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Essentials of An Integrated PSRO Data System. January, 1976

Stimulated mainly by the passage of PL-92-603 and the data requirements of the PSRO's established by that law, a lively debate has developed as to how health care data will be collected and processed. The three main topics around which the debate revolves are:

1.) Accuracy of the data

2.) Confidentiality and access

3.) Cost.

Recent passage of PL 93-641 has increased the urgency of this debate, as it would seem logical for the HSA's established by this law to work closely with the corresponding PSRO's and to use data provided by the latter. It is apparent that they will not be able to become effective until such data is available.

Therefore, it seems appropriate at this time to develop a general scheme for data management which would:

1) Meet the requirement of accuracy, confidentiality/access and cost effectiveness

2) Provide a minimum data set necessary for a uniform national system of peer review.

3) Be flexible enough to adapt to specific local needs and to unforeseen future needs.


It is apparent that there is a considerable investment (both private and public) in data systems at present of the order of magnitude of billions in hardware and annual expenditures of approximately billions in EDP operations, related to healthcare. Among the larger data processors is the National Center for Health Statistics, the Bureau of Health Insurance, SRS, State Medicaid programs, Blue Cross / Blue Shield, and private health insurance companies. In addition, the considerable data-collection capability exists in private monitoring systems (such as the Commission on Professional and Hospital Activities) as well as within individual hospitals. Because of the substantial existing investment, legitimate concern has been expressed that PSRO's might simply add "another layer of data-gathering" and further increase cost and confusion. This concern must be addressed.

In spite of the significant capacity in existing systems, there are several glaring defects. One is compartmentation. Data collected by one organization is not available to other organizations that need it. The corollary to this is duplication, organizations have set up duplicating systems because of ignorances of data available elsewhere or inability to get it. Both of these problems tend to increase the total cost of data collection. Related to the problems of compartmentation and duplication is the significant problem of harassmentof the provider. Hospitals have increased administrative costs simply to provide the information required by federal state and local agencies of government as well as third-party payers, and physicians and clinics are likewise struggling under an increasing load of paperwork which threatens to impede their ability to deliver the medical services which are urgently needed.

In spite of the complexity and extent of existing data-gathering apparatus, there are areas in which gross inaccuracies occur. In Hospitals the crucial point of data-gathering is usually in the hospital record rooms, and the causes of inaccurate data fall into two main categories;

1) Insufficient, inaccurate or illegible recording of diagnoses and procedures by the attending physician.

2) Deliberate distortion of information to accommodate third-party payment mechanisms.

3) Inadequate or inaccurate identification data due to lack of uniformity of hospital discharge data sets and lack of uniformity of training and supervision of personnel abstracting the data.

The problem of confidentiality and access to data are magnified considerably by the present uncoordinated system not only are there flagrant breaches of confidentiality because of the multitude of people handling this data without overall supervision, but conversely, when a public party has legitimate need to know certain information, it is often nowhere readily available in an aggregated format.

These defects in the present system relate mainly to data concerning institutional care. When it becomes necessary to collect ambulatory care data, all these problems will be multiplied manyfold. Additionally, present data collection systems are seldom demographically oriented so that what actually happens within a given geographic area or within a defined population is difficult to determine.


A. Structure.

In an attempt to bring more order into the presently fragmented system and to address the three basic issues of accuracy, confidentially/ access, and cost, we would propose the following scheme diagrammed in Figures 1 and 2: (see diagrams following)

These figures are based o the concept of a "data brokerage" (Ref.), and a common pathway for all health care data, with management of the system at the PSRO/HSA level by a Data Sub-Committee of the PSRO, and at the State Support Center or State PSRC level by a similar data sub-committee of that body. Both sub-committee would, of course, be responsible to their Boards.

A key feature of the system is the data-processing contractor at both levels. This organization would be chosen after competitive bidding in response to an RFP put out by the data management sub-committee. Organizations which might bid for such contracts would be either existing data processing firms, specializing in health care data, such as EDS, like wood.

