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 difference between value ‐ and outcomes ‐ based contract strategies The increased number of stakeholders in outcomes ‐ based contract design Additional aspects of outcomes ‐ based contract templates compared to traditional SRAs The current contracting landscape in Medicaid and future goals

Today’s Discussion 1 Meaning of Value PDL Contracting vs Outcomes Based 2 Contracting 3 Complexity of OBC 4 SMART ‐ D Open Sourced Contract

Value Means Different Things to Different People

Supplemental Rebate Contract Stakeholders Manufacturer Plan PBM / MCO (Employer/State ) 5

Outcomes Based Contract Stakeholders Required for Patient compliance and adherence Plan (Employer/ State ) Prescriber Outcomes Measure Medical Claims PBM / MCO Data Data Manufacturer Aggregator 6

PDL Contracting vs Outcome Based Contracting

Outcome Based Contracting More than PDL Management or Supplemental Rebate Contracting PDL Management Rebates are negotiated on On average state PDLs cover States typically manage roughly 400 brand drugs nearly 70% of 50% to 60% of all HIC3s (1200 ‐ 1500 NDCs) gross drug spend Supplemental Rebate Contracting Supplemental rebates are Not all therapeutic classes transactional by design have drugs with and bring financial value supplemental rebates 8

Outcome Based Contracting More than PDL Management or Supplemental Rebate Contracting Outcomes Based Contracting is complex . Supplemental rebates Can include a risk Can include an Admin Must have an are a component of an corridor with bonus fee to offset the outcomes measure Outcomes Based and penalty targets cost of the Outcomes that is clearly defined Contract Based Contract Can have growth caps Compliance is often Must have timely the key to success access to Medical claims data Compliance, by itself, does not infer outcomes 9

Complexity of Outcomes Based Contracting

Addressing Complexity of OBCs Critical Factors to Consider 1| 6| Accuracy & access to medical Drug selection claims data 2| 7| Risk corridors “True up”/”Settle up” period 3| 8| Volume changes Timely filing of medical claims 4| 9| Compliance/adherence Rebate methodology 5| Measurement of the outcome 11

Addressing Complexity of OBCs Critical Factors to Consider 1| Drug selection There are many limiting factors: Federal rebate • Unit cost and volume • Patent expiration • Manufacturer participation • Cost of substitutes/alternative therapies • 2| Risk corridors Create shared risk scenario with stop loss for each party • Adjust risk with each iteration of the contract • 3| Volume changes Use volume caps to protect against “too much” upside growth • Add enhanced discounts when volume exceeds predetermined cap • 12

Addressing Complexity of OBCs Critical Factors to Consider 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 Who measures the outcome? • What elements will be measured? • 6| Accuracy and Access to Medical Claims Data Negotiate on the data you have • Both groups (State and PhRMA) understand the complexity and • limits within the data. Negotiate the details • 13

Addressing Complexity of OBCs Critical Factors to Consider 7| “True up”/ “Settle up” period 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? 8| Timely Filing of Medical Claims Must account for any lag in receiving medical claims data • when negotiating the settlement period 9| Rebate methodology Will the contract have the anticipated value at the end of the • contract period? GNUP vs % WAC to ensure contract retains anticipated value • 14

SMART ‐ D Open Sourced Contract

Appendix A Terms and Conditions Covered Product Data Aggregator Utilization Period Covered Product Status Outcomes ‐ Based Benchmark Preferred Status Intervention Population Bona Fide Service Plan Evaluation Methodology 16

Appendix B Financial Metrics Base Administrative Fee Payment for Adherence ‐ Based Benchmarks Outcome ‐ Based Supplemental Unit Rebate Amount Rebate Calculation Methodology Settle ‐ Up Period 17

Summary

End Game vs Reality • The right drug, for the right patient, at the right What is the end time, in the right setting, at the right price • Only pay for successful outcomes game? • Failures are free • Baseball analogy What is the • Need PhRMA partner reality? • Value proposition must work for all parties 19

Consideration for State Stakeholders 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 20

After this presentation, you should understand: The difference between value ‐ and outcomes ‐ based contract strategies 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

After this presentation, you should understand: Additional aspects of outcomes ‐ based contract templates compared to traditional SRAs 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 outcomes for members

Thank You

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