Unbiased Analysis of Today's Healthcare Issues

Value Tools in Managed Care Decision Making

Written By: Jason Shafrin - May• 25•17

Along with co-authors Jeremy Schafer and Dominic Galante, I have a new paper out in JMCP this month.  The abstract is below, but do read the whole piece here.

BACKGROUND: Organizations such as the National Comprehensive Cancer Network, American Society of Clinical Oncology, Institute for Clinical and Economic Review, and Memorial Sloan Kettering have created distinct tools to help different stakeholders assess the value of oncology treatments. However, the oncology value tools were not necessarily created for payers, and it is unclear whether payers are using these tools as part of their drug management process.

OBJECTIVE: To understand what value tools payers are using in oncology management and what benefits and shortcomings the tools may have from the payer perspective.

METHODS: A survey targeting drug coverage decision makers at health plans was conducted in August 2016. Respondents attesting to using 2 or more value tools in drug management were eligible for an additional in-depth interview to understand the respondents’ perceived benefits and shortcomings of current value tools. Respondents also were asked to describe desired attributes of a hypothetical payer-centric value tool.

RESULTS: A total of 28 respondents representing approximately 160 million commercially insured medical lives completed the survey. Twenty respondents (71%) reported using at least 1 value tool in their drug management process. Twelve respondents (43%) used at least 2 tools, and 4 respondents (14%) used at least 3 tools. A total of 6 respondents were selected for in-depth interviews. Interviewees praised value tools for advancing the discussion on drug value and incorporating clinical evidence. However, interviewees felt available value tools varied on providing firm recommendations and relevant price benchmarks. Respondents most commonly recommended the following attributes of a proposed payer-centric value framework: taking a firm position on product value; product comparisons in lieu of comparative clinical trials; web-based tool access; and tool updates at least quarterly. Interview respondents also expressed some support for allowing manipulation of inputs and inclusion of quality-of-life and patient-reported outcome data.

CONCLUSIONS: Although nearly half of payers surveyed use 2 or more value tools in the drug management process, payers identified a number of areas where the tools could be revised to increase their utility to payers.

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Highlights from the 2017 ISPOR Conference

Written By: Jason Shafrin - May• 24•17

Over the past few days, I have been attending the International Society for Pharmacoeconomics and Outcomes Research (ISPOR) 2017 Annual Conference in Boston. The session had a number of interesting presentations. While I was not able to catch them all, below are links to a few highlights.

Do the US and UK health care systems have anything in common?

Written By: Jason Shafrin - May• 22•17

The United Kingdom’s National Health Services provides universal health coverage at not cost to patients.  On the other hand, in the U.S. not all people have insurance, and further insurance can be provided by public entities (e.g., Medicare, Medicaid), private and employer-provided health insurance, and other sources.  Whereas the NHS system is highly centralized, the U.S. system is much more decentralized.  Could these two systems have anything in common.

According to an article by Maynard, Altman and Stearns (2017), they  say that the two systems may aim to have similar forms of reimbursement moving forward.

Increasingly, U.S. reform in terms of payment mechanisms is being emulated by the English. Both systems seek better measurement and management of “value,” that is, the effects of health care on the length and quality of patients’ lives. The hospital systems of both countries are attempting to integrate care function and move away from “fee for service” to bundled or incentive payments.

It looks like care value is important on both sides of the Atlantic.  Measuring value as well as setting up policies to incentivize high-value care is exactly the focus of the Innovation and Value Initiative–where I serve as the Director of Research.  Although IVI’s focus is largely on the U.S. market, identifying high value treatments is truly a concern for patients, physicians and payers around the globe.

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Tackling Antimicrobial Resistance

Written By: Jason Shafrin - May• 21•17

O’Neill Commission has identified a number of recommendations to tackling drug-resistant infections. Seth Seabury and Neeraj Sood have their own thoughts on how to incentivize the development of antibiotics to fight antimicrobial resistance (AMR) which they describe in an interesting article in the Health Affairs blog. They write:

The US patent system incentivizes innovation by offering the creator of a new technology monopoly power over its use for a fixed period of time… In the case of medications , we would thus expect market forces to give manufacturers incentives to invest in the development of new treatments [covered by patents] that offer the most value to patients (Note 1).

However, while the development of new antimicrobials to combat AMR would seem to offer high value, our current system offers insufficient incentives to invest in them. This is because the profit from a new drug is mechanically related to the number of people who take it. In the case of antimicrobials, more use of a specific agent eventually leads to resistance, so the highest societal value from new antimicrobials comes when they are used as little as possible until needed. This significantly undermines the incentives for manufacturers to invest in the development of a new antimicrobial drug. Efficient incentives will come from policy interventions that dampen the tie between manufacturer profits and the volume of antimicrobial use.

The authors examine a number of alternatives to incentivize the development of antibiotics including market entry awards, exclusivity extensions, priority review vouchers or some type of combined approach. Interesting throughout.

