For peer review programs, the last decade has been a bumpy ride.
Established by the Tax Equity and Fiscal Responsibility Act of 1982, peer review organizations alternately have been praised and criticized. Following a move to their latest phase of work, they're once again gaining the support of the provider community.
PROs are the successors of Professional Standards Review Organizations, which were established in 1972. The original review groups had little support among providers because they were created primarily because of concerns about how well federal money was being spent, not because of quality issues.
Insurance companies also were suspicious of the plan because it gave physician-led groups responsibility for quality review. In addition, the PSROs were hampered by their methodology. For example, they conducted inpatient reviews while patients were receiving hospital services.
The current program, which was passed by Congress in 1982, was designed to make peer review less onerous and to encourage cost-effectiveness. Fixed-price contracts were awarded after competitive bidding rather than giving grants as had been done with PSROs. Also, the number of review areas was reduced from nearly 200 to 54.
The provider community looked at the new structure as positive. It supported the changes, as did consumer groups.
But the new program got off to a shaky start when it took HCFA much longer than anticipated to publish the rules that governed the program. The problems were exacerbated by concerns, primarily on the part of hospitals, that the new organizations would implement a quota system, meaning hospitals would be allowed only a certain number of admissions each year.
The entire mission of the peer review program changed when Congress enacted the Medicare Prospective Payment System in 1983. Under that system, PROs no longer were charged with avoiding overutilization, but rather with reviewing the adequacy and quality of care given.
Like the PSROs before them, the PROs eventually drew the ire of providers. Hospitals argued that as the PROs' mission expanded, they became more intrusive.
But the program had its triumphs. For example, a 1985 study found that the PRO in Rhode Island had been responsible for reducing the number of hospital admissions for 104 elective procedures from more than 5,000 to slightly more than 1,100 for the 15-month period ended Dec. 31, 1984. By extrapolating, HCFA estimated that hospital admissions reductions saved $1.2 billion nationwide over the same period.
As the program evolved, it became much more punitive than it needed to be, said Andrew Webber, the executive vice president of the Washington-based American Medical Peer Review Association. However, the new direction of the program will erase many of those problems, he said.
"Until the day I die, I will tell you that the PRO program performed a useful role at the time," Mr. Webber said. "Yes, it became too administratively burdensome, but the PRO program had a positive impact on the system, and in some form it can again."