tions are faced with a financial situation in which it is almost impossible to manage for quality.

There are several ways to improve the way payment methods reward quality care. One option is to refine existing payment methods to provide greater rewards for quality. As noted in the preceding discussion, all existing payment methods can be improved to reward quality better. However, although these incremental improvements are important to pursue, a more fundamental restructuring of the payment system is needed. One of the common threads that runs through most of the recent innovations in payment is greater attention to subpopulations with common clinical needs.

Chapter 4 describes the need for a classification system around priority conditions to facilitate the provision of care based on the common reasons for which people seek care. Although it would be premature to recommend payment based on priority conditions, it is appropriate to study their feasibility as a tool for aligning the scope of services provided with the scope of payment. For example, a patient with a chronic condition may be seeking the acute care services traditionally covered under insurance, but may also need, for example, services related to counseling and behavior change, support groups, e-mail access for communication between visits, strongly managed and continuous coordination with other health professionals, and medical supplies. However, today’s payment approaches offer a chronically ill patient face-to-face office visits as the primary mechanism for receiving care and rarely encompass the range of services needed across the continuum of care. Furthermore, the fragmentation of payment by service can make it difficult for care to be coordinated efficiently across multiple settings. There is a misalignment among what the patient needs, the services provided, and how needed services are paid for. Organizing care and payment around priority conditions could offer a framework for aligning payment incentives around a common clinical purpose that is consistent with meeting patient needs as completely and efficiently as possible.

The committee recognizes that such redesign could require significant changes in the purpose and structure of the insurance function. The role of health plans could shift toward a heavy emphasis on obtaining information from various configurations of providers and, in turn, releasing information to the public. Consumers’ responsibilities could also shift if they are to become more directly involved in comparing options for care and the arrangements through which they wish to receive care. Despite the challenges, however, the committee believes good-quality care can be recognized and rewarded through payment policies.

Although this chapter focuses on current payment policy and its shortcomings, the committee also discussed a set of larger economic issues. The committee recognizes that the recommendations in this report will reduce costs in some areas and increase costs in others. In general, correcting problems of overuse and misuse is likely to result in cost reductions, whereas correcting problems of underuse is likely to increase costs (Chassin et al., 1998). Quality problems

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