HCFA has signed off on its first Medicare+Choice plan: a state-licensed provider-sponsored organization in rural Oregon that's jointly owned by a hospital system and an independent practice association.
The seven-hospital Central Oregon Hospital Network owns 38% of the PSO, called Central Oregon Independent Health Services. The 287-physician Central Oregon IPA owns the remaining 62%.
The PSO is headquartered in Bend, Ore., and will service a seven-county region that has no other Medicare managed-care option for the elderly. It plans to begin signing up Medicare enrollees Jan. 1.
Patricia Gibford, COIHS chief executive officer, said the PSO was notified last week that it was the first Medicare+Choice plan and first PSO to be certified by HCFA.
HCFA is considering granting a federal waiver from state law to a PSO sponsored by St. Joseph Healthcare System in Albuquerque. A HCFA spokesman said the agency has yet to grant the waiver.
COIHS averted the waiver process because it is a state-licensed PSO.
Under last year's federal budget law, a PSO may contract with HCFA to enroll Medicare beneficiaries under a state license. If a state will not grant a license to a PSO, that PSO can apply to HCFA for a three-year waiver from state regulation.
COIHS was created more than three years ago to contract with the Oregon Health Plan, the state's Medicaid managed-care program, Gibford said. It has about 21,000 Medicaid enrollees in a 10-county area. It has no commercial insurance product.
The PSO's service area is rural. Bend, with a population of about 50,000, is the largest city and home to 181-bed St. Charles Medical Center, the flagship of the Central Oregon Hospital Network.
HCFA estimated that about 30,000 Medicare enrollees reside in the COIHS service area. Medicare pays HMOs in all seven counties its minimum reimbursement rate, projected to be $378 per enrollee per month in 1999. Medicare payment rates go up to a high of $800 a month in places like New York City and Dade County, Fla.
Gibford said the low payment rate was a PSO consideration.
"We don't expect to make a lot of money, but we do expect to make it a going concern," she said.
COIHS hopes to have about 3,000 seniors enrolled in 1999, increased to 5,000 the following year, Gibford said.
"We want to keep our estimates conservative," she said.
The PSO will offer a Medicare managed-care plan called "Clear Choice Health Plans."