Is the lure of PSOs too good to be true? Experts differ on the answer
Is the lure of PSOs too good to be true? Experts differ on the answer
Expect PSO journey to involve paperwork, major dollars, headaches
Soon, many physicians across the country likely will become part of provider-sponsored organizations (PSOs) that contract directly with Medicare, and they'll do it for the same proverbial reason that adventurers climb Mount Everest: because it's there.
But before they start shelling out money for the adventure, they should ask themselves what they really hope to accomplish, and then learn everything they can about risk contracting, experts advise.
The Balanced Budget Act of 1997 has made it possible for PSOs to contract directly with the Health Care Financing Administration (HCFA) to provide services to Medicare patients and to control decision making. HCFA included PSOs in its Medicare+Choice program. (See story on Medicare requirements for PSOs, p. 85.)
These contracts all assume risk, and the PSOs are paid on a capitated basis, in which the PSO receives a set payment per Medicare beneficiary member per month. That money must cover all Medicare health care services provided to the covered population of patients. (See story on how the fees are determined, p. 84.)
Medicare risk contracting will be much harder than many physicians think it will be, experts say.
"A lot of providers think they can be ready for Medicare risk contracting with a lot of their current staff, and that they don't need to make too many changes to be ready to launch a Medicare product. That's almost delusional to think that way," says John Gorman, president of Managed Care Compliance Solutions in Washington, DC. The health care management consulting firm specializes in Medicare risk contracting.
"You are in essence building a health plan, albeit a provider-owned and -operated health plan," Gorman adds.
Some physicians, disillusioned with how managed care companies have taken a large bite out of their revenues, may welcome an opportunity to be paid for managing their own care.
"I think PSOs can work out very well for physicians, and the concept is fantastic," says Alan Baskin, MD, an internist with a private group practice called the Bergen Institute of Medicine in Dumont, NJ. Baskin also is the president of the New Jersey Society of Internal Medicine.
Baskin says he would consider becoming involved in a PSO so he could gain more control over the process of delivering quality health care.
"That's the major goal of the doctor, to get back into autonomy to deliver health care that he feels is needed for the patient," Baskin says.
And if a PSO is operated properly, then it can lead to better patient care and work out positively for the patient, physician, and Medicare program, Baskin adds. (See story on pros and cons of PSOs, at right.)
Other physicians view PSOs as more of the same evil in the form of capitation contracts that already have taken over too much of their industry.
"It seems to me the only Medicare patients who will benefit from risk capitation contracts would be the extremely poor, indigent patients who can't even afford the 20% deductibles," says Steven F. Frier, MD, an internist in a solo private practice and an assistant clinical professor at the Mount Sinai School of Medicine in Englewood, NJ.
Frier says he will not have anything to do with PSOs, largely because he thinks all risk contracting is bad for patients and physicians.
"The way it works is the doctor gets a certain amount of money per month per patient, whether he sees that patient or not," Frier explains. "Then the doctor has to pay for all studies, consultations, and hospitalizations out of that money, so as soon as the patient walks into his office he's losing money."
Most Medicare risk contracts do not put physicians at risk for individual patients and instead have incentives and penalties that deal with patients as a group, says Jo Ann Lamphere, DrPH, an associate director of the Public Policy Institute of the American Association of Retired Persons in Washington, DC. Lamphere spoke about PSOs at the 10th annual National Managed Health Care Congress (NMHCC) held in Atlanta in April.
"There are group model HMOs and all different varieties of capitation arrangements, but the history of managed care has not been to penalize physicians every time they seek to provide services to their patients," Lamphere adds.
Frier explains why he is against risk contracts by telling this anecdote of an experience he had at the NMHCC conference in Atlanta:
"We had a roundtable discussion about how to handle the negative media that's occurring lately with managed care, and everybody knew I was a doctor. I said, 'Let me ask you folks, how do I handle a patient who says, "What am I going to get out of a risk capitation contract?"' which is what a PSO is, and nobody came up with a good answer," Frier says.
"The next morning, a lady said that was a very good question to ask. She is an employee of a managed care organization who uses an indemnity insurance product for her own benefits," Frier adds.
While it's true that capitation and risk contracts have some flaws, so does fee-for-service medicine, Lamphere says.
"There's a preponderance of evidence that fee for service encourages unnecessary tests, procedures, and hospitalization, with no evidence that those led to a better outcome for the patient," Lamphere says. "Let's not pretend that fee-for-service medicine is a perfect world."
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