The federal programs were fashioned to address incentives of the prevailing financing mechanisms for health care. For instance, when cost-based reimbursement was the predominant mode of hospital payment, utilization review to detect overuse of care had a key place in peer review efforts such as the PSRO program. Prospective payment prompts more attention to underuse and quality of care, as seen in recent activities of the PRO program. Nevertheless, utilization review and quality assurance are closely linked activities; both have been and will continue to be important in any program intended to assure the quality of care for the elderly. In designing the strategy for a new quality assurance program for Medicare (Chapter 12), we hope to create a program with the flexibility and appropriate tools that can respond to whatever incentives emerge from changing Medicare financing and reimbursement schemes. To lay the groundwork for such a program, we here examine past and existing quality assurance efforts for Medicare.


Experimental Medical Care Review Organizations (EMCROs) were voluntary associations of physicians who reviewed inpatient and ambulatory services paid for by Medicare and Medicaid. The program, in existence between 1970 and 1975, was administered and funded by the National Center for Health Services Research and Development. Far more a research and development effort than an operational one, the EMCRO mission was to encourage physicians to work together and to upgrade methods for assessing and assuring quality of care. EMCROs were concerned with both inpatient and ambulatory care.

Although no comprehensive evaluation of the EMCRO program was ever done, analyses of data and activities of the New Mexico EMCRO documented important impacts of the program on the appropriate use of injectable drugs and on the quality of ambulatory care in the state’s Medicaid program (Lohr et al., 1980). Those results were obtained through a dual approach that emphasized education (development and promulgation of injection guidelines) and economic sanctions (denial of payments for inappropriate services). EMCROs were essentially a prototype for PSROs, established about midway through the EMCRO program.


Purpose and Structure

Professional Standards Review Organizations (PSROs) were established by the Social Security Amendments of 1972 (P.L. 92–603) to assure that

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