Outcomes-Based Contract Agreements Increasing Among Insurers

July 16, 2018

Agreements between health plans and drug and device manufacturers that combine product reimbursement with clinical, quality, utilization, or financial outcomes—known as outcomes-based contracts (OBC)—are becoming more popular among insurers, according to a new survey developed by Avalere.

“Historically in this area, plans and manufacturers have contracted through static, retrospective methods with limited ability to take action during performance periods principally using a post-period lookback focused purely around rebates,” Matt Brow, president of Avalere, told First Report Managed Care. “Now we are seeing the rise of a new form of OBC that looks and feels more like a partnership between the plan and manufacturer in which the parties set common goals for patient care, review on a real-time basis during the performance period the progress toward those goals and are empowered through technology to take action to improve performance.”

For the survey, researchers analyzed 50 health plans and pharmacy benefit managers. Of those, 25% reported that they currently have an OBC in place and 85% said they were considering similar contracts.

According to the survey respondents, OBCs were most commonly in place for three common therapeutic areas, including cardiovascular disease, infectious diseases and oncology. For cardiovascular disease and infectious disease—specifically Hepatitis C—outcomes have been clearly defined, which lends themselves to OBCs. However, in oncology, metrics for an OBC have not yet been well established.  The researchers also found that due to increasing technological capabilities, the administrative burdens associated with entering OBCs are lessening leading to faster OBC development.  

“OBCs generally align around measures of performance that relate to total cost of care, patient health, progression of disease, reduction in hospitalization/ER utilization/clinical complications and/or any other measurable outcome sought by plans and patients potentially achieved through targeted therapies,” Mr Brow explained.  

Further areas where payers are using these agreements are within diabetes and other endocrine disorders, immune/inflammatory diseases, rare/orphan diseases and respiratory illnesses like asthma and COPD. Currently, UnitedHealthcare and Medtronic have a similar contract that targets patients with diabetes. According to recent first-year results of the executed partnership, use of Medtronic insulin pumps led to 27% fewer preventable hospital admissions compared with patients who injected themselves.

“Health plans have been engaged in OBCs for some time—some public and many more private—and this trend continues to gain traction,” Mr Brow said. “Our research indicates that a quarter of plans have existing OBCs in place and the vast majority (85%) are actively considering adding a first or additional OBC(s) in the future.”

Julie Gould

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