Value-based Arrangements

Payers and providers are increasingly adopting value-based care, although they need to continue to invest in the models and collaborate to make them work, according to a report released on April 10 by AHIP, the American Medical Association (AMA) and the National Association of Accountable Care Organizations (NAACOS). The 74-page report identified best practices for developing payment arrangements for value-based care, including establishing clearly defined contract terms and considering ways to incentivize payers and providers to participate and move away from fee-for-service arrangements.

“Our goal here — AMA, AHIP and NAACOS — is to identify these real world best practices, get those in the hands of health plans, of physicians and clinicians and the teams in general, the VBC entities, so that they can really absorb this information [and] take action based on it related to their own participation in these models, so that we can really scale this nationwide,” Danielle Lloyd, AHIP’s senior vice president of private market innovations and quality initiatives, said during an April 12 panel discussion at the NAACOS Spring 2024 conference in Baltimore.

Among the issues facing health care payers, paying for multimillion-dollar cell and gene therapies (CGTs) is one of the most pressing, as evidenced during AHIP’s 2024 Medicare, Medicaid, Duals & Commercial Markets Forum, held March 12 through 14 in Baltimore. While they were mentioned by multiple speakers throughout the three-day conference, speakers at one session focused on the topic said that while approaches such as short-term milestone-based contracts and risk pools are being used, no perfect solution has emerged yet.

Many CGTs are in the pipeline, impacting potentially millions of patients and prompting many questions around affordability and accessibility, stated Sean Dickson, senior vice president of pharmaceutical policy at AHIP, during the March 12 session, titled “Cell and Gene Therapies: Regulatory Updates and Coverage Policies.” “Oncology is where it will get really interesting,” and these agents will have the greatest impact on Medicare payers.

Payers face challenges incorporating drug spending into value-based payment models, making it difficult to reduce overall health care costs, according to panelists who participated in a session at the virtual Value-Based Payment Summit on Jan. 31. The speakers were encouraged with the increased attention being paid to expensive medications and difficulties in ensuring people take their prescriptions. However, they stressed that more needs to be done to educate providers and ensure pharmacy spending is in check.

Frank W. McStay, II, assistant research director at the Duke University Margolis Institute for Health Policy and the session’s moderator, noted the federal government and states have recently proposed and implemented policies to reduce drug costs and increase access to medications. For instance, the Biden administration on Jan. 30 announced that it planned to increase access to sickle cell treatments via the Cell and Gene Therapy (CGT) Access Model that CMS introduced last year.

CMS’s Cell and Gene Therapy Access Model’s first focus will be on therapies for sickle cell disease, the agency said Jan. 30. The administration unveiled the model almost one year ago as one of three new models for testing by CMS’s Innovation Center to lower the cost of drugs and increase access to new treatments. The model will implement outcomes-based agreements (OBAs) for cell and gene therapies to treat sickle cell disease beginning in 2025 “and may be expanded to other types of CGTs in the future.” The administration estimates that about half of people with sickle cell disease are enrolled in Medicaid, with health care services costing about $3 billion annually. Through the model, CMS will negotiate OBAs, and states can decide whether to enter into the arrangements. “CMS will negotiate financial and clinical outcome measures with drug manufacturers and then reconcile data, monitor results, and evaluate outcomes. The CGT Access Model will begin in January 2025, and states may choose to begin participation at a time of their choosing between January 2025 and January 2026.”

In December, the FDA approved the two newest cell and gene therapies, which were the first such agents approved for the treatment of sickle cell disease. As more of these products launch onto the U.S. market — the agency previously predicted that it would be approving 10 to 20 of the treatments by 2025 — payers are taking a variety of approaches to managing the therapies. Cost remains the main obstacle to their use, but their long-term durability also remains a question to some extent.

Dec. 8 saw the newest approvals, both for the treatment of sickle cell disease in people at least 12 years old: bluebird bio, Inc’s Lyfgenia (lovotibeglogene autotemcel; lovo-cel) and Vertex Pharmaceuticals Inc. and CRISPR Therapeutics’ Casgevy (exagamglogene autotemcel; exa-cel). The latter agent is the first CRISPR/Cas9 genome-edited cell therapy that the FDA has approved. The FDA gave both applications priority review, orphan drug, fast track and regenerative medicine advanced therapy designations. It also gave Lyfgenia rare pediatric disease designation.

From Star Ratings and risk model changes to a significant overhaul of the Medicare Part D benefit that will take effect over the next few years, Medicare Advantage insurers this year must anticipate the potential impact of major changes and ensure their products and services continue to satisfy members. Investment priorities highlighted by three influential MA carriers include digital solutions, member engagement strategies and value-based care.

Humana Inc., for one, took a “thoughtful approach to bids to ensure we were meeting members’ needs while balancing the rate environment,” says George Renaudin, president and Medicare and Medicaid. That included maintaining or enhancing key benefits that were identified by consumers and brokers as most critical to members, such as $0 premiums, dental and Part B “givebacks.”

The FDA recently approved the two newest cell and gene therapies, with one of them earning the distinction of being the first of its kind approved by the FDA. As more of these products launch onto the U.S. market — the agency previously predicted that it would be approving 10 to 20 of the treatments by 2025 — payers are taking a variety of approaches to managing the therapies.

Dec. 8 saw the newest approvals, both for the treatment of sickle cell disease in people at least 12 years old: bluebird bio, Inc’s Lyfgenia (lovotibeglogene autotemcel; lovo-cel) and Vertex Pharmaceuticals Inc. and CRISPR Therapeutics’ Casgevy (exagamglogene autotemcel; exa-cel). The latter agent is the first CRISPR/Cas9 genome-edited cell therapy that the FDA has approved. The one-time treatments come with hefty price tags: Lyfgenia is priced at $3.1 million and Casgevy at $2.2 million.

The US Food and Drug Administration’s simultaneous approval of two gene therapies for sickle cell disease from Vertex Pharmaceuticals Incorporated/CRISPR Therapeutics AG and bluebird bio on 8 December provides the competitors an equal start out of the gate, and offers another test for the Rx policy concept that intra-class competition can drive down prices.

Based on the initial list prices, though, it seems like perhaps competition cannot do that, at least not in this case, or at least not yet. Bluebird bio’s Lyfgenia has a wholesale acquisition cost of $3.1m, while the WAC for Vertex and CRISPR’s Casgevy is $2.2m, which might be a significant handicap for bluebird in securing reimbursement.

Across the U.S. in 2022, 24.5% of health care payments involved two-sided financial risk reimbursement arrangements, according to an analysis published on Oct. 30 from the Health Care Payment Learning & Action Network (HCPLAN). That is up from 19.6% in 2021 and 17.9% in 2020.

While the upward trend is encouraging for those interested in shifting away from a fee-for-service model, health policy experts tell AIS Health, a division of MMIT, that more needs to be done to encourage providers to embrace value-based care. They add that adoption varies based on the payer, with Medicare leading the way and private commercial plans lagging.

Most employer-sponsored plans that have stop-loss insurance coverage should be able to pay for expensive gene therapies that have proven to be cost-effective, according to a recent paper from Health Affairs Scholar. However, a separate Health Affairs analysis published this month argues that payers must assess alternative payment models to afford the medications, which can cost more than $1 million per dose.

Aaron S. Kesselheim, M.D., one of the authors of the latter Health Affairs paper says that plans have taken varied approaches to paying for gene therapies ranging from “extremely permissive to extremely tight coverage.”