Value-Based Reimbursement in the US
Value-Based Reimbursement in the US
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The US healthcare environment has been witnessing a slow albeit continuous shift from volume- to value-based reimbursement over the past couple of decades
Publisher: Datamonitor Healthcare
- Highlights
- Description
- Contents
Highlights
- The Accountable Care Act provided significant momentum for the change to value-based care. While the shift has mostly affected provider reimbursement, and affected specific pockets of activity more than others, medicines reimbursement has remained mostly insulated from this dynamic.
- Major VBR initiatives utilized so far include bundled payment programs, accountable care organizations (ACOs), and the oncology care model.
- The main way pharma companies have engaged in VBR has been through product-specific outcomes-based contracts (OBCs) penned with individual health plans. Such deals were mainly employed in competitive drug classes, demonstrating a divergence from the European trend of utilizing risk-sharing deals mainly in oncology.
- Legal and regulatory barriers to OBCs include the Medicaid Best Price (MBP) rules, the antikickback statute (AKS), and the FDA restrictions on off-label communications for manufacturers. Of these, the last one is closest to being overcome, whereas the first two would require further safe harbors to be established. While these regulations do not present an absolute barrier to OBCs, they create additional risks for the manufacturers that many are not willing to take
Key Questions Answered
- What are the key drivers for the transition to value-based reimbursement, and what are the challenges?
- What value-based initiatives have been implemented within different US healthcare segments?
- In what way has pharma engaged in value-based care?
- What are the barriers for outcomes-based contracting and how can they be overcome?
- What do payers think about outcomes-based contracts and pharma’s role in value-based care?
- What lessons have been learnt from outcomes-based deals so far?
Overview
The US healthcare environment has been witnessing a slow albeit continuous shift from volume- to value-based reimbursement over the past couple of decades, with the healthcare reform under the Accountable Care Act providing significant momentum for the change. While the shift has mostly affected provider reimbursement, and affected specific pockets of activity more than others, medicines reimbursement has remained mostly insulated from this dynamic.
Major VBR initiatives utilized so far include bundled payment programs, accountable care organizations (ACOs), and the oncology care model. The ACOs established under the Accountable Care Act have been growing and taking on more risk, but payers highlight integrated delivery networks (IDNs), or similar arrangements where the providers take on the risk for the outcomes as well as total costs of an entire patient population across their healthcare needs, as the most impactful approach.
TABLE OF CONTENTS
5 OVERVIEW
6 INCREASING COSTS DRIVE SHIFT TO VALUE
6 US healthcare costs are rising overall
9 Increasing healthcare costs impact patients’ health and wealth
10 Despite high healthcare spend, the US lags in health outcomes
11 A response: the shift towards value-based medicine
12 Bibliography
14 VALUE-BASED REIMBURSEMENT MODELS
14 ACA and MACRA are key to legal frameworks in the move to value-based care
15 Value-based reimbursement in Medicare and Medicaid
22 Value-based reimbursement in the commercial segment
28 Bibliography
33 MEETING THE CHALLENGES OF THE SHIFT TO VALUE-BASED CARE
33 Several challenges remain in the shift to value-based care
33 Volume-based payment systems are entrenched, and a shift to VBR could result in revenue gaps
34 Shift to VBR requires a move from silo care to network-based care
35 The challenge of tracking: outcomes, payments, and savings
39 Physician accountability and engagement are key to a successful transition to value-based care
41 Measuring value
44 Who will drive the shift to VBR?
45 Bibliography
49 THE PHARMA AND MEDTECH RESPONSE TO VALUE-BASED CARE
49 Pharma and medtech need to proactively engage in VBR
50 Building in and demonstrating value in evidence development
51 Bibliography
53 OUTCOMES-BASED CONTRACTS
53 Outcome-based risk-sharing deals are the mainstay of pharma’s foray into VBR so far
61 Barriers to use of outcome-based risk sharing
71 Successful outcomes-based contracting considerations
74 Bibliography
LIST OF FIGURES
6 Figure 1: Total national health expenditure, 1990–2025 (estimated)
9 Figure 2: Express Scripts’ forecast for cost trends in 2017–19
10 Figure 3: Total national health and out-of-pocket health expenditure, 1990–2025 (estimated)
14 Figure 4: Alternative reimbursement models have differing levels of financial risk for the providers
25 Figure 5: Total national preferred formulary value (Express Scripts)
42 Figure 6: Likelihood of healthcare plans using value frameworks a year from the Avalere survey
53 Figure 7: Benefits of outcome-based contracts for payers and pharma manufacturers
62 Figure 8: Barriers to OBCs
66 Figure 9: Action needed to remove regulatory and legal barriers to outcome-based reimbursement for medical products
LIST OF TABLES
8 Table 1: Express Scripts top 15 therapeutic classes’ drug expenditure trends in the commercial segment, 2016
16 Table 2: CMS VBR programs
33 Table 3: Challenges to the transition from volume- to value-based care
35 Table 4: Silos within the patient care pathway
55 Table 5: Selected outcomes-based contracts signed with US health insurers
61 Table 6: Multi-pronged market access strategy employed by Spark Therapeutics for Luxturna
64 Table 7: Scope of safe harbor for payer communications included in the FDA’s final guidance, issued in June 2018
72 Table 8: Success drivers for outcomes-based contracting
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