Conditions of Participation

The oldest form of quality assurance for Medicare is based on “structural” properties of organizations wishing to be eligible for reimbursement for services rendered to Medicare enrollees. Specifically, such organizations must meet certain “Medicare Conditions of Participation.” Hospitals can meet these conditions by being accredited mainly by the Joint Commission on Accreditation of Healthcare Organizations (and hence be accorded “deemed status”) or by being certified by state agencies. (Refer to Chapter 5 and Volume II, Chapter 7 for a broader discussion of the Medicare Conditions of Participation.)

Utilization Management

Another outgrowth of cost-containment pressure is the development of utilization management. This refers to a set of tools designed to monitor both the appropriateness of a given treatment and the treatment site to control unnecessary use of health care services by prior review and authorization for services (especially procedures and hospital admission). Integrating utilization management with other strategies for balancing cost, quality, and access may improve the effectiveness and efficiency of the health care system as a whole (Gray and Field, 1989). The private sector has been more aggressive about implementing utilization management into health care plans for the nonelderly than the government has been with respect to Medicare and the elderly, although this is changing as government decision makers look to the private sector for ideas and models to help shape Medicare policy (PPRC, 1988).


Central to any discussion of national health policy in general, or the Medicare program in particular, are the issues of cost, access, and quality. Of major concern to the public and to policymakers are the rising costs of health care and the rising expenditures of the Medicare program, at a rate well beyond that for general goods and services.

High-quality health care costs money. What has not been determined, however, is whether allocating additional amounts of money to the health care system necessarily guarantees better quality of care or improved health. Similarly, it is not known whether providing fewer, or different, resources in the health care system necessarily means poorer quality and worse health outcomes.

These issues have special significance for Medicare in light of the revolution that has occurred in the organization and financing of health services

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