- Health plans are increasingly working with drug and medical device companies to tie reimbursement to clinical, quality, utilization or financial outcomes, a new Avalere survey finds.
- Of 50 health plans and pharmacy benefit managers that participated in the survey, 25% reported having an outcomes-based contract in place and 85% of those said they were considering more such contracts. One-third of respondents said they were looking into such an arrangement.
- Plans are also having more conversations about the deals within their organizations. More than a third said they talk about outcomes contracts “a great deal,” up from 25% a year ago, and 49% said there was “some” discussion of the pacts. The rest acknowledged some interest in the topic, but “not very much.”
The report highlights the rising popularity of the contracts to tie payment to patient outcomes rather than volume of services among both private and public insurers.
“Outcomes-based contracts are becoming more of a mainstream topic within health plans,” Avalere President Matt Brow said in a statement. ‘While most remain in an exploratory stage, plans that have accrued some experience with outcomes-based contracts are interested in pursuing more.”
The three most common therapeutic areas targeted by the contracts are cardiovascular disease, infectious diseases and cancers. Avalere notes that heart disease and infectious diseases, particularly hepatitis C, already have well-defined outcomes, making them prime candidates.
Other areas where payers are using the agreements are orthopedics, diabetes and other endocrine disorders, immune/inflammatory diseases, rare/orphan diseases and respiratory illnesses like asthma and COPD.
One such contract between UnitedHealthcare and Medtronic targets patient with diabetes. In one-year results released this week, use of Medtronic insulin pumps led to 27% fewer preventable hospital admissions compared with patients who injected themselves throughout the day. The companies did not disclose an amount, but said the program lowered costs in the first year.
Medtronic has promoted the deals, signing close to a thousand contracts with hospitals for specific costs if its Tyrx antibacterial sleeve fails to prevent infection in patients with cardiac implants.
GE Healthcare and Philips have also signed contracts tying payments to outcomes. Such deals can range from pricing arrangements, where there is one price for hitting a metric and a different price if it is missed, to warranties on outcomes.
For example, GE is looking at macro-level outcomes and aligning with clients to help them reduce their costs of care. That includes the performance of GE’s imaging products in providing care, but also product maintenance and location of devices to optimize use.
The company currently has nine partnerships with a combined $2 billion in committed outcomes over the past six to nine years, Helen Stewart, managing principal of GE Healthcare Partners, told Healthcare Dive in a March interview.
For GE, the decision to embrace value-based care was strategic. “We stepped into this strategy because we needed a way to inform our product roadmap [and] investments, aligned not just to what is the most clinically relevant piece of equipment … but also around how those pieces of equipment deliver efficient quality care,” Stewart said.
If plans and providers can see real savings, it is likely to compel more to seek out value-based contracts with their suppliers.