The next leg in provider-sponsored organizations' journey from theory to reality begins this week when HCFA convenes a panel of insurers, providers and consumers to create solvency standards for PSOs.
The task before the group is daunting at best.
Over the past several years, provider and insurance groups have honed and hardened their respective positions to the point where the fight over PSOs was one of the nastiest during the balanced-budget debates of 1995 and 1997.
The Balanced Budget Act of 1997, enacted in August, opened the Medicare program to PSOs but left the determination of PSO solvency standards to what is called "negotiated rulemaking."
Under that procedure, representatives of all affected groups meet with a neutral "convener" to reach consensus. That means all the parties involved must agree and any one member can veto a proposal.
Among the groups represented at the table will be the American Hospital Association, the American Medical Association, the American Association of Health Plans, the Blue Cross and Blue Shield Association, Premier, the Catholic Health Association, the Federation of American Health Systems, the American Association of Retired Persons and the American Health Care Association.
The budget legislation calls for the committee to issue a report to HCFA by March 1. HCFA then would publish the solvency rules by April 1.
If the panel does not make progress or is stalemated by the end of January, HCFA can disband the panel and create the solvency standards on its own.
Expectations among most of the committee seem to be low.
"The chances of success are zero," said a lobbyist for one of the groups with a seat at the table. "It is a little frustrating given all the time and effort that is going into it." The lobbyist asked not to be identified.
But even if the panel cannot reach a consensus, it will not be a wasted effort, said Mary Grealy, senior Washington counsel for the AHA.
"We may not be able to write (the final regulation), but I don't think we will be as far apart as some people think," Grealy said. "It will also be good from the standpoint that everyone will learn something, and we will be better off than we would have been if we just turned this over to HCFA."
Under the balanced-budget legislation, the National Association of Insurance Commissioners was guaranteed a slot on the commission. The NAIC is field-testing its own solvency standards, which are likely to be a flash point on the committee.
Provider groups say the NAIC standards do not adequately reflect the differences between PSOs and traditional insurers.