How to make value-based care more valuable

O'ConnorUnwinding a healthcare system built on decades of fee-for-service delivery will not come easily. Nevertheless, 2015 saw several major healthcare changes that will enable the industry to begin to use value from innovation in technology, pharmaceuticals and clinical care as its defining metric. The value-based healthcare baby has arrived and is cutting its teeth. And while it will grow quickly, it will stumble and will need wise guidance in order to mature in a way that enables it to achieve its potential.

Here are the top 3 value-based healthcare developments of 2015:

#1. SGR repeal

After bipartisan legislation passed both the U.S. House of Representatives and the Senate in March, President Obama signed into law the Medicare Access and CHIP Reauthorization Act in April. In arguably the most definitive demonstration of the shift away from fee-for-service to value-based care, the law repealed the sustainable growth rate (SGR), which previously reimbursed providers for “activities and treatments,” a volume-based metric. In its place are the beginnings of a system that reimburses providers based on outcomes.

My colleague, Patrick Dunham, CEO of Curant Health, detailed five key moves to a value-based healthcare system for Managed Healthcare Executive shortly after the legislation was signed into law. Defining value, paying for better outcomes, properly aligning and incentivizing stakeholder interests, getting the most out of costly prescription medications by improving patient adherence and expanding the network of accountability are the gist of those key moves.

What does this mean for managed care? Cost cutting can only go so far before patient outcomes are jeopardized. Managed care executives would do well to ensure that the longest lever available to affect more than $105 billion in wasted healthcare spending, medication nonadherence, is being addressed to the benefit of all concerned; prescribers, payers, pharmaceutical manufacturers and most importantly, the patient. If you are not leveraging your pharmacist partners to improve medication adherence, you are missing out on an opportunity to save money and improve outcomes simultaneously.

#2. Pharmaceuticals’ at-risk day is here

We suspected for some time that biopharmaceutical manufacturers would be required to assume some risk amidst soaring drug prices; accepting reduced payment, or in some cases no payment, if therapies prove ineffective in real-world conditions.

That day arrived in mid-November with Amgen’s announced deal with Harvard Pilgrim for the PCSK9 inhibitor Repatha. This newly approved class of “uber-statins” are injectable cholesterol-lowering drugs carrying $1,000 per-month-for-life price tags. According to numerous reports, Harvard Pilgrim will recoup additional rebates from Amgen if patients taking Repatha do not meet certain cholesterol target levels.

These risk-based negotiations are an excellent opportunity to bring alignment and value to both payers and pharmaceutical manufacturers. We will be seeing more of these deals in the near term. Here are 3 tools managed care executives can use for successful risk-based negotiations.

#3. New hepatitis C drugs didn’t bankrupt the system

After all of the gnashing of teeth about pricing of Gilead’s groundbreaking therapies capable of curing hepatitis C, the $1,000 per pill regimens didn’t break the bank for payers. This was due in part to the highly stringent prior authorization processes insisted upon by payers, and also in part because of the efficacy of these therapies. The value of a $94,500 course of Harvoni compared to a $577,000 liver transplant is easy to understand. While real-world outcomes will likely not meet clinical trial results touted by the manufacturer of 96% to 99% cure rates, Harvoni didn’t break the bank.

Though pricing needs to be part of the discussion before new therapies come to market, the prior authorization process and access to curative therapies needs to improve. In early November, the Associated Press reported that the federal Centers for Medicare & Medicaid Services sent letters to the states reminding them that they cannot legally restrict access by low-income people to cures for hepatitis C infection.

According to a study by the University of Pennsylvania delivered at the 2015 AASLD (American Association for the Study of Liver Diseases) Liver Meeting, almost half of Medicaid recipients were denied reimbursement for direct-acting hepatitis C antivirals in 2014 and early 2015, more than 90% of which were for Harvoni or Sovaldi. Access and adherence to high-value, life-saving therapies must improve.

NEXT: 3 ways to advance value-based care in 2016

Here are the top 3 ways to advance value-based care in 2016:

#1. Define value simply as outcomes divided by costs

The SGR repeal was a value-based step in the right direction. However, it does not define “value” clearly enough. We define value as simply outcomes divided by costs. This creates clarity in all that we do on behalf of our patients and industry partners including prescribers whose time is precious, payers who need to derive full value from expensive therapies and biopharmaceutical manufacturers who benefit from near clinical trial conditions generated by medication management protocols proven to improve adherence and outcomes. Commit to defining value as outcomes divided by costs and assessment of value is more easily achieved.

#2. Support more alignment between payers and manufacturers

Biopharmaceutical manufacturers and payers are beginning to realize that their interests, while appearing divergent, are best served when working together. Manufacturers need to keep prices high to recoup investments in R&D, maintain shareholder value and invest in the next breakthrough therapies. Payers need to keep costs low for their plan sponsors.

In the new world of value-based care, these interests, as demonstrated by the at-risk landscape mentioned above, payers and manufacturers would do well to work on pricing and access in advance of new therapies coming to market. We are a long way off from real alignment, but as the drumbeat of new legislation on drug pricing grows louder, the traditional adversaries are dipping their toes into the unfamiliar waters of cooperation.

As told to Stat by Lori Reilly, executive vice president for policy and research for the Pharmaceutical Research and Manufacturers of America (PhRMA), “Medicines that truly represent value should merit a larger price.” What’s needed to complete the picture are medication management protocols proven to improve adherence rates and associated sharing of labs data that bring near clinical trial conditions to real-world patient experiences.

#3. Tap top value from high-cost therapies

In order to achieve value from those medications, managed care executives should: (1) Set minimum levels of patient engagement from responsible parties, including pharmacists, to improve adherence levels; (3) Take a longer-term view of the patient, and (3) Meet regularly with your highest-volume specialty medication manufacturers and ensure all available resources are being tapped to improve adherence, which we know improves outcomes and lowers overall healthcare costs for chronically ill patients.

Marc O’Connor is chief operating officer for Curant Health. Curant Health treats patients nationwide through its medication management protocols.