Getting what we pay for: innovations lacking in provider payment reform for chronic disease care

Despite wide recognition that existing physician and hospital payment methods used by health plans and other payers do not foster high-quality and efficient care for people with chronic conditions, little innovation in provider payment strategies is occurring, according to a new study by the Center for Studying Health System Change (HSC) commissioned by the California HealthCare Foundation. This is particularly disconcerting because the nation faces an increasing prevalence of chronic disease, resulting in continued escalation of related health care costs and diminished quality of life for more Americans. To date, most efforts to improve care of patients with chronic conditions have focused on paying vendors, such as disease management firms, to intervene with patients or redesigning care delivery without reforming underlying physician and hospital payment methods. While there is active discussion and anticipation of physician and hospital payment reform, current efforts are limited largely to experimental or small-scale pilot programs. More fundamental payment reform efforts in practice are virtually nonexistent. Existing payment systems, primarily fee for service, encourage a piecemeal approach to care delivery rather than a coordinated approach appropriate for patients with chronic conditions. While there is broad agreement that existing provider payment methods are not well aligned with optimal chronic disease care, there are significant barriers to reforming payment for chronic disease care, including: (1) fragmented care delivery; (2) lack of payment for non-physician providers and services supportive of chronic disease care; (3) potential for revenue reductions for some providers; and (4) lack of a viable reform champion. Absent such reform, however, efforts to improve the quality and efficiency of care for chronically ill patients are likely to be of limited success.