Why there’s an uptick in outcomes-based contracts


Operational issues aside, outcomes-based contracts can offer a two-fold benefit for managed care executives.

A majority of health plans have favorable attitudes toward outcomes-based contracts (OBCs) and are actively pursuing them, according to a new survey.

OBCs are agreements between health plans and manufacturers that tie product reimbursement to patient outcomes.

Avalere surveyed 45 private health plans, which represent 183 million of the covered lives in the United States. Respondents were medical directors, pharmacy directors, or held a similar decision-making role within the health plan.

The survey found that 70% of health plans they have favorable attitudes toward OBCs and about 54% either have OBCs in place or are negotiating one or more. Among payers with OBCs in place, most indicate they plan to pursue more.


“The findings show that health plans are poised to pursue more outcomes-based contracts,” Sung Hee Choe, vice president at Avalere. “Health plans are looking beyond the operational challenges that have been associated with outcomes-based contracts in the past and are beginning to view them as a way to achieve their goals to reduce costs and improve outcomes.”

While the health plans surveyed recognize the operational challenges associated with outcomes-based contracts, most are figuring out ways to benefit from these types of contracts in multiple therapeutic areas, according to the survey.

“Current OBCs primarily address four therapeutic areas: endocrine, infectious disease, cardiovascular, and respiratory conditions; however, plans are interested in expanding to other therapeutic areas, like immune/inflammatory diseases,” says Choe. “The top therapeutic areas tie to areas in which plans are pursuing broader value-based initiatives. They are also areas in which outcomes metrics are relatively easier to define and measure.”

Outcomes-based contracts may offer managed care executives a potential solution for achieving goals to manage drug costs while maintaining beneficiary access to new therapies, according to Choe.


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