Despite pressure from hospital groups, a congressional advisory panel late last week stood by a recommendation that challenges the need for federal licensing of provider-sponsored organizations.
The Physician Payment Review Commission's recommendation, however, did open the door to Congress' consideration of some type of federal certification of PSOs serving only Medicare beneficiaries. But the PPRC, in preparing its annual report to Congress, didn't formally recommend lawmakers approve federal oversight of PSOs.
In a related development, the National Association of Insurance Commissioners announced last week that it will have a draft of its rules regulating managed-care plans and PSOs by June.
The new rules determining which plans pass state solvency muster would still have to be tested and are unlikely to be completed until year-end, according to an NAIC source. The rules are not binding on states but carry weight with state and federal lawmakers.
The PPRC in January came out in favor of a draft recommendation that questioned the need for federal certification of PSOs because the states have been more flexible in their licensing (Feb. 3, p. 3). After that decision, hospital groups tried to get them to reverse direction.
In a letter to commissioners and PPRC staff, the American Hospital Association argued that states in fact have not been more accommodating and that the federal government should be the regulator of any health plan that enrolls only a Medicare population.
A further barrier to PSO entry, the AHA said, is the quality rule requiring that non-Medicare enrollees must account for at least half of a Medicare HMO's total covered population, The theory is that a plan that has enough quality to attract commercial enrollees would be good enough for Medicare beneficiaries.
In the PPRC meeting last week, Gail Wilensky, chairwoman of the 13-member panel, sought but failed to achieve a compromise recommendation under which the 50/50 rule would be supplanted by other quality-assurance measures. That would remove one barrier to Medicare-only health plans, including PSOs. Wilensky's compromise proposal included federal licensing of such Medicare-only health plans.