§ 152.4. Scope of Department of Health review of a preferred provider organization.
(a) The Department of Health will review the applications of preferred provider organizations which assume financial risk and which utilize arrangements or provisions which may lead to undertreatment or poor quality care.
(1) Arrangements or provisions which may lead to undertreatment or poor quality care include, but are not limited to, the following:
(i) Contractual arrangements with physicians or providers in which the physicians or providers agree to arrange, pay for or provide health care services for a fixed payment set and received in advance of health care services, sometimes referred to as capitation reimbursement arrangements.
(ii) Contractual arrangements with physicians or providers in which a type of financial incentive structure is employed which conditions the provider’s payment for service, or a portion thereof, upon gains or losses experienced by an insurer or purchaser resulting from preferred provider arrangements or which allows a provider to share in the gains or losses, sometimes referred to as fee withholding risk pool arrangements.
(iii) Health benefit plans under which the reimbursement received by an enrollee for a health care service rendered by a nonpreferred provider is less than 80% of the payment which a preferred provider would receive from the preferred provider organization for the same health care service.
(iv) Health benefit plans under which an enrollee who receives a health care service from a nonpreferred provider is liable for payment of more than 20% of the payment which a preferred provider would receive from the preferred provider organization for the same health care service. For the purpose of calculating this percentage, cost-sharing amounts shall be excluded if cost-sharing is applied by the preferred provider arrangement regardless of whether a health care service is rendered by a preferred or a nonpreferred provider.
(v) Health benefit plans under which coverage for health care services is provided only when the services are rendered by a preferred physician or provider participating in the preferred provider arrangement.
(2) In order to assure that the preferred provider organization is not utilizing arrangements or provisions which may lead to undertreatment or poor quality care, the Department of Health will determine the following:
(i) The preferred provider organization makes available to enrollees a sufficient number and range of providers by class, specialty and geographic service area to adequately serve enrollees and to provide them with adequate access to and availability of health care services covered under the preferred provider organization’s benefit plan.
(ii) Adequate disclosure is made to enrollees regarding rights and responsibilities under the preferred provider organization’s utilization review programs.
(iii) An adequate grievance system exists which permits enrollees to appeal utilization review decisions which result in denial of payment or denial of access to health care services or which concern alleged poor quality care or undertreatment by a preferred provider.
(iv) If the preferred provider organization chooses to establish selection criteria for provider participation in preferred provider arrangements, the criteria are appropriate and the preferred provider organization has systems to adequately verify that providers accepted for participation meet the selection criteria.
(v) An adequate peer review process exists to monitor factors affecting quality of care.
(vi) For capitated programs, the following quality assurance system standards shall be met:
(A) The system is under the active direction of a provider knowledgeable and experienced in assessing quality of care.
(B) The staffing of the quality assurance function is appropriate to the size and scope of operations of the preferred provider organization and the extent to which its economic incentives may lead to poor quality care.
(C) The quality assurance system actually assesses quality of care through usual and customary quality assurance techniques, such as performance of medical care evaluations and audits and medical record review.
(vii) The preferred provider organization has adequate capacity to remove from preferred provider status a provider found to be providing poor quality care.
(viii) The preferred provider organization has adequately identified and addressed the economic incentives of arrangements or provisions which may lead to undertreatment or poor quality care.
(b) Maintenance of a quality assurance system in accord with Department of Health standards does not require assumption of responsibility for or involvement in the medical treatment of an enrollee beyond that set forth in the contract between the preferred provider organization and the enrollee.
Cross References This section cited in 31 Pa. Code § 152.3 (relating to content of an application for approval); and 31 Pa. Code § 152.5 (relating to review of application by the Secretary).
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