Payers adopt value-based reimbursement strategies: What it means for pharma

The wheels of the healthcare industry move slowly, but they are headed in a new direction - toward a value-based system. As public and private payers develop new reimbursement programs, pharma will have to assess its current position and determine how best to succeed within the emerging paradigm.

What is value-based care?

At its core, value-based care is a reaction to the long-standing fee-for-service system that has been commonplace in the U.S. for decades. Under the new paradigm, reimbursements are tied to the quality of care delivered. Quality, in this sense, is determined by the effectiveness and efficiency of treatment.

Much of the drive toward a value-based healthcare system has been led by the Centers for Medicare and Medicaid Services, which introduced an entirely new reimbursement program in 2016. This year, the program becomes fully formalized, and physicians across the country have been hard at work transitioning to the new system.

Under the new program, care organizations with qualifying Medicare populations submit reporting data to CMS that demonstrates how they are creating value for patients and optimizing processes and operations. Organizations that submit the required information stand to gain increased reimbursements from CMS.

More recently, private payers such as Cigna and Aetna have implemented their own value-based programs in an attempt to reduce costs and improve quality of care. Accountable care organizations are a key piece of the puzzle. ACO arrangements can help providers collect and submit relevant data.

Integrating pharma into the value-based system could benefit patient outcomes.

How are commercial payers supporting value-based programs?

Anyone who has worked in the healthcare field knows how fickle the industry can be. From constantly changing federal regulations to shifting patient expectations, organizations need to stay agile to keep pace.

In spring 2018, several major payers announced plans to work with ACOs to develop reimbursement schemes modeled after CMS's Quality Payment Program. According to Health Payer Intelligence, such arrangements reward providers based on criteria such as hospital admission reductions, increased preventive screening rates and patient satisfaction scores. The goal of these monetary incentives is to build trust with patients and improve outcomes in a meaningful, measurable manner.

What stake does pharma have in value-based care?

Establishing a nationwide, value-based care system requires collaboration between providers, payers and the pharma industry. Specifically, the challenge of drug pricing must be addressed within the full context of the public and private payer system. As noted by Pharmaceutical Executive magazine, pharma manufacturers need a seat at the table as ACO arrangements are made in order to reduce the risk of additional price regulations in the future.

Intermountain Healthcare stakeholders Dr. Thomas Lee and Laura Kaiser, writing in The New England Journal of Medicine, proposed that rebates for effective drugs could be one tool for reducing costs to patients. In such a scenario, the drug manufacturer would agree to rebate the cost of therapy when a patient does not respond as expected.

Additionally, Lee and Kaiser proposed another potential way to integrate pharma into a value-based care system. A joint analysis scheme would turn drug makers into partners in long-term quality efforts. In this case, drug manufacturers and providers would leverage national guidelines for tracking prescribing behaviors and medication adherence rates, comparing these metrics to patient outcomes.

There are many ways in which pharma can take on a bigger role in a value-based system, but more trials are needed to determine which strategies are most efficient and effective.

Keeping up with the fast moving world of healthcare can be a challenge. As regulations shift and new financial models emerge, industry leaders need to be informed. To stay up to date, check out our resource center at ELSMediaKits.com today.