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New Strategies for Outcomes-Based Contracting


Executives from diagnostics, payer, pharma, and patient care companies recently got together to share stakeholder insights on outcomes-based contracting.

(L-R) Marc O'Connor, of Curant Health; Jerry Conway, of CDx Diagnostics; and Har

(L-R) Marc O'Connor, of Curant Health; Jerry Conway, of CDx Diagnostics; and Harry Vargo, of Aetna, pose after taking part in a recent panel at the CBI Outcomes-Based Contracting conference in Philadelphia. Not pictured, but part of the panel discussion, was Sachin Kamal-Bahl, of Pfizer. Photo/John Halpern.

The title of a recent panel, held at the CBI Outcomes-Based Contracting conference in Philadelphia late last year, was “Create a Win-Win Scenario-Linking Contracts to Cost-Savings Evidence and Better Patient Outcomes.” During the panel, and in additional interviews, the speakers shared their insights and thoughts on the new world of outcomes-based contracting.

Jerry Conway, executive VP of managed care at CDx Diagnostics, and formerly VP of payer relations and reimbursement at Foundation Medicine Inc., served as moderator. Harry Vargo, director, trade relations, for Aetna; Sachin Kamal-Bahl, vice president and head, Center for Health Systems Innovation and Leadership, Pfizer; and Marc O’Connor, principal and chief operating officer for Curant Health, a provider of personalized care management and medication management services, participated in the panel discussion.

The following are some insights from the industry neighbors, and key stakeholders in the value-based care equation, on navigating this new terrain.

#1. The payer perspective

VARGO: We are trying to change the way we currently partner with pharma. We are looking at a better approach to healthcare-one that provides a better impact for our patients with the best possible outcome for their medications and their overall healthcare.

We are being flexible, we are willing to change. This is different than what we’ve ever done before. Previously, pharma manufacturers and healthcare was transactional. “We have your drug, we cover your drug, we pay for your drug.” Outcomes contracting is changing that. I like to say when we start talking with manufacturers in these outcomes-based discussions, “We are not trying to prove your drug does not work.”

We are not trying to prove that. We are just trying to get the best possible outcome for our members and patients.

One thing to keep in mind, there is not a wrong answer, there’s not a wrong metric. It’s really what you are looking for and the pharma manufacturer. It can be different from one pharma and one health plan. What might be good for Aetna, might not be good for someone else. And what might be good for Pfizer, might not be good for Merck or Lilly.

#2: A triple win?
KAMAL-BAHL: Think of it as a funnel, with the patient at the large end. And that the first question one should ask is-does it make sense for the patient? The next question should be whether or not it is good for the system at large. The third question should be how do we create a win/win for other stakeholders? This is a proposed structural and logical way to think of the question at hand. It should start though with the question of whether or not it makes sense for the patient.

#3: Who is best-placed to achieve better outcomes?
O’CONNOR: Curant Health, a provider of personalized care management and medicine management services, has a way to engage with patients and providers. Additionally, we can assume risk as part of an outcomes-based contract, along with the manufacturer. Medication management
services companies do two things that are very challenging for manufacturers or payers to do. The first is we have those discussions with providers that go outside of the awareness phase. Outside of “here’s the label, here’s the drug, here’s what it does.” We provide additional line of sight in the adoption, compliance, and persistence phases, when it’s challenging for manufacturers for a variety of reasons, to have those
discussions with providers. And then the payers are always challenged in how they engage the provider and the patient. They do engage some patients via support resources, but deep patient support is challenging for them because it’s not part of the payers’ core focus.

Number two-and most importantly-is having an entity that will help determine and deliver improved health outcomes in a way that is meaningful for all stakeholders. When patients are engaged, adherent to their therapy and experiencing improved outcomes, not only do you see improvement in contract metrics between the payer and the manufacturer, but other metrics improve as well. Adoption and compliance numbers go up for the manufacturer. They have a deeper connectivity with the patient. It’s all about rebate minimization and it provides a way to have a better relationship with the patient without the manufacturer’s legal department having concerns. Most importantly, patient outcomes improve for that disease state.

VARGO: Aetna has an integrated platform; we have both medical and pharmacy, so it’s a little bit easier for us because we have both. But with some that have the medical and some that have the pharmacy, it could be a little more difficult because that seamless approach or real-time data isn’t going to be there to help point to outcomes.

#4: Diagnostics and genomics
CONWAY: Validated comprehensive genomic profiling (CGP) has emerged in recent years as a pragmatic solution that is central to successful outcomes-based contracting in oncology. In oncology, the top three most pressing challenges faced by payers are:

  • Control of rising cancer specialty drug costs.
  • Control of overall cancer care costs.
  • Balancing treatment standardization with personalization.

Payers are responding to these challenges by implementing a number of alternative payment models, or APMs (e.g, clinical pathways, medical home, and bundled payments), that are designed to shift from a “pay for volume” to a “pay for value” or “real-world outcomes-based” paradigm.

Precision oncology, or the clinically and financially efficient use of genomically matched, targeted, and immunotherapy treatments and clinical trials, is evolving as a potentially important starting point for cancer care within successful APMs. CGP drives successful utilization and cost-management strategies to effectively address the top three challenges identified by payers in oncology, and, therefore, should justify the necessity of payer coverage and value-based payment today when used in the appropriate clinical setting.

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