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MICHIGAN PEER REVIEW ORGANIZATION CONFIRMS SUBSTANTIAL FINANCIAL IMPACT ON MEDICARE COSTS

MICHIGAN PEER REVIEW ORGANIZATION CONFIRMS SUBSTANTIAL FINANCIAL IMPACT
 ON MEDICARE COSTS
 PLYMOUTH, Mich., Feb. 10 /PRNewswire/ -- The Michigan Peer Review Organization (MPRO) has recently released data demonstrating its financial impact as a federal peer review organization (PRO) under the current contract and the substantial impact possible if PROs were allowed to focus review into areas with the greatest benefit-cost ratio.
 MPRO has identified 192 diagnosis-related groups (DRGs) which produced a minimum 2-1 benefit-cost ratio for the Medicare program during this time period. The 43,888 reviews completed from these DRGs produced almost $18 million in savings for an average of $407 per case, or a 6-1 benefit-cost ratio. If MPRO had reviewed each discharge within these DRGs, a savings of $60 million could have been achieved for the Medicare program.
 MPRO's data analysis demonstrates that the PRO program can produce a favorable benefit-cost ratio for the Medicare program if review is concentrated among those DRGs with a high potential for savings. If the Medicare program eliminated the low-impact practice of processing upward DRG adjustments and directed PROs to focus efforts on the high-impact DRGs, the savings generated could underwrite other PRO program components, including quality review, beneficiary outreach and pattern analysis.
 The MPRO data cover the first 33 months of the Third Scope of Work contract which began April 1, 1989. During this time, MPRO produced almost $32 million in net payment denials for the Medicare program, producing an average net payment denial per review of $131. This represents a benefit-cost ratio to the Medicare program of just under $2 for each dollar spent.
 By focusing PRO review among a small sub-set which demonstrates a minimum benefit-cost ratio of 2-to-1, the average net payment denial per review triples, at one-fifth of the expense. Furthermore, by reviewing all of the cases associated with these DRGS, potential payment denials exceed twice the savings realized by MPRO during the Third Scope of Work at one-half the cost.
 MPRO is one of 54 federally designated PROs that function as utilization and quality review organizations for the Medicare program. The PRO program was initiated in 1984 to protect the integrity of the Medicare Trust Fund.
 Under terms of the contract with the federal government's Health Care Financing Administration (HCFA), each PRO is responsible for ensuring that inpatient hospital care received by Medicare beneficiaries is medically necessary, rendered in the appropriate setting, and of a quality which meets professionally recognized standards. This is accomplished through retrospective and concurrent review of medical records and/or information provided telephonically by facilities or practitioners.
 Copies of MPRO's impact study are available upon request from Sherry L. Ross, community relations associate, Michigan Peer Review Organization, 40600 Ann Arbor Road, Suite 200, Plymouth, Mich. 48170, 313-459-0900.
 -0- 2/10/92
 /CONTACT: Sherry L. Ross of the Michigan Peer Review Organization, 313-459-0900, Ext. 619/ CO: Michigan Peer Review Organization ST: Michigan IN: HEA SU:


JG-ML -- DE008 -- 8190 02/10/92 10:09 EST
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Date:Feb 10, 1992
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