For two decades administrators of Medicare have tried to reconcile the competing goals adopted by the program's political creators–meeting obligations to the beneficiaries of a social insurance system, maintaining peace with and the participation of providers, and protecting the federal budget. Administrative efforts to balance these objectives have evolved in three phases. The search of the late 1960s for measures to placate providers and win consensus among them, gave way in the early and mid-1970s to new organizations and programs (Professional Standards Review Organizations, capital expenditure review, and others) that would impose controls on the program at the state and local levels, which in turn have yielded to more centralized and direct strategies, notably the prospective payment system adopted in 1983. The new federal activism may be initiating a period of “technocratic corporatism,” in which administrators and providers will engage in increasingly structured negotiations over the details of reimbursement policies.

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