ORGANIZATIONS REPRESENTED AT HEARINGS-Continued Kaiser Foundation Health Plan, Inc., Arthur Weissman, senior vice president and member, board of directors. Lewin and Associates, Inc., Lawrence S. Lewin, president. Maryland Health Services Cost Review Commission, Harold A. Cohen, executive director. National Academy of Sciences, Institute of Medicine, Robert Ball, senior scholar. National Council of Senior Citizens, Nelson H. Cruikshank, president. National Lutheran Home, Washington, D.C., Rev. Richard Reichard, executive director. New York State Department of Social Services, Beverlee A. Myers, Deputy Commissioner for Medical Assistance. New York State Moreland Act Commission on Nursing Homes and Residential Facilities, Jonathan Weiner. Prudential Insurance Company of America: Kittredge, John K., F.S.A., senior vice president. White, William C., Jr., vice president. Rand Corp.: Mitchell, Bridger M., senior economist. Newhouse, Joseph P. Rockefeller Foundation, John Knowles M.D., president. United Auto Workers, Melvin A. Glasser, director, Social Security Department. United Hospital Fund of New York, Joseph V. Terenzio, president. United Steelworkers of America, Bernard Greenberg, assistant director, Insurance, Pension and Unemployment Benefits Department. Wisconsin, State of: Durkin, Robert, Administrator, Division of Health Policy and Planning. Lucey, Hon. Patrick J., Governor. NATIONAL HEALTH INSURANCE Quality Assurance WEDNESDAY, FEBRUARY 18, 1976 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The subcommittee met at 1:30 p.m., pursuant to notice in room 2322, Rayburn House Office Building, Hon. Paul G. Rogers, chairman, presiding. Mr. ROGERS. The subcommittee will be in order, please, to continue our hearings on proposals for national health insurance. This afternoon we have with us Dr. Michael J. Goran, Director of the Bureau of Quality Assurance, Health Services Administration, Department of HEW, Rockville, and Dr. Robert Van Hoek, Acting Administrator, Health Services Administration, Department of HEW. We welcome both of you gentlemen to the committee. We will be pleased to receive your statements, and you may proceed as you desire. STATEMENT OF ROBERT VAN HOEK, M.D., ACTING ADMINISTRATOR, HEALTH SERVICES ADMINISTRATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED BY MICHAEL J. GORAN, M.D., DIRECTOR, BUREAU OF QUALITY ASSURANCE, HEALTH SERVICES ADMINISTRATION Dr. VAN HOEK. Thank you, Mr. Chairman. With your permission, I would like to read the opening statement. Mr. ROGERS. Yes. Dr. VAN HOEK. Dr. Goran and I are pleased to appear before this subcommittee to discuss with you the subject of Professional Standards Review Organizations PSRO's and their potential as a quality assurance mechanism for national health insurance. We believe any national health insurance system would have to contain a strong quality assurance system to assure that health care dollars are spent in the most effective way possible on quality services. Such a quality assurance system would include three elements: (1) A certification and accreditation program whereby facilities and professionals are required to meet standards, against which they are periodically assessed; (2) a program in which the quality, appropriateness, ne cessity, and use of services is assessed and, where deficiencies are found, correction is made through continuing education and other mechanisms; and (3) a program to link the results of quality assurance to the continuing licensure of health manpower. Today I will speak to the second component of such a quality assurance system: The assessment of services for quality, necessity, and appropriateness. From the outset of any national insurance NHI-program, there is a need for a system of surveillance and monitoring of the quality and appropriateness of health care services. We believe the PSRO program, which is a health professional controlled but publicly accountable approach to such review, has the best potential to assume that role under any form of a national health financing scheme. The PSRO program represents one of the most significant current efforts by Congress and the Department of Health, Education, and Welfare to assure that the medical care delivered to beneficiaries and recipients of the medicare, medicaid, and maternal and child health and crippled children's services programs is of high quality and that such care is provided in a manner which reflects the most appropriate and efficient utilization of our Nation's health care resources. PSRO's help to assure that the highest quality of care is delivered for the Federal dollar spent by identifying deficiencies in health care practices and correcting them through continuing education and administrative change. I believe it would be beneficial to examine the origins, current status and implementation of the PSRO program. BACKGROUND The PSRO program was authorized by the 1972 amendments to the Social Security Act. The PSRO provision of Public Law 92-603, section 249F, required the Secretary of HEW to establish and support a nationwide network of voluntary, nonprofit groups of local physicians in order to first, improve the quality, and, second, to make more cost effective the over $25 billion in Federal expenditures for health care services financed by and provided to beneficiaries and recipients of titles V, XVIII, and XIX of the Social Security Act. The program is based on the concepts that health professionals are the most appropriate individuals to evaluate the quality of medical services and that effective peer review at the local level is the soundest method for assuring the appropriate use of health care resources and facilities. The PSRO legislation was developed in response to the belief that increasingly high medical costs under medicare and medicaid were due in part to inappropriate utilization of institutional services. It had become apparent that then existing review mechanisms were ineffective in controlling unnecessary utilization or assuring that quality care was delivered. The quality and cost concerns exist in even greater measure today as more documentary evidence becomes available on the delivery of poor quality or unnecessary health care services. In 1972, legislators looked to mechanisms which could simultaneously improve quality while containing costs by preventing unnecessary use of services. Two sets of activities which were initiated in the late 1950's caught the attention of these legislators. Reports began to emerge which documented the successful efforts by relatively new physician review organizations to control unnecessary utilization of services and thereby control expenditures for medicaid and medicare reimbursement services and items. Hospital lengths of stay were reduced from one-half to 3 days. The unnecessary use of services was brought under better control. These communitywide physician review organizations, which were able to improve upon the existing institution-based utilization review activities of the medicare and medicaid programs, served as prototypes for PSRO's. A second development resulted from the increasing number of studies which began to assess quality through retrospective reviews of the diagnosis and treatment of patients on an individual and aggregate basis. The concept of systematic appraisal of medical care originated in the United States and dates back to the years just prior to World War I, when pioneering efforts were made in evaluating the outcomes of medical care. The 1950's saw the rebirth of such efforts to systematically assess the quality of medical care. Following enactment of the legislation creating the medicare program and the subsequent issuance in 1967 of the utilization review regulations relating to beneficiaries of that program, medical staffs and institutions were required to provide evidence that various studies were being conducted. These studies, entitled "Sample Review," were designed to improve the quality of care in the institution. In order to assist hospitals in meeting these requirements and, in a broader sense, to assist hospitals to meet their responsibility to assure the delivery of high quality medical care, organizations such as the Joint Commission on Accreditation of Hospitals, the American Hospital Association and the Commission on Professional and Hospital Activities developed and conducted extensive training in the techniques of medical audit. The efforts of individual hospitals and of researchers resulted in the development of a number of audit techniques including: (1) The use of criteria which are developed by local practitioners to assure objectivity; (2) the involvement of local practitioners to assure that the results of the study will result in needed change; and (3) the use of the results of the assessment to define topics for health professional continuing education programs, thus making these programs directly relevant to the educational needs of health professionals. Those audit techniques are now part of the PSRO review system. PSRO LEGISLATION PSRO's were designed to incorporate the structure of these prototype organizations and the methodology of objective review. While PSRO's have been viewed by many as primarily a mechanism |