 

Toward A New Model For Promoting The Development Of Antimicrobial Drugs

Friday Links

Written By: Jason Shafrin - May• 19•17

“I will build a great Health Wonk Review . . . and nobody builds Health Wonk Reviews better than me, believe me.”

Written By: Jason Shafrin - May• 16•17

Although we have already passed the 100 day mark since Donald Trump took office, this will be my first time hosting the Health Wonk Review. In this Trump-themed edition, we take the man at his word. We not only identify some of the best health care posts on the internet, but we also organize them based on some of Donald Trump’s most well-known health care related comments.

“Repeal and Replace”

  • Whatever new legislation comes to replace the Affordable Care Act–such as the proposed American Health Care Act–any new policies and regulations must make sure to have patient outcomes and patient values at their core.  This is the argument made by Alan Balch and Darius Lakdawalla in their post in the Health Affairs blog.  They write that “If our goal is to create a well-functioning and competitive market for insurance, that too will revolve around patient perspectives. Firms succeed in competitive markets when they best meet the needs of their customers. Therefore, if health insurance reform succeeds in building more competitive markets in which consumers can directly choose from an array of options, payers will view patient preference as more salient to their own business decisions.”

“We can’t spend money on programs just because they sound good”

  • Trump defunded the Office of National Drug Control Policy. Joe Paduda of Managed care reaction is a blog piece titled ‘Trump de-funds Drug Policy Office…WTF!‘. He writes “30,000 dead people, thousands of devastated communities, huge societal costs, dead moms and kids and drug-addicted newborns, fentanyl and elephant tranquilizers coming in from China and he de-funds ONDCP?!”

“Obamacare is collapsing, and we must act decisively to protect all Americans”

“We’re going to save billions of dollars”

  • One of the reasons why drug prices are high is the federal government’s 340B drug pricing program.  In fact, Tom Adam Fein of Drug Channels participated in one of HHS Secretary Tom Price’s listening sessions. His recent blog post highlights four ways that the 340B Drug Pricing Program is raising drug costs. He then shares the recommendations he gave HHS for improving the program by addressing the widespread channel distortions the program has caused.
  • America is one of only two countries in the world that allow Direct To Consumer drug advertising. Is this a good thing? On the one hand patients are informed of new treatment that could benefit them.  On the other hand, physicians may feel pressured to prescribe treatments that may not be necessary in order to please their patients.  Tom Lynch examines the impact of direct to consumer advertising  in his post Pharma’s Nine Words at Workers’ Comp Insider, and even captures reader reactions to the article.

“Drain the swamp”

“Stop experimenting with Americans’ health”

  • This quotation actually came from Tom Price, the current Secretary for Health and Human Services in the Trump administration. The comment was made in reference to new bundled payment and value-based purchasing initiatives by Medicare’s Innovation center (CMMI). While bundled payments to providers are likely to reduce cost, it is unclear whether they will be able to improve patient outcomes. In my recent post at Healthcare Economist, I identify five key barriers that bundled payments schemes must overcome for their implementation to both reduce cost and improve patient outcomes.

Note: The post title echoes President Trump’s quotation “I will build a great wall . . . and nobody builds walls better than me, believe me.

Are bundled payments the solution? Five key barriers to implementation

Written By: Jason Shafrin - May• 15•17

Alternative payment models, bundled payment and episode-based payments are the latest trend in reducing unnecessary care and making sure care is delivered efficiently.  However, what is a “bundle”?  Based on a recent report from the Health Care Payment Learning and Action Network (HCP LAN), bundled payment can be designed at three levels:

  • At the setting level, whereby the episode is focused on a hospital stay;
  • At the procedure level, in which the episode encompasses a defined surgical procedure; or
  • At the condition level, whereby the episode is defined around a condition. Conditions for which episode payment can be used range from asthma to diabetes to cancer.

So is the solution just to do bundles, bundles and more bundles? Well, there are at least five key challenges for implementation.

First, what services would be included in the bundle at baseline?  The HCP LAN report makes the following point:

Using historical data to determine the episode price creates challenges for payment and care transformation: Setting the episode price is a critical aspect of episode payment design. Yet, it creates a significant challenge. Historical data is crucial to giving payers and providers an understanding of the resources needed to deliver high-quality care and optimal outcomes. However, that same historical data may likely reflect care that was unnecessary or inappropriate, and may not reflect the potential for low-cost, high-value services that have traditionally not been used because the providers do not get paid for them. These include care coordination services, lifestyle change support (in the case of coronary artery disease), or pre-natal parenting education support (in the case of maternity care).

Second, how will prices be set in the bundles?  Currently, payers and policymakers can use market prices of historical component in the bundle to estimate bundle reimbursement rates.  If bundles begin to make up a larger share of payment, however, there will not be market prices for individual components of the bundle.  As the practice of medicine evolves and the composition of the bundle changes, it will become increasingly difficult to price the bundle without market prices on individual components of the bundle.