Optimum Systems, Health Application System, etc..., or they could be spin-offs of existing third-party payers, either the Blues or commercial health insurance companies. In the latter case, the EDP organization, handling data under the integrated PSRO system, would have to be managerially divorced from the parent corporation in order to avoid conflict of interest. Existing organizations such as BHI, the Blues, commercial carriers, etc., would continue to maintain data systems for their own internal needs, but common needs would be met by the PSRO network.

A second key feature of the system is that management information, quality assurance data, and claims payment data would all flow over a common pathway. The compelling reasons for this are

1) Economy of operation

2) Minimal harassment of providers

3) Effectiveness of managerial control.

Economy and minimal provider-harassment would be accomplished by the necessity for submission of only one abstract containing the necessary data elements for each service rendered, whether in hospital, nursing home, doctor's office, or patient's home. This could be submitted to a local PSRO data center, generally by direct terminals located in community hospitals. When ambulatory care review becomes required, doctors and clinics or medical office buildings may find it expedient to have entry terminals primary for ambulatory care data in their own facilities. Doctors in solo practice or in more rural communities could submit abstracts by mail to their OSRO data centers or to the entry \terminals in their community hospitals. Large hospitals having their own computer systems at present would only need to make arrangements for linkage from their computers to the PSRO data center for transmission of essential data elements.

B. Management

Managerial responsibility at the PSRO/HSA level would be invested in the PSRO Board and delegated to the Data Management Sub-Committee. Although the Board membership is restricted to M.D. or D.O. members of the local PSRO, the sub-committee could, and should, include non-M.D. members. Certainly a member of the corresponding HSA should sit on this committee, and if the PSRO is statewide, each of the main users of this system should be represented; namely, BC/BS, HIAA, State Hospital Association, Inc.

At the level of the state or regional support center (of which 12 exist at present), the Data Management Sub-Committee would be even more broadly representative, with representation from the appropriate state health agencies, medical schools, regional HEW offices, and responsible consumer organizations, etc.

Confidentiality/access issues would be settled by the Data Management Sub-Committees at the appropriate levels. A uniform policy would be established, and there would be no question as to where to fix responsibility for the release or retention of information.

Although not shown in the second diagram, there is a third, or nation, level of data-handling represented by such organizations as the National Center for Health Statistics, Bureau of Health Insurance, SRS and, When some national health insurance plan is voted by Congress, whatever federal agency will be given authority to manage this program. These organizations should be concerned mainly with aggregated data and only when necessary for eligibility determination or payment of claims with individually identified data.. Much of the argument on this subject at present seems pointless if it is recognized that disciplinary control of both patients and providers should be delegated to the PSRO level and at higher levels. Management should be concerned with managing the systems, not with the disciplining of individuals.

On this subject, it might be pertinent to observe that, as the data system becomes operational, the present tendency of BQA to try to control process in each PSRO should be drastically curtailed, and the role off BQA should be mainly to monitor the outcome of the efforts of each PSRO actually relying on the support centers to provide most of the data that will be necessary to do this.

C. Funding.

Funding of the PSRO Data System is a part of the general problem of funding PSRO operations, which is an issue at present. We will not go into this question in detail in this paper, other than to observe that we feel strongly that PSRO's should receive their income mainly from those institutions for which they provide services so that all purchasers of data from the PSRO would pay an appropriate amount for it. It should be remembered that in addition to providing data, the PSRO also providers certification of the necessity, quality, and the appropriateness of the service, upon which payment will be based. The cost of EDP and certification must be recognized as reimbursable costs, and provision made to pay for these functions through the same reimbursement mechanism which pays for the health care services themselves. At present the total cost of PSRO review of institutional care including administrative, EDP, and certification costs is between $10 and $35.00 per hospital admission (Ref.).

It would appear that, as PSRO's become more efficient, this cost will settle down to between $10-$15 for a total of $110-$165 million dollars for present 11 million Medicare and Medicaid admissions annually. Reimbursement for review of nursing home care and ambulatory care will require slightly different arrangements, but the principles should be the same.

