Questions About the Cost-Benefit Analyses of the Professional Standards Review Organization Program

Inquiries were made concerning the cost-benefit analyses of the Professional Standards Review Organization (PSRO) program conducted by the Congressional Budget Office and the Department of Health and Human Services (HHS). Under the Social Security Act, PSRO's do not have statutory authority to review medical care services provided to nonfederally reimbursed patients. Private health insurers may contract with PSRO's to conduct reviews of health care services for which they reimburse patients. The cost of such a review must be fully paid by the insurer. In the absence of agreements among the private insurer, the health care institutions, and the PSRO, the institutions are not obligated to submit to PSRO review the health care services provided to other than Medicare/Medicaid patients. It may be appropriate to include costs relating to patients which PSRO's are not authorized to review so that, if through PSRO review, the Medicare costs per day are lowered when the Medicare utilization rate decreases, non-Medicare costs per day are increased. GAO was not aware of any other health programs administered by HHS which have been subjected to an extensive cost-benefit analysis. Other programs with purposes similar to the PSRO program have not been thoroughly analyzed from a cost-benefit viewpoint.