HCFA: Set To Release PSO Standards; May Delay Surety Bonds
The Health Care Financing Administration is expected to release the solvency standards for provider-sponsored organizations this week. Modern Healthcare reports that in order to contract directly with Medicare beneficiaries, providers will be required to have at least $1.5 million in net worth and $750,000 in cash. The HCFA proposal strikes a "middle ground between stricter solvency standards sought by the health insurance industry and more lenient ones sought by provider groups," who were seeking a "maximum cash requirement of $500,000." The American Hospital Association said, "To require that 100% of the net worth amount be in cash, as some have suggested, would unreasonably limit a PSO's ability to have a complement of assets to meet its financial needs." Providers and the insurance industry are also at odds over whether PSOs should "be required to hold additional funds in escrow to cover start-up losses." According to providers, escrow accounts would "impede PSO formation," while insurance companies say that the measure is necessary to "protect beneficiaries from undercapitalized operations." HCFA will recommend that decisions regarding escrow accounts be made on a case-by-case basis (Weissenstein, 2/16 issue).
Surety Bonds Delayed
Modern Healthcare reports that several sources say HCFA is likely to delay implementation of the rule requiring home care companies to post surety bonds "equal to the greater of $50,000 or 15% of their total annual Medicare reimbursements." In addition, the Home Care Association of America has filed suit in U.S. District Court seeking a "preliminary injunction against the regulation, which is scheduled to take effect February 27." The HCAA is also suing to stop implementation of "new cost limits on home-care Medicare payments." A date for the hearing has not yet been scheduled. However, it now appears that HCFA will voluntarily delay implementation of the rule "as it tries to sort out myriad complaints about the regulation." A HCFA spokesperson said, "If technical changes are needed, we will make them as long as it doesn't impose a problem with our fight against fraud and abuse." Several other groups, including the AHA and the National Association for Home Care, are also "appealing to HCFA to voluntarily delay implementation of the surety bond rule" (Weissenstein, 2/16 issue).