It's a debate only an actuary could love.
Providers, insurers and regulators last week engaged in an esoteric debate over how to value a provider-sponsored organization's assets for purposes of determining whether it's financially strong enough to accept risk contracts directly from Medicare.
But the same groups as well as HCFA have yet to decide a far simpler question -- how much should those PSO assets total?
Insurers say a good starting point is the $1.5 million in assets required under model HMO legislation that the states have used to develop their own managed-care regulations. Providers want a measure of solvency that avoids set-in-stone numbers.
The groups met in Washington last week for the third time as a HCFA-convened panel assigned to negotiate solvency standards for Medicare PSOs. Under the balanced-budget law enacted in August, PSOs for the first time will qualify as direct risk-bearing contractors with Medicare in 1999.
The 14-member panel will meet twice in January and once in February. It is scheduled to forward a consensus report to HCFA by March 1 to contribute to HCFA's publication of a proposed PSO solvency rule, due April 1.
At the center of last week's debate were such issues as whether a PSO should be allowed to count all its healthcare delivery assets toward the total holdings necessary to meet solvency standards, even if those healthcare delivery assets represent a high percentage of its total holdings.
State regulations often do not permit HMOs to have their assets concentrated in any one particular holding because that could jeopardize the financial solvency of the HMO if the holding drastically loses value.
Insurers argued that the same standards also should apply to PSOs. But provider groups represented on the panel said concentrating investments in healthcare delivery assets actually would represent a reduction in risk because it demonstrates that a PSO has the capacity to treat its enrollees.
Likewise, insurers said if PSOs are allowed to count data processing hardware and software as part of their healthcare delivery assets, HMOs also should have the same opportunity to count their computer systems. HMOs now can count some, but not all, of their information system assets as part of their holdings for purposes of meeting solvency standards.
But provider groups argued that because more of a PSO's data processing capacity would be used in patient care, not for plan administration, more of it should be considered part of healthcare delivery assets when measuring solvency.
A related issue is how much of the value of a PSO's medical equipment should be included in its assets. Insurers argued that the percentage of the value of medical equipment that is included should equal PSO patients' use of that equipment.