Developing A Patient-centered Care Payment Model

Rationale: Increase of chronic disease prevalence drives health care expenditures upward. Continuous and coordinated care is particularly important for patients with chronic illness. Managing both quality and cost of chronic disease is a major task for health care planners and policymakers. To enhance chronic care quality and control health care expenditures, many countries have adopted pay-for-performance strategy for chronic care services. Since 2001, Taiwan Bureau of National Health Insurance (NHI) has implemented a pay-for-performance pilot policy for selected chronic diseases. Since the policy is fee-for-service basis, there are no incentives to provide lower-cost treatments and to improve care quality. Lack of adequate risk adjustment promotes doctors to select patients with less severe disease. Therefore, it is critical for Taiwan to design a payment policy that only treatments needed for patients will be prescribed, and then both goals of care quality improvement and cost containment will be achieved.

Objectives: To employ health-based risk adjustment to establish a patient-centered care capitation payment system that provides an alternative for improving the current pay-for-performance system.

Methodology: Samples of diabetes patients are selected from Taiwan NHI physicians' and hospitals' claimed data. The diabetes population are those been diagnosed diabetes twice in ambulatory services during 2002 to 2005. We incorporate the health-based risk adjustment and selected care performance indicators to develop the patient-centered care capitation payment model that simulates all NHI covered services and costs related to diabetes. The payments are adjusted for age, sex, health status collected from diagnoses, and the care performance indicators. The indicators are selected first based on the clinical guidelines, and then reviewed by the researchers and physicians.

Results: The results indicate that average of total expenditures is significantly higher for the patients participated in pay-for-performance than those otherwise. It is also show that the physicians in pay-for-performance system tend to select less severe patients. The introduction of the patient-centered care capitation payment system can save medical costs and reduce risk selection.

Conclusions: Under the current pay-for-performance program, use of the fee-for-service in which medical resources are abused, the mechanism for medical cost control has never been achieved. The current payment system fails to provide integrated services, improve care quality, and reduce the abuse of medical resources. The patient-centered care capitation system, aiming for reducing unnecessary medical expenditures and encouraging better care performance, is a practical alternative for the current pay-for-performance system.