Provider-Sponsored Organization (PSO) Law and Legal Definition

A provider-sponsored organization (PSO) is a managed care contracting and delivery organization consisting of a group of doctors, hospitals, and other health care providers who accept full risk for beneficiaries' lives. Therefore, PSO provides its services in return for a fixed payment per month for each medicare beneficiary assigned to it. A PSO is owned and governed by health care providers such as physicians, hospitals, or allied health professionals and not by an insurance company. PSO may be either profit or not-for-profit entities, or public or private entities. PSO through its network, supplies all medical services required by medicare law.

The following is an example of a federal statute defining the term:

According to 42 USCS § 1395w-25 (d)(1), the term "provider-sponsored organization" means a public or private entity:

(A) that is established or organized, and operated, by a health care provider, or group of affiliated health care providers;

(B) that provides a substantial proportion (as defined by the Secretary in accordance with paragraph (2)) of the health care items and services under the contract under this part [42 USCS §§ 1395w-21 et seq.] directly through the provider or affiliated group of providers; and

(C) with respect to which the affiliated providers share, directly or indirectly, substantial financial risk with respect to the provision of such items and services and have at least a majority financial interest in the entity.