HCFA expects to publish separate rules for the federal solvency standards for PSOs and the criteria for PSO waivers from state licensing requirements. Each of these is discussed below. HCFA defines this phrase broadly because of the many new types of health care organizations that are continuing to be formed. Thus, HCFA will look at an entity's organizational structure including lines of business, mission, bylaws, and control to determine the predominant nature of the entity. Of course, from the IPA's perspective, it might not want to be deemed to be engaging primarily in the delivery of health care services, because of potential exposure to corporate practice of medicine or malpractice claims.
Similar issues arise for physician practice management companies.
Interestingly, HCFA notes that one of the reasons it set this level was not to preclude the possibility of a PSO as offering a point of service option. The purpose of these tests is to distinguish the PSO as an entity made up of separate providers who have economically combined in an acceptable manner and who are bound together in order to contract with the Medicare program. A provider is required to be at financial risk for more than the provider's own items and services. That is, each affiliated provider must have a stake in the economic operations of the PSO as an enterprise. HCFA considered defining a specific level of risk but determined that this would not be workable given the numerous types of providers, the varying capacity of providers, and various financial concerns.