Third, bundles must be designed with improving patient health always in mind.   The HCP LAN report states that including the patient voice in bundled payment design “involves engaging consumers, patients, families, and their advocates in meaningful participation in the design, implementation, governance, evaluation, and quality improvement of episode payment models.” Although most all stakeholder support patient engagement broadly, what exactly patient engagement means and insuring stakeholders do more than just offer patients token gestures is a challenge.

Fourth, it is difficult to manage and share “…the vast amounts of data necessary to assess, manage, and mitigate risk and to use [these data] to improve quality and outcomes for patients.”  In particular, physicians in small practices or small mom-and-pop providers (e.g., home health agencies) will have difficult analyzing data to see if they are going over or over budget on their budget and may have problems coordinating reimbursement with other organizations that may be in the bundle.

Fifth and finally, there are regulatory barriers to implement bundled payment.  In particular, three regulations which could impede the implementation of bundles include: “physician self-referral law, the anti-kickback statute, and the civil monetary penalty (CMP) laws.”

In short, bundled payment offers the promise of improving the efficiency of how health care is delivered, but there are significantly operational issues that may make bundled payment challenging to implement in practice.

Will MACRA kill small physician practices?

Written By: Jason Shafrin - May• 14•17

Depending on the source, 34% to 59% percent of physicians are employed in practices of less than 10 physicians.  On the other hand, 39% of physicians are employed by hospitals.  How will these proportions change over time?

An interesting paper by Casalino (2017) examines the impact of the  Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) on the likely composition of physicians in the future.  MACRA provides incentives for physicians to join Advanced Alternative Payment Model (AAPM) programs which include:

  • Accountable Care Organizations (e.g., Next Generation ACOs)
  • Comprehensive End-Stage Renal Disease Care Organizations
  • Oncology Care Model
  • Comprehensive Primary Care Plus (CPC+) medical home program

AAPMs require physicians to accept both upside and downside financial risk.  Those participating in an AAPM receive a 5% payment bonus between 2019-2024 and have a 0.75% payment increase compared to only a 0.25% payment increase for physicians participating in Merit-Based Incentive Payment System (MIPS).

CMS is investing $20 million annually for the next 5 years to provide technical assistance to physician practices of 15 or fewer patients.  Additionally, physicians in CPC+ programs only need to take on nominal risk.  Additionally, physicians with fewer than 100 patients or with less than $30,000 of billings are also exempt from both quality measure reporting as well as positive and negative payment adjustments.

Are these incentives sufficient to keep small practices alive in the U.S?  Casalino thinks not.

Nevertheless, I believe it likely that MACRA will accelerate the movement of physicians into corporate employment. Participating in the CPC+ program or creating an Oncology Care Model practice requires the investment of capital and of substantial physician and staff time, both of which are scarce in small practices, and it involves taking some financial risk for the cost of care.

More importantly, the complexity of MACRA will, I believe, be too daunting for many physicians. The material presented in this article may seem somewhat complex, but it is a very simplified version of the 823-page MACRA final rule.

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End of the Week Links

Written By: Jason Shafrin - May• 11•17

Interpreting evidence on value

Written By: Jason Shafrin - May• 10•17

Value is the latest jargon to hit the health care sector.  One potential way value could manifest itself is through value-based insurance design (VBID).  Under VBID, patients would pay lower copayments for treatments that are highly effective and/or low cost would pay higher payments for treatments that have low effectiveness or high cost to the payer. An editorial by Shrank, Saunders and McClellan (2017) examine the reactions to a study that examined the effect of eliminating cost sharing for certain cardiovascular medications after an acute myocardial infarction.  The results showed a $5000 decreases in cost, but these results were not statistically significant from a control group with standard cost sharing.

How were these results interpreted? Generally, academics concluded that there was no effect–because the results were not statistically significant–whereas private insurers saw a large decrease in cost and some readily adopted the approach.  Why the difference?  The authors explain.

The universities and academic medical centers that conduct evaluations prioritizerigorous, high quality evidence. To be published in the highest-impact journals, researchers aim to conduct studies to minimize the possibility that their results are due to random chance or other confounding factors. This requires a sufficient sample size; well-defined interventions; similar, preferably randomized control groups; and a sufficient period to minimize transitory effects…

In contrast, the business community prioritizes speed and timely information for ongoing adjustments. If a company waited for statistically significant, as well as clinically and financially meaningful, results to be sure an intervention would deliver long-term improvements in outcomes, costs, or both, it would lose precious months or years before it could scale innovations. A health care payer may pilot and expand a new payment model well before there is definitive evidence of its success if the approach is intuitive, is consistent with the mission of the organization, is supported by a compelling business rationale, and has prior evidence trending in the right direction. This can be risky, sometimes leading to wasted resources and effort on “fads.”

In short, academics want to be 95% sure that their conclusions are right.  Businesses just need to be right over half the time; although individual interventions may not work out, as a portfolio, the expected benefits would outweigh the costs on average.

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