Provider-based Medicare risk contracting and subcontracting: opportunities and risks for provider sponsored organizations.

Provider sponsored organizations (PSOs) are increasingly acquiring the risk for the management of Medicare Risk patients by accepting capitation directly from the Health Care Financing Administration (HCFA) or through contracts with HMOs or other organizations contracting with HCFA. The Medicare population and the requirements that the federal administration has put into place with respect to risk contracting are unique and demand specific responses on the part of the PSO for a contract to be successful. The PSO is cautioned to understand the actuarial risk, the clinical uniqueness of the Medicare beneficiary, Medicare reimbursement regulatory requirements, utilization management needs, and necessary reporting before entering into a contractual arrangement. This article attempts to describe some of the more common issues a provider organization must consider.