4 Tips for Value-Based Contracting

Many in healthcare are looking to value-based agreements with pharmaceutical manufacturers as a way to generate savings for health plans and ensure that medications provide the intended outcomes for members. Although there are relatively few of these agreements in place, best practices are beginning to emerge. Here are four tips to consider when designing a value-based contract:

  • Determine the ideal disease state and patient population. While predicting the outcomes for an individual patient can be difficult, the right metrics and reporting allow for more confidence about patient populations. Be sure that the subset of members you select for a value-based program is representative of the larger group.
  • Precise, easy to collect, and reproducible measures. Determining measures can be the most challenging part of a value-based contract. Target outcomes should be objective and easy to monitor and extract from claims data. Avoid relying too heavily on Patient-Reported Outcomes (PROs), as this information is not readily available to payers and results can be inconsistent in a real-world setting. Also, be sure to select clinically meaningful outcomes, if possible, and incorporate hard outcomes (i.e., ER visits, and hospitalizations). If you use surrogate markers, be sure to select ones that are strongly related to a hard outcome (for example, LDL levels directly related to ASCVD).
  • Balance the rewards with the administrative cost. Executing a value-based contract may require significant resources–including staff time and potential investments in new technology. Before entering into an agreement, your organization needs to determine whether the potential financial rewards will justify these added costs.
  • Avoid common pitfalls. When creating a value-based contract, several areas could undermine your success, including creating an agreement to drive market share, lack of clinically meaningful endpoints, and overly complex measurements or outcomes.

At Abarca, we believe that value- and outcomes-based contracts will play a significant role in making healthcare awesome for health plans and, ultimately, members. We have agreements in place with some of the nation’s leading drug makers–like Amgen and Biogen–and more on the way.

And, as these partnerships become more commonplace, we are looking forward to continuing to find a better way to negotiate and implement them and sharing what we’ve learned with our partners in the industry.

This blog was written by Suzette M. Vélez-Rivera, PharmD, BCACP, BCGP, Director of Clinical Services, based on sessions she attended at AMCP Nexus.

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