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Challenges Faced in the Transition to Value-Based Payments

October 30, 2019

As AMCP Nexus 2019 kicks off in National Harbor, MD, this week, researchers presented on alternative payment models, and discussed the benefits and barriers faced when transitioning to pay for value.

Jane F Barlow, MD, MPH, MBA, EVP and chief clinical officer, Real Endpoints, Bruce Nash, MD, MBA chief physician executive and SVP of health and medical management, BlueCross BlueShield Massachusetts, and Roger Longman, chairman of Real Endpoints, presented data on the following:

  • The current landscape of alternative contracting and payment models, including key stakeholder considerations;
  • Identifying challenges and limitations with the establishment and implementation of performance measures; and
  • Recognized the opportunities and limitations inherent in alternative contracting and payment models.

Alternative contracting falls into one of four categories, according to the researchers, based on available data and economic challenges, which includes: (1) outcomes-based cost; (2) outcomes-based clinical; (3) pay-over-time/outcomes-based; and (3) cost-cap/subscription. Rationale examples are the level of competition and concern surrounding payment delays.

Some of the considerations of innovative contracting for institutional stakeholders include increasing budget certainty and demonstrating value of drug spend for payers; gaining payer access faster and generating real world evidence for manufacturers; opportunities to leverage drug data and adherence for pharmacy benefit managers; and addressing buy-and-bill concerns for providers.

Researchers explained that alternative contracting tends to be the most common for ultra, high-cost therapies, for which demand has significantly risen since 2010. They further explained that that cell and gene therapies will continue to rise rapidly between 2020 and 2031. These new developing therapies present challenges when implementing new contracts.

Alternative contracting also comes with its own challenges in regulatory, data, and strategic areas.

“Most alternative contracting arrangements were not contemplated by government price reporting regulations,” explained researchers.

Some believe that alternative contracting will limit the amount of risk manufacturers are willing to take. There is also uncertainty surrounding the calculations for discounts using time as value. Researchers also explain that innovation by state Medicaid plans could effect rebates.

Other significant regulatory challenges include the anti-kick back statutes, anti-trust, privay/HIPPA, and sales pricing.

Data challenges present themselves because various data sources are used across the health care industry. “Currently only pharmacy and medical claims data are available across large populations,” explained the researchers, noting that we need a “thoughtful construct for capturing real-world data.”

Strategy-based challenges come in a number of forms, but researchers explained that alternative contracting has the potential to bridge the gap in standardizing evaluation approaches.

To address these challenges, the researchers concluded that the market has a number of needs to meet before the transition can be entirely successful. Some of the needs included: increasing early information sharing (transparency on therapies in development); greater sophistication in financial models, and pooling of risk or payment over time to protect self-insured employers and smaller payers.

—Edan Stanley

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