What is a provider-sponsored organization?
The different ways the House and Senate budget bills answer that question have set the stage for a battle between provider and insurance industry lobbyists amid congressional budget negotiations.
The budget bills the House and Senate approved recently say a PSO, to be allowed to contract directly with Medicare, is any group of providers who come together to offer most of the benefits included in Medicare's basic benefits package. They can be public or private organizations, hospitals, physicians or other providers, large or small.
The contentious issue is how the providers come together.
The House bill would require the providers to be under common ownership or control.
However, the Senate version is much more lenient. Providers would not have to be under common ownership or even affiliated. Instead, independent providers who share financial risk could be considered a PSO.
Hospital groups want the Senate's more lenient PSO definition to be included in the final budget package hammered out by House-Senate negotiators and the White House. They argue that requiring providers to be under common ownership is an unnecessary barrier that would delay the entry of PSOs into the market.
"The network approach that we support would not be possible under the House bill," said Thomas Nickels, vice president and deputy director of federal relations for the American Hospital Association.
Insurers want the definition as strict as possible and are supporting the House version. They say providers bound together only by shared financial risk are no different from an HMO network put together by a traditional insurer.
"The looser the definition of a PSO gets, the harder it is for (providers) to argue that they are an integrated network," said Julie L. Goon, vice president of government affairs for the American Association of Health Plans.
Physicians want to pare back the definition of a PSO so small groups of doctors can contract directly with the government without providing the entire range of services covered under Medicare.