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Medicine & Chronic Illness

PERSPECTIVE

Making A Business Case For High-Quality Chronic Illness Care

Efforts to advance the use of evidence-based guidelines offer hope for improving clinical outcomes for the chronically ill. However, long-term cost containment and quality improvement are unlikely unless we change our financing, regulatory, and oversight structures. People would be better served if we replace our crisis-oriented, piecemeal approach with a customer-driven, systems-oriented approach focused on persons with chronic conditions.

Purchasers would achieve a better return on investment if evidence-based guidelines were implemented within new business structures that are rooted in the nature of chronic conditions. However, this return on investment is not measured in dollars spent on days or hours of care. It is measured in outcomes achieved through dollars spent on care for persons with chronic conditions as their condition evolves over years, not days, and across care settings. It is measured in the quality of life, higher levels of consumer satisfaction, improved productivity, and decreased or delayed disability.

For example, continuity is frequently cited as a key feature of effective chronic illness care.¹ Yet we have separate, unrelated management, information systems, payment structures, financial incentives, and quality oversight for each segment of care, with disincentives for proactive, continuous care interventions.

Some findings suggest that care coordination can reduce health care use while maintaining or improving the quality of care for chronic illness.² However, there is mixed evidence that it actually reduces costs. The added cost is necessary to help people work through the maze of providers, regulations, and payment methods—which case management still does not eliminate.

Managed care versus fee-for-service. Some studies have shown that the Program of All-Inclusive Care for the Elderly (PACE), social health maintenance organizations (SHMOs), EverCare, and dually eligible managed care demonstrations for frail elders have improved outcomes and may reduce costs.³ As yet these programs serve a very small percentage of the chronically ill.

While managed care companies can pool financing for episodes of care, most have separate and unrelated contracts with each provider, and each provider uses disconnected methods for the same episode. Medicare payment methods for Medicare+Choice (M+C) plans actually contain disincentives for serving high-end users.⁴ There is some evidence that health status adjustment models will help to correct some of the inequities relative to fee-for-service, although even the best of current risk adjustment models do not fully compensate for the problem.⁵

In the early 1990s some health networks developed managed care programs and continua of primary, acute, and long-term care. In response to payment reductions in the Balanced Budget Act (BBA) of 1997, many dismantled their integration efforts and returned to fee-for-service financing, with hospitals as their core business. Their disease management efforts retrenched to meet silo-based business incentives, regulatory requirements, and quality review requirements.

A business case for quality. Many health network and managed care executives say that there is no business case for specializing in chronic illness care; it is a poor business risk to attract high-end users. Health networks could establish prevention programs and geriatric practices with some evidence of cost benefit, but most payment methods do not allow them to benefit from cumulative cost savings or long-term clinical effectiveness.⁶

To establish a business case for quality, we must define our preferred results and rewards and remove barriers to success. We must (1) empower consumers for self-care management and judiciously apply new drugs and medical technologies; (2) establish evidence-based guidelines in care of targeted chronic conditions and recognize comorbidity and other influences; (3) expand coverage for preventive and case management services; and (4) reevaluate prospective payment methods for physicians and for home health, therapy, skilled nursing facility (SNF), partial hospitalization, end-stage renal disease (ESRD), and outpatient hospital services for persons with complex care needs.

We must also maintain payment methods for Medicare demonstrations serving the frail elderly until adequate M+C risk adjusters are established; freeze phase-in of institutional payment rates at the 90-10 blended rate; establish a special payment, at least equal to fee-for-service arrangements, for M+C plans serving a disproportionate share of persons with high-cost chronic conditions; and evaluate hybrid risk adjustment methods, partial capitation, and cluster diagnostic groups to more accurately predict high cost. Finally, we must modify or eliminate regulations that impede effective chronic care.

Health care is just beginning to acknowledge the consequences of chronic illness. New interventions are still in their infancy. There are anecdotal evidence and isolated reports of their cost benefit. Yet there is virtually no systemwide cost and quality information on chronic illness care as a person’s chronic condition evolves across time, place, and profession. As a result, it is unrealistic to expect solid cost-effectiveness evidence for all new interventions. It may be more prudent to follow the lead of successful U.S. companies and establish targets, incentives, and business structures that enable health care providers to avoid "cultural lock-in" and transform their practices in response to rapidly changing market conditions.⁷

Editor's Notes

 
Richard Bringewatt is president and chief executive officer of the National Chronic Care Consortium in Bloomington, Minnesota. Health Affairs invited his comments on the paper by Molly Joel Coye, which precedes this Perspective.

NOTES

Top NOTES

 

1. C.J. Evashwick, Seamless Connections: Refocusing Your Organization to Create a Successful Continuum of Care (Chicago: American Hospital Publishing, 1997).
2. A. Chen et al., Best Practices in Coordinated Care (Princeton, N.J.: Mathematica Policy Research, March 2000).
3. D.L. Kodner and C.K. Kyriacou, "Fully Integrated Care for Frail Elderly: Two American Models," International Journal of Integrated Care (November 2000), <www.ijic.org/cgi-bin/pw.cgi/2000-11/000005/article_content.htm>(28 September 2001).
4. A. Esposito, "Update on the Development of M+C Risk Adjustment Methodology" (Presentation to the Medicare Payment Coalition, Baltimore, Maryland, 31 March 2001).
5. L.M. Greenwald et al., "Risk Adjustment for the Medicare Program: Lessons Learned from Research and Demonstrations," Inquiry (Summer 1998): 193–209.
6. D.M. Buchner and E.H. Wagner, "Preventing Frail Health," Clinical Geriatric Medicine (February 1992): 1–17; and L.Z. Rubenstein, "The Clinical Effectiveness of Multidimensional Geriatric Assessment," Journal of the American Geriatrics Society 31, no. 12 (1983): 758–762.
7. R.N. Foster and S. Kaplan, Creative Destruction (New York: Currency Books, 2001).

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