Physician-Sponsored Organizations Receive Priority for Peer Review Contracts

HRD-88-43: Published: Jan 21, 1988. Publicly Released: Jan 21, 1988.

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In response to a congressional request, GAO determined whether the Health Care Financing Administration (HCFA) complied with a requirement to give physician-sponsored organizations preference in the award of contracts for peer review organizations (PRO).

GAO found that: (1) in 1986, HCFA awarded PRO contracts to physician-sponsored organizations in 75 percent of the cases where they were competing with physician-access organizations; (2) 44 PRO are physician-sponsored, while 10 percent are physician-access organizations; (3) HCFA opened 31 of the 54 contracts for competitive bidding, but 15 had only one bidder; (4) 12 of the 16 cases with two or more bidders had competition from both physician-sponsored and physician-access organizations; and (5) 3 of the 10 physician-access organizations obtained contracts in competition with physician-sponsored organizations, 4 performed well enough to obtain a noncompetitive contract renewal, 2 were the only bidders, and in the remaining case, all the bidders were physician-access organizations.

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