Value-Based Contracting Showing Greater Value for Care Provided, Innovative Opportunities

San Diego—Value-based contracting is demonstrating greater value for care provided, while innovative contracting opportunities are expected to increase in the future, according to a session at the AMCP meeting that included both payer and manufacturer perspectives. The use of value-based contracting supports the overall objectives of improving health outcomes for members, while focusing on all aspects of care and supporting the alignment of multiple stakeholders across the healthcare continuum.

What Is Value-Based Contracting?

A contractual arrangement between payer and pharmaceutical manufacturer where financial incentives are based on health outcomes, value-based contracting supports improved adherence and patient outcomes; reduction of hospitalizations and the slowing of disease progression; and the alignment of payers, patients, and physicians, according to Kim Gwiazdzinski, RPh, MBA, senior director, pharmaceutical trade relations, Prime Therapeutics. All aspects of care, including channel management, persistency and compliance, health monitoring and diagnostic testing, and health outcomes assessments are emphasized. Value-based contracts do not replace or affect traditional rebate contracts.

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There are multiple approaches to value-based contracting. Some focus on performance targets such as adherence and closing gaps in care. Others focus on comparative effectiveness (eg, comparisons of total pharmacy and/or medical costs or rates of preventable events). Yet, other types of value-based contracting include risk sharing (payments for drug therapy or preventable medical events) and channel management (eg, specialty pharmacy, retail vs mail).

Establishing a value-based arrangement is an iterative and collaborative process, involving reporting and data submission (with special attention given to the ability to capture pharmacy and/or medical data), invoicing and payment, and focus on continuous improvement. Ideally, value-based contracts are utilized in therapeutic classes that have objective measures, easily accessible data, and sufficient patient populations. These key therapeutic categories include diabetes, respiratory conditions, infectious diseases, osteoporosis, and oncology.

Referring to value-based contracts as “a marathon, not a sprint,” Ms. Gwiazdzinski listed the challenges faced as finding the right partner, organizational buy-in, risk sharing, Health Insurance Portability and Accountability Act, timelines, and financial issues.

The Payer Perspective: Providing Greater Value for Plans and Members

In a discussion on the payer perspective of value-based contracts, Jeanie Brown, PharmD, MBA, pharmacy director, Blue Cross and Blue Shield of Kansas, explained the incentives value-based contracts offer, as contracting opportunities for branded drugs continue to diminish.

For health plans, these benefits include the ability to provide greater value for the care provided, managing total costs by considering the medical spend as well as pharmacy costs, and enhancing traditional rebate contracting. Plan members benefit through education and outreach, which encourages adherence to medications and treatment plans to slow disease progression and minimize the potential for hospital visits. To realize these benefits, there are 3 requirements. The first exists at the organizational level (contract objectives and details; assessing what programs are or could be implemented; and financial opportunities); the second involves implementing interventions that enhance or complement existing efforts, and the third requires support outside of the pharmacy (eg, quality, care management, and pharmaceutical manufacturers).

One example lies in the therapeutic category of diabetes, in which Dr. Brown cited up to a 2.7 percentage point improvement seen in member adherence to their medications, and a 1 percentage point improvement in members having at least 1 hemoglobin A1c test per year.

The Manufacturer Perspective: Patient-Centered Care

“Improving patient-centered care and outcomes is at the core of what manufacturers do,” according to Julie Locklear, PharmD, MBA, vice president, health economics and outcomes research, EMD Serono, Inc., who discussed the manufacturer perspective of value-based contracting. “Patient-centered care is what drives our business and our efforts toward innovation and how to achieve these goals optimally. We believe in the value our products bring to patients,” she continued, adding that access is therefore critical and manufacturers continually look for ways to improve and support patient access and effective use.

Dr. Locklear went on to discuss current healthcare trends brought about by the Patient Protection and Affordable Care Act, which includes multiple pay-for-performance initiatives; the Patient-Centered Outcomes Research Institute, which identifies critical patient-centered research questions, funds patient-centered comparative clinical effectiveness research, and disseminates results in ways that are useful and valuable; and the Pioneer ACO Model Demonstration Projects, which strive to move from a shared savings payment model to a population-based payment model and improve quality, outcomes, and cost savings for Medicare, employers, and patients.

Outcomes-based contracts reflect a shift to real-world demonstration of effectiveness, with a focus on high-cost diseases: 40% for chronic diseases; 52% for oncology products; and 8% for devices and diagnostics. Most of the activity in the United States has centered on the use of coverage for evidence development arrangements at the Centers for Medicare and Medicaid Services; the United States is now in collaboration with payers that focus on innovative, value-based performance solutions. A recently published review of performance-based risk-sharing arrangements over the past 20 years identified 148 arrangements worldwide, with Italy, the United Kingdom, and the Netherlands accounting for 60% of them and the United States accounting for 12% (n=18).

Dr. Locklear identified 5 key components of value-based contracting (Table). Specialty pharmacy partnerships also contribute to value-based contracting in meaningful ways by incorporating the first and recurring point of contact with patients and providing benefit in issues such as patient adherence. Thus, Dr. Locklear concluded, opportunities for unique collaborations are opened, as a significant portion of a specialty drug’s effectiveness is correlated with how adherent a patient is to therapy.—Mary Mihalovic

Table. Key Components of Value-Based Contracting