Peer Review Organizations

This paper addresses three topics related to the impact of Medicare's Prospective Payment System (PPS) on the quality of hospital care received by the elderly: (1) To what extent can Medicare's Peer Review Organizations (PROs) be an effective quality-assurance tool; (2) what barriers exist to their achieving full effectiveness; and (3) what policies or actions might reduce these barriers? It was prepared as a commissioned background document for the Office of Technology Assessment, Congress of the United States, as part of a larger work concerning ways to evaluate PPS effects on cost, quality, and medical technology. The author briefly reviews the history of peer review and quality assurance, documents the legislation underlying the present PRO program, describes the basic elements of the program (such as its mandated admissions and quality-assurance activities, its data reporting requirements, and performance-based evaluation), examines the quality-assurance potential of PROs in terms of present advantages and disadvantages of the program, and discusses several future actions and policies that may prove crucial to the success of the program as a quality assurance system.