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Public payment and delivery reform initiatives foreshadow private market changes


The incentives unfolding in both the public and private insurance markets that include providers assuming more financial risk will impact prescribing decisions for specialty pharmaceuticals.

The incentives unfolding in both the public and private insurance markets that include providers assuming more financial risk will impact prescribing decisions for specialty pharmaceuticals. Understanding those incentives is critical for drug managers and other healthcare stakeholders, according to Leigh Ann Bruhn, BS, MBA, director, Avalere Health in Washington D.C., speaking at the Academy of Managed Care Pharmacy (AMCP) meeting in a session entitled Specialty Pharmaceutical Management in the Public Sector.

In the session, Bruhn described select benefit designs and payment and delivery reform pilots that public payers (Medicare, Medicaid, and state exchanges) are adopting and testing to improve patient outcomes and manage use of specialty drugs. These approaches by public payers, she said, can foreshadow approaches private payers may adopt and innovate further on.

Beginning with benefit design, she talked about the familiar tools used by exchange plans to keep premiums affordable including essential health benefits, actuarial value, out of pocket limits, and guarantee issue and rating rules. The plans, she said, focused on select levers-network design, formulary design, and cost-sharing requirements-to keep premiums low.

Specialty tiers are used much more commonly in health exchange and Part D plans compared to employer plans, with 91% of exchanges and 94% of Medicare Part D plans using four or more specialty tiers in 2014 compared to 20% used in employer plans.

Among the payment and delivery reform pilots that she described was an Oncology Care Model (OCM) through the Centers for Medicare & Medicaid Services using a bundled payment initiative. Due to be implemented in the spring of 2016, drugs in the OCM continue to be paid at the average sale price (ASP) plus 6% or through Part D plans but are included in the total cost of care calculation.

The OCM provides an episode-based payment broken down into two payment types:

  • per-Beneficiary-Per-Month (PBPM) payments that support delivery of required enhanced services, and

  • Performance-Based payments that incentives reducing costs and improving patient outcomes.

Physician practices in this model are not required to take downside financial risk and can opt to participate in a one-sided risk option (available for all performance years) or two-sided risk option (only available in performance years 3-5). According to Bruhn, practices that opt into the two-sided risk option will receive a lower discount that will result in higher target prices and allow them to earn higher performance-based payments.

Practices that use the OCM are required to undertake quarterly reporting on a range of metrics, including whether care provided is consistent with current guidelines. Currently, the model does not include compliance targets and compliance is not tied to payment.

Bruhn emphasized that payment and delivery reforms that shift accountability and risk to providers are among the important forces emerging in both the public and private spheres that will increasingly influence use of specialty drugs, along with payer coverage, formulary placement, and copy/coinsurance requirements.

According to Bruhn, for payers to achieve the goals under payment and delivery reform, they need to meet providers where they are in terms of capabilities and culture, and think how they can support the capabilities of provider organizations and provide real-time data to support decision-making.

Bruhn also encouraged drug manufacturers to show providers how their specialty drugs fit into overall quality and performance goals associated with emerging payment and delivery programs.

“This means focusing both on clinical outcomes of the drug as well as the broader patient journey and wrap-around services available to patients during this journey,” she said.

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