSOs are nearly ready to start enrollment.
The four PSOs are the first wave of experimental managed-care arrangements being tested in HCFA's Medicare Choices demonstration project (April 22, 1996, p. 30).
The only PSO with enrollees is the Florida Hospital Healthcare System, which first applied to HCFA for inclusion in the demonstration more than a year ago. After making it through several levels of screening, HCFA notified the system Dec. 26 that it could begin operations.
Richard Reiner, president of the system, said executives had anticipated the approval and had already trained marketing staff, tested information systems and had begun spreading word about the system in the three-county area designated by HCFA.
On Dec. 31, the system ran an advertisement in a local newspaper announcing the program, called Florida Hospital Premier Care. It received 500 calls that day. On Jan. 1, it ran a second ad and the next day received 2,500 calls.
"At one point we had so many calls we had to reroute some phone lines" Reiner said. Some 400 beneficiaries enrolled in January followed by another 1,200 so far this month.
"There was even more interest than we expected, and we had budgeted aggressively," Reiner said.
The Orlando, Fla., market has about 140,000 Medicare beneficiaries, according to HCFA, and about 23% are enrolled in four Medicare-certified HMOs.
Florida Hospital Healthcare System is a not-for-profit corporation sponsored by Adventist Health System in Orlando. Adventist fronted the money for the venture, but Reiner declined to say how much. Thirteen of FHHS' 18 board seats are held by system physicians.
Vance Maloney, M.D., a family practitioner and chairman of the FHHS board, said giving physicians control of the board was a "trust issue from my standpoint.
"Traditionally it's been physicians vs. hospitals, but this is a way to build a working relationship," Maloney said.
While Maloney said he had to do some arm-twisting to get a few physicians on board, most were enthusiastic about eliminating the traditional insurer from the healthcare equation.
"Control is the main issue; insurers are not looking out for hospitals or physicians," Maloney said.
HCFA pays FHHS a monthly capitated amount, and the system in turn divides the funds among the hospital and groups of physicians organized primarily by specialty. The physicians are paid based on the number of procedures performed.
What makes the FHHS a particularly good test of the PSO idea is that it will be a Medicare-only operation, similar to the PSOs envisioned under two bills before Congress.
FHHS was not required by the Florida state insurance commissioner to obtain a state HMO license. The PSO bills before Congress would allow PSOs to enroll Medicare beneficiaries under federal rules without obtaining a state HMO license.
Two of the other three PSOs that hope to open their doors this spring are in the Philadelphia market, setting up an interesting procedural contrast between state and federal regulation.
One Philadelphia-area PSO is Health Plans of Pennsylvania, owned by the Crozer-Keystone Health System. System President Jack McMeekin said the PSO is awaiting final clearance from HCFA to begin enrolling beneficiaries.
"Every single piece of marketing materials has to be approved by HCFA," McMeekin said.
Unlike the Florida program, both Health Plans of Pennsylvania and the second Philadelphia-area PSO, Health Partners of Pennsylvania, must obtain an HMO license from the state insurance commissioner in addition to obtaining HCFA approval.
Health Plans of Pennsylvania is offering a product called "MedCare Plus," a zero-premium plan that will give beneficiaries points if they take part in programs such as smoking cessation or get regular mammograms. The points can be used to add benefits such as eyeglasses or membership in the plan's fitness facility.
Over the next three years, the plan will be rolled out across the Philadelphia market, McMeekin said. Philadelphia has more than 100,000 Medicare beneficiaries, but only about 9,000 are in HMOs.
Health Partners will begin operations April 1, said Barbara Katz Shobert, the PSO's vice president of communications. Seven Philadelphia-area teaching hospitals own Health Partners.
Because of the location of many of Health Partners' hospitals, they hope to enroll inner-city beneficiaries who are traditionally under-represented in managed-care plans.
"We have a number of access issues, like transportation for example, that we will be working out," Shobert said.
HCFA's fourth PSO is the Memorial Sisters of Charity Health Network in Houston. A spokeswoman for the plan declined to give details of the program but said it would begin enrollment within the next several months.