Background Material Relating to PSRO's CONTENTS I. Summary of the legislative history of the Professional V. Response of Senator Wallace F. Bennett to allegations A. Extent of congressional consideration.. B. Norms of health care.. C. Confidentiality of patient records. D. Costs of PSRO... E. Sanctions against physicians.. VI. Appendix: A. Statutory language from Public Law 92-603 re- 27 B. Introductory statements to the Senate by Senator tion C. PSRO regional map- (III) I. Summary of Legislative History On July 1, 1970, Senator Wallace F. Bennett announced his intention to offer an amendment authorizing the estabishment of Professional Standards Review Organizations (PSRO) throughout the United States (Appendix A). In that speech Senator Bennett stated that the legislative oversight work of the Finance Committee and its Subcommittee on Medicare and Medicaid indicated urgent need for development of effective professional quality and utilization_control mechanisms for the Federal health care financing programs. He noted that the American Medical Association had requested him to consider introducing legislation which they had prepared designed to establish peer review organizations throughout the country. Senator Bennett said that, although he agreed with the AMA that establishment of peer review organizations was necessary, he believed that the AMA proposal should be expanded and strengthened to assure comprehensiveness of review and public accountability. In that announcement of his intent to introduce a review amendment, he stated that, "I believe that physicians, properly organized and with a proper mandate, are capable of conducting an ongoing effective review program which would eliminate much of the present criticism of the profession and help enhance their statute as honorable men in an honorable vocation willing to undertake necessary and broad responsibility for overseeing professional functions. If medicine accepts this role and fulfills its responsibility, then the Government would not need to devote its energies and resources to this area of concern. Make no mistake; the direction of the House-passed Social Security bill (H.R. 17550) is toward more-not less-review of the need for and quality of health care. I believe my amendment would provide the necessary means by which organized medicine could assume responsibility for that review." Senator Bennett formally introduced his amendment on August 20, 1970 (Appendix B). The Committee on Finance considered the Bennett Amendment during its extensive work on H.R. 17550, the Social Security Amendments of 1970. The legislative proposal was approved by the Committee with some modifications in October, 1970. During Senate floor debate on H.R. 17550 a motion offered on December 18, 1970 to delete the Bennett Amendment from the Committee bill failed to carry by a vote of 18 yeas to 48 nays. Although the Senate approved H.R. 17550, the House and Senate were unable to confer on the bill prior to the end of the 91st Congress. Senator Bennett reintroduced his proposal on January 25, 1972 (see appendix B) as an amendment to H.R. 1, the Social Security Amendments of 1972. Subsequent to further consideration, the Finance Committee announced its approval of the Bennett Amendment to H.R. 1 on March 2, 1972. The full Senate considered and approved H.R. 1, including the PSRO Amendment, in October, 1972. Upon completion of Senate action on H.R. 1, a Conference was held with the House of Representatives to resolve differences between the House and Senate bills. The Bennett Amendment was, of course, subject to Conference consideration inasmuch as it had not been included in the House bill. The House Conferees accepted the Senate PSRO Amendment after certain changes were agreed to by the Senate Conferees. Thereafter, the House of Representatives and the Senate approved the Conference bill on October 17, 1972. The President signed the bill into law on October 30, 1972 (Public Law 92-603). 2 II. Excerpts from Senate Finance Committee Report Concerning PSRO's The Senate Finance Committee Report on H.R. 1, the Social Security Amendments of 1972, contained an extensive discussion of the PSRO provision which the Committee had approved. The Committee Report described the need for an effective profes sional review mechanism to review the quality and utilization of health services provided through the Federal health programs, the failures of existent utilization review mechanisms and its intent with respect to the structure and operations of the PSRO program. Excerpts from the Committee report appear below. PROFESSIONAL STANDARDS REVIEW (SEC. 249F OF THE BILL) According to recent estimates the costs of the medicare hospital insurance program will overrun the estimates made in 1967, by some $240 billion over a 25-year period. The monthly premium costs for part B of medicare-doctors' bills-rose from a total of $6 monthly per person on July 1, 1966, to $11.60 per person on July 1, 1972. Medicaid costs are also rising at precipitous rates. The rapidly increasing costs of these programs are attributable to two factors. One of these is an increase in the unit cost of services such as physicians' visits, surgical procedures, and hospital days. H.R. 1, as reported, contains a number of desirable provisions which the committee believes should help to moderate these unit costs. The second factor which is responsible for the increase in the costs of the medicare and medicaid programs is an increase in the number of services provided to beneficiaries. The Committee on Finance has, for several years, focused its attention on methods of assuring proper utilization of these services. That utilization controls are particularly important was extensively revealed in hearings conducted by the subcommittee on medicare and medicaid. Witnesses testified that a significant proportion of the health services provided under medicare and medicaid are probably not medically necessary. In view of the per diem costs of hospital and nursing facility care, and the costs of medical and surgical procedures, the economic impact of this overutilization becomes extremely significant. Aside from the economic impact the committee is most concerned about the effect of overutilization on the health of the aged and the poor. Unnecessary hospitalization and unnecessary surgery are not consistent with proper health care. REVIEW OF PRESENT UTILIZATION CONTROLS The committee has found that present utilization review requirements and activities are not adequate. "Under present law, utilization review by physician staff committees in hospitals and extended care facilities and claims review by |