Moving beyond Round Pegs and Square Holes: Restructuring Medicare To Improve Chronic Care

Chronic disease is widely recognized as the main contributor to morbidity, mortality, and health-related costs in the United States (1). Although there is some consensus regarding what constitutes high-quality chronic care (2-5), the delivery of such care remains largely elusive within the United States (6). In fact, the combination of increasing chronic disease prevalence and poorly organized health care delivery systems has been cited as a key driver of poor quality care (7). This chasm between possibility and reality is perpetuated by coverage and payment policies of the Medicare program (8, 9). In this paper, we describe state-of-the-art chronic care innovations to date, discuss ongoing and planned efforts by the Centers for Medicare & Medicaid Services (CMS) to test related changes to Medicare's benefit structure and provider reimbursement, and suggest opportunities for future progress in this area. State-of-the-Art Chronic Care Several principles of high-quality chronic care have been outlined in the context of a chronic care model (2-5). This model endorses reliance on multidisciplinary teams of health care professionals who collaboratively educate, counsel, and empower patients with self-care techniques to manage their chronic diseases. Individually tailored evidence-based treatment plans guide clinical decision making and the frequency of patients' planned visits for chronic care. Supported by customized treatment plans and multidisciplinary teams of health care professionals, patients are charged with undertaking necessary lifestyle and behavioral modifications to manage their diseases responsibly. Information technology facilitates provider practice redesign, including the creation of disease registries, proactive outreach to patients, and greater involvement of nonphysician health professionals. Incentives are aligned so that community resources, health insurance payment systems, and provider teams can best facilitate desired processes and outcomes. Despite a widespread and long-standing awareness of the need to restructure health care organization, financing, and delivery to better address the needs of individuals with chronic disease, the best strategy for attaining the ideals of this chronic care model is far from straightforward. Several innovations have been designed to resolve the mismatch between the current health care system and the needs of individuals with chronic disease. Randomized, controlled trials of chronic care models (including geriatric evaluation and management, health enhancement, collaborative interdisciplinary care, transitional care, chronic disease self-management, and support for family caregivers) have demonstrated the ability to improve clinical outcomes, limit hospital or nursing home use, and reduce costs through health care delivery redesign (10-20). However, general incompatibility with mainstream health care financing and, in some cases, a disconnect with existing provider practice have impeded the dissemination of effective models into mainstream health care (6, 21). Disease management and case management are the approaches to chronic care that are most widely in use today. Disease management is predicated on promoting patient self-management and physician adherence to evidence-based guidelines. Although disease management has demonstrated its potential for improving quality of care for an index disease (22, 23), few programs are designed to coordinate care among multiple providers or to manage health conditions unrelated to the index disease. For this reason, the relevance of disease management to older people with more than 1 chronic condition is more limited (24). For example, fewer than 4% of Medicare beneficiaries with heart failure, depression, or diabetes have no other major chronic conditions; in fact, most (80%, 71%, and 56%, respectively) have 4 or more chronic conditions in addition to the index disease (25). Moreover, health literacy is lower among older adults (26, 27); consequently, the standard education, communication, and self-management techniques employed by disease management organizations may not be as effective among Medicare beneficiaries. Critically, several recent reviews of the literature have found insufficient evidence to conclude that disease management can reduce health-related costs, even for patients whose medical needs are less complex than those of Medicare enrollees (22, 23, 28). Case management is another popular approach to meeting the special needs of medically complex individuals with chronic disease in the current health care delivery system. Case management typically identifies high-risk individuals, regardless of specific conditions, and takes a more comprehensive and customized approach to coordinating all of their health care needs. While there is some evidence that case management can be successful (29), the heterogeneity of interventions tested and outcomes evaluated complicates synthesis of the existing literature (30). Randomized, controlled trials of case management thus far do not substantiate its ability to lower health care costs (30-33). Although novel models of chronic care have achieved varying levels of success, thus far most of these new approaches have focused on a single disease, a single site, a single transition, or single provider. Rarely have more than 2 of these innovations been integrated into comprehensive, coordinated systems of care (Table 1). Moreover, these models commonly operate independently rather than in conjunction with primary care (34), functioning either on a referral basis (for example, geriatric evaluation and management and the health enhancement program) or in parallel with primary care (such as disease management, case management, chronic disease self-management, and caregiver support) rather than being integrated within provider practice. The Program for the All-inclusive Care of the Elderly (35) and the second round of the Social Health Maintenance Organizations (36, 37) were designed as comprehensive, integrated care models, but their operating costs are high, their penetration into mainstream health care has been limited, and their ability to improve chronic care or reduce costs remains uncertain (38, 39). In practice, chronic care lags far behind what is conceptually possible. Table 1. Component Processes of Chronic Care Models Round Pegs and Square Holes Identifying effective approaches for delivering chronic care is particularly relevant to Medicare beneficiaries, for whom chronic disease is the norm rather than the exception. Researchers estimate that 78% of Medicare beneficiaries have at least 1 chronic condition and that 63% have 2 or more chronic conditions (40). The majority of program spending is directed to beneficiaries with multiple chronic conditions; approximately two thirds of program costs are attributable to the 20% of beneficiaries with 5 or more chronic conditions (40). Despite the high prevalence of chronic disease and the disproportionate costs incurred by beneficiaries with multiple chronic diseases, fee-for-service Medicare today remains largely organized for the delivery of acute care services (8, 9, 41). Fee-for-service Medicare fails to support the principles of high-quality chronic care in several ways. Coverage criteria favor services that improve rather than maintain physiologic function; many items with demonstrated importance for prevention and maintenance of functioning, such as eyeglasses, hearing aids, and, until recently, prescription drugs, are excluded. Provider reimbursement is based on encounters of short duration, which discourages the provision of time-consuming but critical activities, such as patient education, counseling, and coordination of care between providers. Medicare's failure to reimburse services not provided or ordered by physicians impedes the operation of multidisciplinary teams and the contributions of nonphysician medical professionals who may be capable of meeting aspects of patients' needs more appropriately and less expensively. The program currently lacks incentives for providers to adopt information technology, such as electronic medical records, disease registries, or other systems to communicate among providers and manage patients proactively and longitudinally. In the aggregate, Medicare's acute care orientation generally discourages rather than promotes high-quality chronic care. In the absence of professional guidance, beneficiaries with heavy disease burdens and their families find themselves alone in navigating a complex array of medical providers, potentially contradictory or confusing clinical recommendations, and critical treatment decisions (6, 41). Not surprisingly, outcomes within the Medicare program are suboptimal. Beneficiaries are at risk for a host of unwanted outcomes, including high out-of-pocket costs (42-44), general deficiencies in quality of care (45-47), medical errors and adverse events (48, 49), hospitalizations that might have been averted with good ambulatory care (50), and death (51, 52). The poor alignment between Medicare and the chronic care model results in excess spending and leaves beneficiaries at risk for acute exacerbations of chronic disease and other undesirable outcomes that could be potentially avoided with higher-quality care. Current Chronic Care Initiatives Given the expanding population of older persons with chronic conditions in the United States and a lack of compelling evidence to support any single definitive course of action, CMS, the federal agency responsible for the Medicare program, has a challenging mandate. Thus far, CMS has responded by embarking on an ambitious program to examine the effectiveness of chronic care innovations in Medicare through demonstration programs. Some of these initiatives emanate from congressional interest and concern. The Balanced Budget Act of 1997; the Medicare, Medicaid, and State Children's Health Insurance Program Benefits Impr