A proposal for managed care payment options for patients with chronic conditions.

This paper proposes an episode of care payment system for patients with chronic illnesses, extending earlier published work on this model of ambulatory care (Duckett and Jackson 1993). The payment system relies on annual voluntary enrollment and some marginal broadening of Medicare coverage in exchange for patients' willingness to participate in an ambulatory managed care arrangement. In the context of Australian health ministers' enthusiasm for managed care, the proposal embodies an intermediate policy approach which supports greater health care efficiency while minimising the prospect for reductions in patient autonomy or serious distortions in patterns of care. The policy is not designed to be applied population-wide, but to address the issues involved with a resource-intensive patient group, those requiring ongoing management of chronic conditions.