When the Clinton administration unveiled its healthcare reform plan last fall, prospects looked dim for continuation of the Medicare peer review program to monitor hospital use and quality of care.
After all, the president's plan called for the elimination of the decade-old Medicare quality assurance program one year after the enactment of reform legislation.
Andrew Webber, the enthusiastic executive vice president of the Washington-based American Medical Peer Review Association, admits that he was beginning to feel gloomy about the future of the industry he has represented since before the first peer review contract was signed in 1984.
Since then, however, prospects for peer review organizations have taken a turn for the better, at least for the short term. The change is primarily due to congressional pressure and, of all things, provider support.
Changing role. While the movement to save the nation's 54 PROs seems to be gaining strength, the reprieve is only temporary at best. Regardless of what type of reform plan is passed, the PROs' role is bound to change dramatically. For PROs, the key now may be to adapt themselves to what the healthcare system will look like several years down the road.
"The bottom line is, we feel a lot better than we did back in October," Mr. Webber said. "Congress thinks there needs to be something more than just accrediting programs and report cards (to monitor quality) and, hopefully, PROs can fulfill that function."
After enactment of Medicare and Medicaid in the mid-1960s, the federal government decided it needed an apparatus to reduce the unnecessary use of services and to ensure quality of patient care (See related story, p. 48).
For the PRO program, the darkest hour may have been last October, when the Clinton administration dropped its bomb.
"The original position (of the White House) was that the PRO program would continue until there was a new (quality assurance) system in place, and that is what (the White House) had been telling us," Mr. Webber said.
While it is impossible to know what really happened, Mr. Webber said, "a certain individual at the White House" decided to kill the PRO program because "he thought he was sending a big present to the physicians."
Congressional aides say the person pushing elimination of the PROs was Ira Magaziner, the senior White House adviser for policy development, although his support for the idea apparently has waned as the strength of the opposition to it has become apparent.
Surprising supporters. Members of Congress, consumer groups and a congressional advisory panel all have called for the program to be continued, at least until a new system can be put in place and is proven effective in ensuring quality in the Medicare program. Even provider groups like the American Medical Association-
most of which have been long-time critics of the program-have argued for its survival.
In a letter to Senate Finance Committee Chairman Sen. Daniel Patrick Moynihan (D-N.Y.) and the Clinton administration, three finance committee members wrote: "At a time when the Clinton administration is recommending reductions in the rate of growth of Medicare expenditures as a means to partly finance system reform, it is not prudent to eliminate the only program designed to protect Medicare recipients against compromises to quality. We need to assure the Medicare community that we will not walk away from protecting their needs at this very critical juncture."
The letter by the Finance Committee members was followed by a February report from the Prospective Payment Assessment Commission, which advises Congress on Medicare Part A. ProPAC recommended that the PRO program be continued until a replacement that is proven to be "more effective" can be implemented.
"If there is something better out there to replace them, that's fine, but first we should know it is effective," said Donald Young, M.D., ProPAC's executive director.
Public concern. Consumer groups also chimed in on the side of PROs. The American Association of Retired Persons told Congress and the White House that the PROs were needed.
"The public's concern about what will happen to the quality of care after healthcare reform has never been greater," said John Rother, AARP's director of legislation, research and public policy. "(Congress has) to have something to point to (to) show that quality is a concern."
But while the support of Congress and other groups may have bought the peer review program some time, the healthcare reform effort will certainly offer them new opportunities and new challenges.
"The PROs generally have long-term contracts (typically three years), and because of that there is a little bit of business as usual going on with some PROs," said Joe Mello, a partner with KPMG Peat Marwick's Long Beach, Calif., office, who has several peer review organizations among his clients.
"But PROs clearly cannot sit back on their heels and wait for the federal government to tell them what to do," Mr. Mello said. "They are in a good position to respond to whatever the quality reporting functions are in the new system."
Broader scope. In some respects, PROs already are making the shift, Mr. Webber said. The program's new methodology, called "the fourth scope of work" by the peer review programs, is designed to move them from the old, punitive, case-by-case system to a broader definition and evaluation of patient care.
"The fourth scope is a great blessing," Mr. Webber said. "It is getting PROs trained and evaluated in the new science of clinical review, and it is exactly the type of thing that is going to be needed in a reformed healthcare system."
The new focus has won some important, if not willing, converts to the PRO program. The AMA, after years of calling for the termination of the program, now guardedly supports the new focus.
"We think it's moving in the right direction," AMA Executive Vice President James Todd, M.D., said at an AMA meeting earlier this year.
