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Understanding the Complexity of Outcome Based Contracting in Medicaid
Is the benefit worth the effort?
Douglas Brown, R.Ph., MBA
Vice President, Account Management & Value Based Solutions
Understanding the Complexity of Outcome Based Contracting in Medicaid - - PowerPoint PPT Presentation
Understanding the Complexity of Outcome Based Contracting in Medicaid - - PowerPoint PPT Presentation
Understanding the Complexity of Outcome Based Contracting in Medicaid Is the benefit worth the effort? Douglas Brown, R.Ph., MBA Vice President, Account Management & Value Based Solutions After this presentation, you should understand: The
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Today’s Discussion
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Meaning of Value PDL Contracting vs Outcomes Based Contracting Complexity of OBC SMART‐D Open Sourced Contract
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Value Means Different Things to Different People
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Supplemental Rebate Contract Stakeholders
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Manufacturer PBM / MCO Plan (Employer/State )
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Outcomes Based Contract Stakeholders
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Patient Medical Claims Data Data Aggregator Prescriber Manufacturer PBM / MCO Plan (Employer/ State ) Outcomes Measure
Required for compliance and adherence
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PDL Contracting vs Outcome Based Contracting
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Outcome Based Contracting
More than PDL Management or Supplemental Rebate Contracting
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PDL Management Supplemental Rebate Contracting
On average state PDLs cover nearly 70% of gross drug spend States typically manage 50% to 60% of all HIC3s Rebates are negotiated on roughly 400 brand drugs (1200‐1500 NDCs) Not all therapeutic classes have drugs with supplemental rebates Supplemental rebates are transactional by design and bring financial value
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Outcome Based Contracting
More than PDL Management or Supplemental Rebate Contracting
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Outcomes Based Contracting is complex.
Supplemental rebates are a component of an Outcomes Based Contract Can include an Admin fee to offset the cost of the Outcomes Based Contract Must have an
- utcomes measure
that is clearly defined Can include a risk corridor with bonus and penalty targets
Compliance, by itself, does not infer outcomes
Can have growth caps Compliance is often the key to success Must have timely access to Medical claims data
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Complexity of Outcomes Based Contracting
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Addressing Complexity of OBCs
Critical Factors to Consider
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1| 2| 3| 4| 5| 6| 7| 8| 9|
Drug selection Risk corridors Volume changes Compliance/adherence Measurement of the outcome Accuracy & access to medical claims data “True up”/”Settle up” period Timely filing of medical claims Rebate methodology
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Addressing Complexity of OBCs
Critical Factors to Consider
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1| Drug selection 2| Risk corridors 3| Volume changes
There are many limiting factors:
- Federal rebate
- Unit cost and volume
- Patent expiration
- Manufacturer participation
- Cost of substitutes/alternative therapies
- Create shared risk scenario with stop loss for each party
- Adjust risk with each iteration of the contract
- Use volume caps to protect against “too much” upside growth
- Add enhanced discounts when volume exceeds predetermined cap
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Addressing Complexity of OBCs
Critical Factors to Consider
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4| Compliance/Adherence
- Component of OBC, but not OBC by itself
- Critical to success of an OBC
- Gaps are a major stumbling block to negotiating
an OBC
5| Measurement of the Outcome 6| Accuracy and Access to Medical Claims Data
- Who measures the outcome?
- What elements will be measured?
- Negotiate on the data you have
- Both groups (State and PhRMA) understand the complexity and
limits within the data.
- Negotiate the details
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Addressing Complexity of OBCs
Critical Factors to Consider
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7| “True up”/ “Settle up” period 8| Timely Filing of Medical Claims 9| Rebate methodology
What is the right time frame?
- How long will it take to get the data?
- How long will it take the data aggregator to
complete the analysis?
- How much time do both parties have to review
the data?
- How long does PhRMA or the State have to pay
the other party?
- Must account for any lag in receiving medical claims data
when negotiating the settlement period
- Will the contract have the anticipated value at the end of the
contract period?
- GNUP vs % WAC to ensure contract retains anticipated value
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SMART‐D Open Sourced Contract
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Appendix A
Terms and Conditions
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Covered Product Utilization Period Outcomes‐Based Benchmark Intervention Population Evaluation Methodology Data Aggregator Covered Product Status Preferred Status Bona Fide Service Plan
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Appendix B
Financial Metrics
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Base Administrative Fee Payment for Adherence‐Based Benchmarks Outcome‐Based Supplemental Unit Rebate Amount Rebate Calculation Methodology Settle‐Up Period
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Summary
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End Game vs Reality
- The right drug, for the right patient, at the right
time, in the right setting, at the right price
- Only pay for successful outcomes
- Failures are free
What is the end game?
- Baseball analogy
- Need PhRMA partner
- Value proposition must work for all parties
What is the reality?
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Decision makers need to: Understand the complexity, the cost and limitations of OBCs Consider a single state or multi‐state approach? (Hint: depends on your population) Include MCOs or just FFS (Hint: can you get all the data in a timely fashion) Complete a cost benefit analysis
Consideration for State Stakeholders
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The difference between value‐ and outcomes‐based contract strategies
After this presentation, you should understand:
Value based contracting is inclusive of many contract types Outcomes based contracting has measured health related endpoints
The increased number of stakeholders in outcomes‐ based contract design
3 groups to 7 groups Compliance and Adherence are critical to success but by themselves are not outcomes
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Additional aspects of outcomes‐based contract templates compared to traditional SRAs
After this presentation, you should understand:
Supplemental rebate contracts are transactional Outcomes‐based contracts have multiple measured health related endpoints
The current contracting landscape in Medicaid and future goals
Supplemental rebates are coordinated with PDL management Contracting will be focused on value and improved health
- utcomes for members
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Thank You
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Legal
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