Summary: The Professional Standards Review Organization (PSRO) Program was established under the Social Security Act to ensure that services paid for under Medicare, Medicaid, and maternal and child health care programs were necessary and appropriate. Congress, in enacting the PSRO legislation, acted in response to a determination that not only was utilization review warranted, but that the then-existing review mechanisms were not up to the job. Studies concerning the cost effectiveness of PSRO's have disclosed certain problems that exist with respect to the accuracy of the data used and with the methodologies employed to compute savings. The administration proposes to phase out the PSRO Program over the next several years, with all federal support ending in 1984. GAO believes that, in view of the considerable investment of time, energy, and money that has been made to bring the PSRO Program to where it is, it should not be scrapped until a better picture can be drawn of what the effects would be. Accordingly, GAO cannot support the repeal of the PSRO and utilization review committee provisions at this time. In line with the administration's proposal for funding the most effective PSRO's, GAO believes that one alternative to phasing out the program would be the consolidation of PSRO areas. GAO further believes that use of the demonstration concept would be an appropriate way of dismantling a program which is partially aimed at controlling costs, especially when the short- and long-term effects are uncertain.
