Two years ago, a physician in Pennsylvania would only encounter risk pools in a discussion of managed care contracts with a colleague from California. Today, risk pools have become almost commonplace, and physicians everywhere are being asked to join in this type of incentive arrangement. Pennsylvania permits risk pools in managed care contracts after prohibiting them for almost fifteen years. In February 1997, New Jersey adopted regulations on risk transfer between HMOs and providers. Risk pools will become widespread in New Jersey.
Risk pools involve the pre-determined allocation of financial risk in managed care contracts.
Risk pools also involve some significant legal risks to those who participate in them. In this changing environment, risk pools merit close examination in terms of how they work and what legal risks they may involve. The legal risks of joint and several liability and noncompliance with Medicare fraud should be carefully considered before entering a risk pool arrangements. Providers whose utilization and resource consumption are charged against the account have a financial incentive to meet or exceed their budgetary goals. Conversely, if resource consumption exceeds the allocated budget, the account will show a deficit and participating providers may be required to contribute funds to eliminate the deficit.