PSNs: a new model for Medicare risk contracting.

The 1995 Republican House Medicare reform proposal introduced the provider services network (PSN) concept as a new healthcare delivery model for accepting and administering Medicare risk contracts. A PSN operates much like an HMO, but is not subject to the reserve requirements established for HMOs. Providers that want to enter the Medicare risk contracting arena and exercise more control over the delivery of healthcare services may consider forming a PSN. To form a PSN, providers must be sufficiently capitalized to compete with HMOs, create a formal legal organization, and develop a financial plan. To ensure that its goals are met, the PSN must develop a sales promotion plan, enroll members, control and monitor financial resources and clinical outcomes, and implement a management information system. Other crucial capabilities that a PSN must develop include establishing mechanisms for utilization review, membership information maintenance, claims adjudication, physician credentialing, quality assurance, and member grievance procedures.