The first provider-sponsored organization to seek and receive a federal waiver from state regulation, a New Mexico hospital system now is racing to be the first PSO to actually apply for a federal license.
Four-hospital St. Joseph Healthcare System, based in Albuquerque, last month became the first PSO to apply for a federal waiver. Earlier this year HCFA notified potential PSOs that if they want to be operational by Jan. 1, 1999, when the program begins, they must file a PSO application with the agency by Aug. 1.
Before filing a PSO application, a potential PSO must apply for and receive a waiver from state regulation. St. Joseph got its waiver earlier this month.
Now nearly a dozen people are at work on its foot-thick application for the PSO license, which the system plans to complete by the end of this month.
"We have a very strenuous time line, but we think we can meet it," said Janet Blair, a St. Joseph spokeswoman.
Besides completing the PSO application, St. Joseph also is working to finalize the PSO's physician network. It would like to do that before applying to HCFA, said Janice Torrez, vice president of business development at St. Joseph and interim president of the PSO.
Initially St. Joseph will be the PSO's sole owner, but it plans to offer participating physicians an equity position soon after the PSO begins enrolling members. Enrollment is expected to begin Jan. 1.
The PSO has a nine-member board, five of whom are physicians while the others represent the hospital system. St. Joseph is sponsored by Denver-based Catholic Health Initiatives.
Torrez said the PSO has a target of 5,000 to 6,000 enrollees by year-end 1999.
The St. Joseph system does not own an HMO, but it has experience in the Medicare managed-care market through risk-sharing arrangements with several insurers. Those agreements will continue after the PSO begins enrollment.
"I think we probably manage risk as well or better than other providers in the market," Blair said. "You would be crazy to enter this market if you didn't."
Many of the PSO's administrative functions, however, will be contracted out to a private company.