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Medicare and Medicaid risk contracting opportunities for PSOs.

Legislation has been proposed in Congress to allow provider-sponsored organizations (PSOs) to negotiate risk contracts directly with the Medicare program and, possibly, with Medicaid programs. Initially, qualifying PSOs would not be required to be licensed as HMOS, but would be required to demonstrate fiscal solvency and meet quality assurance standards. The proposed solvency requirements, as well as requirements regarding the proportion of commercial to Medicare enrollees in a plan, would not be as rigorous for PSOs as they are for HMOs. The legislation's proponents argue that relaxing requirements for PSO risk contracting will allow Medicare and Medicaid beneficiaries more healthcare choices and better benefit packages. Opponents assert that PSOs would be given an unfair advantage in the marketplace and that consumers may be exposed to a greater risk of plan insolvency. While details of the legislation need to be reconciled, many observers predict that it will become law.