Funding for the State-Support Centers and the data libraries, which would be used primarily for medical care evaluation studies and other retrospective research, might come directly from BQA and research grants from medical schools or schools of public health.


Questions which have been raised in regard to the feasibility of such a common data system are;

1) The possibility of requiring a significant investment in "new hardware" by duplicating existing capacity. We anticipate that the successful bidders for the data-processing contracts would use existing hardware to a large extent and only invest in new hardware as technologic advances in the industry require it. Certainly, new software systems would be required and the stimulus of competitive bidding on some 200 individual PSRO contracts, plus the stimulus of minimal data requirements, established, presumably by the Professional Standards Review Council would, we feel, be a healthy influence to continued improvements in the system.

2) A single, nationwide data system would be another example of "Big Brother is watching you", and a further breach of individuals privacy in a particularly sensitive area.

As we have mentioned above, there are numerous possible "leaks" in the present, uncoordinated system, and essentially no control of confidentiality by any responsible public party. The proposed system clearly fixes responsibility for release or retention of information with data management sub-committees of the PSRO at the local level and the corresponding committee of the support center at the state or regional level. All requests for access to data would be channeled through these committees, and such request would have to be supported by documented "need-to-know".

The converse problem of access to health care information by consumer groups and public parties with a legitimate interest in health care data would be much more readily solved in our proposed scheme than at present. With regard to individual data relating to a particular patient-doctor relationship, confidentiality is the predominant issue, and professional control should be maximal at this level, with only enough non-professional input to keep the professionals honest. At the state, regional and federal levels, access to aggregated data, in order to assess the elements of the healthcare delivery system becomes the dominant concern, and at this level non-professional control becomes important, with a small component of professional input, principally to safeguard privacy and to ensure accuracy. This relationship is shown in Figure 3, taken from a report of the Institute of Medicine, entitled, "Advancing the Quality of Health Care".

Confidentiality of "business" information is a legitimate concern to many providers. For instance, how many beneficiaries Mutual of Omaha or the Blues have in a given area, or the total benefit payments for a given group of beneficiaries, or the retention rate for administrative costs and reserves, are generally regarded as business information, which should not be released to competitors. We are satisfied that the technology exists to build into a "common pathway" system adequate safeguards to secure the privacy of this information.

It should be noted in our scheme that the repositories of "old" data (as opposed to "online" data needed for day-to-day operation) are the "data libraries" controlled by the state / regional support centers. Such data would be used for retrospective MCE studies comparing the performance of different PSRO's, hospitals, clinics, HMO's and other provider groups. Since, as a result of such comparison, someone is always going to come off second best, strict control of such studies and release of information only to those with a legitimate need for the information will be important. The conduct of such studies and the monitoring of the coordinated data system for accuracy and efficiency are two reasons why we feel the support centers should continue to exist and not be phased out (as is present HEW policy).

3) . A large amount of data which would have to pass over a common pathway would "jam the system" and slow the speed of transportation of information, particularly that required by third-party payers for payment of claims

We have reason to believe that, conversely, the transmission of such information would be accelerated rather than delayed, and the efficiency of claim payment would be increased. How to claim payment request comes from a variety of providers (hospital, doctor, pharmacy, VHA, etc.) . and to a variety of payers (Medicare, Medicaid, the Blues, commercial health insurance companies, and the patient himself). Attempts to coordinates the payments of benefits are still clumsy, resulting in duplicate payments, incorrect payments, retroactive denial of payments, and a tremendous volume of correspondence phone calls, etc., trying to rectify these errors.

The "common pathway" scheme would afford an opportunity to gather together the claims of all providers pertaining . to a given case, and to compute accurately the deductibles, co-insurance and coordinated payment of benefits by various payers. At the same time, the PSRO certification (required at present only for payment under federally-funded programs, but eventually in all probability for payment under all health insurance program) would be added to the claim. In approximately 85% of cases based upon present experience, the claim would pass through the screens built into the local and regional computer systems without delay, arriving essentially instantaneously at the office of the third-party payer. The third-party payer would then only check eligibility and conformance to the scope of benefits provided by his contract, and issue checks or payment credits to the appropriate providers.

