changes in the hospital payment rates to the Secretary of DHHS and second, it recommends changes in the DRG classifications. It has discharged this responsibility through regular Commission meetings, which are generally open to the public, and detailed annual reports and technical documents. The statute limits the number of staff to 26, and the annual budget for the ProPAC activities approaches $4 million.

Physician payment under Medicare has come under close scrutiny in recent years. Concern is being heard among physicians, beneficiaries, and government officials about the tremendous growth of physician expenditures over the last several years, the increasing fiscal burden on beneficiaries and taxpayers, and diminished access to quality care for Medicare enrollees who, under the constraints of limited financial resources, avoid seeking services that may not be reimbursed.

As a result, Congress established the Physician Payment Review Commission (PPRC) in 1986 (P.L. 99–272) to advise on reforms to the physician payment system under the Medicare program (PPRC, 1988, 1989). The PPRC is modeled on ProPAC and members include physicians, other health professionals, experts from other disciplines, and representatives of consumers and the elderly. This Commission has four major roles (PPRC, 1988). First, it provides advice to the Secretary of DHHS. Second, it seeks the views of physicians, beneficiaries, and others concerning its recommendations. The conduct of analyses on which to base policy decisions is the third role of the Commission. Finally, it undertakes the work necessary to implement the recommended policy changes.

PPRC has initiated several research projects to develop a Medicare fee schedule for physician payment based on the relative value of resources used by the physicians to produce the services rendered to the patient (see Hsiao et al., 1988). It has also called for practice guidelines to help physicians understand better when services, especially procedures, are appropriate and when they are not.


The Utilization and Quality Control Peer Review Organization Program (PRO)

In addition to managing Medicare outlays, HCFA is charged with ensuring the quality of care rendered to Medicare beneficiaries. Thus, the PRO program, implemented as part of TEFRA 1982 (P.L. 97–248) and administered by HCFA, is intended to ensure quality of care within the Medicare program while reducing unnecessary and inappropriate utilization of services covered by Medicare. (Refer to Chapter 6 and Volume II, Chapter 8 for a broader description of the PRO program.)

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