Intended for healthcare professionals

Education And Debate

Condition based payment: improving care of chronic illness

BMJ 2005; 330 doi: (Published 17 March 2005) Cite this as: BMJ 2005;330:654
  1. Albert DiPiero (, co-chair1⇑,
  2. David G Sanders, co-chair1
  1. 1HealthOregon, 503 NE Laddington Court, Portland, OR 97232, USA
  1. Correspondence to: A DiPiero, Division of General Internal Medicine and Geriatrics, L475, Oregon Health and Science University, 3181 SW Sam Jackson Park Rd, Portland, OR 97239, USA

Fee-for-service is more than a payment method; it defines the method of care. Fee-for-condition—a payment method that rewards superior results and encourages innovation—could greatly improve care for chronic conditions


Chronic diseases represent a growing burden of morbidity, mortality, and cost worldwide. Although mounting evidence points to the important clinical benefits of the chronic care model (figure), most systems have no economic incentive for reorganising care around such a model. The challenge today is not how to deliver high quality chronic care, but how to structure a mechanism that rewards providers for innovation and continual improvement in chronic care. Most payment methods in use today inhibit innovations in care. We propose that payment for caring for a condition would greatly improve care for chronic conditions by financially rewarding superior results. We describe a condition based payment method and what providers can do to implement it.

The chronic care model.

The barrier to using the chronic care model: fee-for-service

An increasing number of studies support the benefits of a more coordinated and planned approach to the care of chronic diseases.12 However, today's dominant payment method, fee-for-service, inhibits adopting the chronic care model and redesign of the delivery system.34 Fee-for-service really means “fee-for-task.” The provider receives payment for individual tasks—office visits, stays in hospital, operations, and so on. In this way, the healthcare enterprise operates like a business that pays employees to answer phones, type memos, and make copies rather than for solving clients' problems. Fee-for-service denies the provider the control of financial resources. Under fee-for-service, a medical practice cannot allocate resources and organise itself to maximise results. For example, if a practice finds that a nurse can perform a service more effectively than a doctor, or if remote communication is beneficial in certain situations, the practice would need to reduce its compensation by replacing the …

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