PROs hope that the lessons learned from the new methodology will allow them to gradually transform themselves into the next generation of peer review organizations, which AMPRA calls Health Quality Foundations.
New alliances. The new entities would be alliances of consumers, purchasers and providers, Mr. Webber said. They would be staffed by experts in fields such as clinical evaluation, consumer outreach and the sciences. The health quality foundations would contract with whatever national quality board is created and would feed quality data to providers, purchasers and patients.
In addition to their contracts with the federal government, the health quality foundations also would assist health alliances or purchasers issuing the quality report cards envisioned under most healthcare reform plans.
"They would not necessarily put out the report card-that should probably be issued by the alliances-but they would have a very important role in doing the external audit of the data to ensure that the alliances are not gaming the system," Mr. Webber said.
For their part, large purchasers already are working on ways to ensure the quality of the healthcare they purchase and to educate their beneficiaries on quality issues.
For example, several large New England companies, including Digital, Xerox and GTE, are running a pilot data collection program and hope to have the first wave of usable data later this year, said Kathleen Angel, corporate benefits manager at Digital and a member of the board of directors of the Washington Business Group on Health. While her group intends to do its own beneficiary education, Ms. Angel said there could be a role for outside data collection or auditing.
Going national. While AMPRA envisions the new generations of PROs remaining state-based, a national quality framework with national standards would link the state groups in order to guarantee that "all states take the quality initiative," Mr. Webber said.
Ms. Angel agreed, saying: "We would like to see national standards. As a national employer, we don't want to have to deal with separate state standards."
Carrying the ball for AMPRA in Congress is Rep. Ron Wyden (D-Ore.), a member of the Energy and Commerce Committee and a longtime advocate of increased quality oversight. Earlier this year, Mr. Wyden sent a "Dear Colleague" letter to every House member, urging them to support his quality plan, which closely resembles the AMPRA proposal.
Mr. Wyden called for healthcare reform to include "a national network of state-based organizations run jointly by consumers and health professionals." He called for the new entities to be funded "by a modest assessment on health plans."
In his letter, Mr. Wyden also took a swipe at the advocates of pure managed competition, the most prominent of whom, Rep. Jim Cooper (D-Tenn.), is also on the Energy and Commerce Committee. Under managed competition, quality would be assured primarily through the marketplace, which would weed out poor providers. Mr. Wyden said in his letter that there needs to be "another component-an active ongoing quality monitoring and improvement system."
Mr. Webber agreed. "Managed competition proponents think that all you need are report cards and the market will take care of it, but it is naive and dangerous to think that consumers can get enough sophistication to make clinical decisions," he said.
Selling strategy. If the new PROs intend to secure contracts with health alliances or purchasers, they will have to incorporate a marketing component into their strategies, said KPMG Peat Marwick's Mr. Mello.
"They will not have as much of a lock on the market as they have today with Medicare," Mr. Mello said. "They will have to be much more competitive. That is going to force them to do some things, particularly in selling themselves, that they have not had to do in the past."
One of the first forays by a PRO into the competitive market involves the California peer review organization, California Medical Review. It has created a new entity called HealthExcellence, a not-for-profit firm that will include in its governance representatives from CMR, several managed-care organizations, purchasers and consumers.
"The current makeup of PROs, that is, physician-based, is not going to fly in the future," said Jack Christy, general counsel for CMR. "Congress, providers and the general public are not going to accept that one segment of the provider community can dominate."
HealthExcellence hopes to be up and running by the end of 1995, Mr. Christy said. In the absence of national healthcare reform, the firm will seek contracts with managed-care groups, other government entities such as the Department of Defense or the Department of Veterans Affairs, and private purchasers eager for data on the healthcare they buy.
Other PROs, such as those in Arizona and Connecticut, already are expanding the scope of their work and are beginning to take their valuable information directly to the public.
In Arizona, the Health Services Advisory Group determined that there had been a more than 50% increase in the number of surgeries in men over the age of 75 for prostate cancer, even though the need for such surgery in men that age is questionable, Mr. Webber said. The PRO took its findings to providers and created a slide show it now presents to community groups, resulting in lower rates of surgery, Mr. Webber said.
While PROs are beginning to transform themselves, the work that lies ahead will not be made any easier by the baggage PROs continue to carry from their
early days as a case-by-case watchdog.
"There are definitely still a lot of people who don't like the PRO program, and that won't make it any easier for them in the future," said a congressional aide who asked not to be identified.
But Mr. Webber said all of that is in the past. "It makes the challenge greater, but those criticisms are based on the old PRO program, not the new one," Mr. Webber said. "(The critics) are working in the past."
For peer review organizations, the key now is to work on the future.