A bill to amend part B of title XI of the Social Security Act to provide a more effective administration of Professional Standards Review of health care services, to expand Professional Standards Review Organization activity to include review of services performed by or in federally operated health care institutions, and to protect the confidentiality of medical records.

Amends Title XI General Provisions and Professional Standards Review of the Social Security Act to establish and revise areas of the Professional Standards Review Organizations established under such Title, taking into account the recommendations of doctors of medicine and osteopathy.

Directs the National Professional Standards Review Council to conduct a study for the purpose of evaluating whether, and under what conditions, organizations other than professional associations shall be allowed to perform review functions.

Requires each Professional Standards Review Organization to assume responsibility for professional standards review of health care services furnished by or in institutions operated by the Public Health Service and the Veterans Administration in the area which it serves.

Requires, in conjunction with such reviews, that procedures be developed whereby deficiencies shall be brought to the attention of administrators of the hospitals and other Federal institutions concerned. Calls for the consolidation of data and reports compiled under these provisions.

Directs that criteria of health care shall be identified or developed by each Professional Standards Review Organization, giving due consideration to such criteria of care identified or developed by national medical specialty organizations. States that such criteria of care shall be used by the Professional Standards Review Organization as guides of care.

Requires the National Professional Standards Review Council to provide for the distribution to each Professional Standards Review Organization, and to each other agency performing review functions, of appropriate materials indicating various guides being utilized in other geographical areas.

Makes provisions to protect the confidentiality of medical records.

Authorizes the Secretary of Health, Education, and Welfare to enter into a contract with any State medical society or private nonprofit organization (including medical foundations) designated by a State medical society for the provision of necessary technical and other assistance in the creation and operation of local professional standards review organizations.

Limits the members of the National Professional Standards Review Council to three terms of three years each.

Removes specified restrictions on payment to providers of services.

Authorizes the use of specified funds; including the Federal Hospital Insurance Trust Fund, for direct reimbursement to an organization which has conducted utilization review activities with respect to services furnished under the Medicare, Medicaid, and Maternal and Child Health and Crippled Children's Services programs of the Social Security Act.