Innovations Lacking in Provider Payment Reform for Chronic Disease Care

Current Physician and Hospital Payment Methods Often at Odds with High-Quality, Efficient Care for People with Chronic Conditions, but Reform Efforts Limited to Small-Scale Pilots

News Release
June 30, 2008

FURTHER INFORMATION, CONTACT:
Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON, DC—Despite wide recognition that existing physician and hospital payment methods 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.

"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," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded in part by The Robert Wood Johnson Foundation (RWJF).

"We get what we pay for in health care, and as long as we pay physicians and hospitals in a piecemeal fashion, we’re generally going to get piecemeal care," Ginsburg said.

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, according to the study.

"The lack of payment innovation for chronic disease care is particularly disconcerting because the prevalence of many chronic conditions is rising, along with related health care costs and diminished quality of life for more Americans," said HSC Health Researcher Ann Tynan, M.P.H., coauthor of the study with HSC Senior Fellow Debra Draper, Ph.D.

According to the Centers for Disease Control and Prevention, chronic conditions cause major limitations in activity for more than one in every 10 Americans, or 25 million people, and account for 70 percent of all deaths in the United States and 75 percent of the nation’s $2 trillion annual medical care costs.

The study’s findings are detailed in a new HSC Research Brief—Getting What We Pay For: Innovations Lacking in Provider Payment Reform for Chronic Disease Care—available online at http://www.hschange.org/CONTENT/996/. HSC researchers conducted 33 semi-structured interviews with informed and knowledgeable observers across the country between September 2007 and January 2008, including medical directors of national, BlueCross Blue Shield, regional and local health plans, employer groups, purchasers of health care, and other observers.

Along with describing several pilot programs designed to alter financial incentives for providers caring for chronically ill patients, the study identifies the main barriers to reforming payment for chronic disease care, including fragmented care delivery; lack of payment for non-physician providers and services supportive of chronic disease care; potential for revenue reductions for some providers; and lack of a viable reform champion.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.