A bill to amend part B of title XI of the Social Security Act to make certain reforms in the program of review of professional medical services provided under the Social Security Act, and to protect the confidentiality of medical records.

Requires the Secretary of Health, Education, and Welfare to assist the National Standards Review Council in proposing guidelines for selection of professional standards review areas, under the Medicare and Medicaid provisions of the Social Security Act.

Directs, after selection of such areas, that an agreement be entered into between the Secretary and a qualified organization which shall be the Professional Standards Review Organization (PSRO) for such area for five years.

Defines "qualified organizations" to include specified private nonprofit organizations and associations and public agencies.

Allows the Secretary to waive review and control activities under this Act where he finds effective review and control by PSROs.

Allows a majority of the doctors in an area to negate selection of a PSRO.

Establishes a trial period for a PSRO before it becomes fully responsible for review and control of medical services within its area.

Sets forth duties of PSROs, including review of medical services to determine: (1) if they were necessary; (2) if they meet professional standards; and (3) what inpatient services could be changed to outpatient services.

Limits physicians' reviews of patient services to those patients other than his own.

Allows PSROs to inspect physicians' records and facilities, where physicians and facilities provide services under this Act.

Requires a PSRO to rotate and provide the broadest possible inclusion of physicians doing reviewing for its area. Requires reviewing committees to demonstrate their capability before a PSRO must accept their findings.

Directs PSROs to identify or develop criteria of health care to be used for review and control in their areas.

Requires PSROs to report substantial violations of health care providers to the State-wide Professional Standards Review Council, but only after a chance for voluntary compliance has been provided.

Prohibits the payment to providers of medical services who are with fault, as determined by the PSRO.

Sets forth an appeal procedure, through the National Standards Review Council, for such providers, where payment is refused them.

Obliges such providers to give necessary care, professional quality care, and inpatient care only where outpatient care will not suffice.

Provides for a suspension and thereafter an exclusion from services under this Act for providers not fulfilling such obligations. Requires notice and opportunity of review for such providers of a decision to suspend or exclude.

Requires the establishment of State Councils where more than one PSRO exists in a State, in order to coordinate such PSROs. Requires that the membership of the State Councils include four public representatives.

Establishes the National Council, consisting of 15 physicians serving three-year terms, who will advise the Secretary, perform the duties specified under this Act, and review and seek to improve the operations of the PSROs.

Requires that State plans for provision of medical care under the Social Security Act meet the requirements of this Act.

Provides for the confidentiality of the records of PSROs and the State and National Councils, including patient records. Imposes penalties for disclosure of such records.

Establishes the Office of Professional Standards Review in the Department of HEW to administer this Act.