For approximately 15% of cases requiring review at the PSRO level, the review process would be accelerated by the gathering of all information regarding a particular case in one locus, and the development of online accessible data systems for review of much of this data. We visualize a BSRO room in each community hospital where the paramedical and professional personnel would review questioned cases, using a CRT terminal to access the PSRO data bank (for details of such a system,). Experience to date indicates that of the approximately 15% of cases "kicked out" by computer screens, all but 2-5% can be certified after paramedical review and promptly returned to the payment mechanism. The 2-5% requiring professional review would be reviewed by doctors at their community hospitals (where they are usually available on a daily basis), and certification would have to wait for weekly or monthly meetings of peer review committees only in rare instances. The virtually total abolition of delayed, retroactive review of claims and denial of payment, which is a source of considerable irritation to all providers at present, should be achievable under our proposed scheme.

4). Such a scheme would be exorbitantly expensive.

We have previously mentioned that the system would not require significant capital investment in new equipment nor in the training and employment of large numbers of personnel as these already exist and need only to be organized in a different management structure. It is even possible that by eliminating some presently duplicative systems, there may be a net saving. There is reliable evidence that the review of institutional care can be done at present for approximately $10-15, per admission. With the costs per hospital admission of Medicare and Medicaid patients averaging $750-$1,000, this amounts to 1-2% of the total cost of care. Experience in the costs of ambulatory care review indicates that it can be done at present for approximately 3-5% of the cost of providing that care and as volume increases that figure can be reduced.

It might be pointed out that when such a scheme becomes operational for both ambulatory and in-patient care, we will have available for the first time reliable data on the costs of an entire spam of illness, from the first patient contact to eventual recovery or death. Such information will give us much more useful information with regard to the cost-effectiveness of different elements of the healthcare system that is available at present.

The question as to how much effect the PSRO review system will have on total costs of healthcare in the nation has been widely debated, and it does not seem wise to make any sweeping generalizations on this point. It seems apparent that initially some unnecessary services will be eliminated, and the length of stay in expensive institutions will be reduced, and there will be an opportunity for better control of provider charges.

On the other hand, insistence on a higher quality of care will, in some instances, increase costs and the inevitable pressure of inflation in the national economy and the continuing introduction of high-cost technology into the healthcare field may offset any potential savings resulting from the PSRO review system.

5). A "common pathway" system might multiply errors in data-gathering and information-handling.

On the contrary, we believe that the proposed scheme affords opportunities for control of the accuracy of data which do not exist in the present "patchwork" system. One important feature is the initial control of data input. We have mentioned that institutional data at present is subject to several causes for the error. In our scheme, all institutional data would be gathered initially by trained nurse-coordinators and transferred from their abstracts to the computer terminal by another specially trained individual. These individuals should preferably e on the payroll of and supervised by, the local PSRO, although in some cases they may be on the hospital payroll and supervised by the PSRO.

When ambulator review is added, we recommend the adoption of the minimum data set for ambulatory care review, which is similar to the UHDDS, which is becoming standardized for institutional care review. We also recommend the adoption of a simple encounter-reporting form for ambulatory care, adapted to individual practices, similar to that developed by H. Philip Hampton of Tampa, Fla. This will provide all information necessary for both claims payment and quality review, reducing the "harassment factor" to a minimum. Information from these encounter forms would be entered likewise by trained data entry personnel in either the local PSRO office or at computer terminals located in community hospitals, clinics, and doctors' office buildings.

One of the important functions of the Bureau of Quality Assurance, working cooperatively with state regional support centers, would be to monitor the accuracy of data system and to continue to develop and introduce into the system improved techniques to ensure accuracy. Such control is impossible at present.


In this paper we have attempted to demonstrate the need for, and the feasibility of an integrated PSRO data system, addressing the three main issues of accuracy, confidential/access, and cost. A proposed scheme is described in general outline. Some frequently voiced questions regarding such an integrated data system are posed and answered.


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