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Fourth-Party Audit Organizations: Practical and Legal Considerations

Published online by Cambridge University Press:  28 April 2021

Nathan Hershey
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Extract

Fourth-party audit organizations (FPAOs) conduct utilization review and control programs, usually on behalf of employers that provide health benefits programs to employees. The existence of FPAOs and their increasing range of activity reflect the business community's great concern about the rising cost of health care. Over the past decade the business community has taken an increasingly active role in seeking to influence federal and state policies regarding health services, and in stimulating the development of new mechanisms of health delivery, with the goal of making its expenditures for health benefits more costeffective. Businesses rely on FPAOs to assist them in controlling the costs of health benefits programs for employees.

As desirable as cost containment in the health field is, however, the various means used to help reach that goal must be evaluated in terms of their practical effects and the relevant legal considerations. This article will (1) describe the functions performed by FPAOs; (2) provide an illustration of the impact of an FPAO in a patient care situation; (3) examine some of the practical problems created by the use of FPAOs; (4) indicate some of the legal questions presented by the activities of FPAOs; and (5) assess the role and likely impact of FPAOs in the future.

Type
Article
Information
Law, Medicine and Healthcare , Volume 14 , Issue 2 , April 1986 , pp. 54 - 65
Copyright
Copyright © American Society of Law, Medicine and Ethics 1986

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References

See Herzlinger, R.E. Schwartz, J., How Companies Tackle Health Care Costs: Part I, Harvard Business Review 63(4): 69 (July/August 1985); Herzlinger, R.E., How Companies Tackle Health Care Costs: Part II, Harvard Business Review 63(5): 108 (September/October 1985).Google ScholarPubMed
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