Value-based Arrangements

Incorporating Pharmacy Spending in Value-Based Payment Models Remains Challenging

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.

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News Briefs: CMS’s Cell and Gene Therapy Model Will First Focus on Sickle Cell Disease

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.”

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Payers Turn to Various Management Strategies for Cell and Gene Therapies

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.

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Aetna, Humana, SCAN Share Priorities for Investing in MA Members’ Care

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.”

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Payers Report Taking Varied Steps to Manage Cell and Gene Therapies

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.

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Bluebird, Vertex Gene Therapies May Answer $1m Question: Can Competition Reduce Rx Prices?

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.

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While Insurers Tout Value-Based Wins, Wide Adoption Remains Elusive

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.

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Papers Delve Into Payment Options for Gene Therapies

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.”

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Direct Contracting Model Achieves Savings, But ACOs’ Mileage Varies

Despite the program receiving continued pushback from progressive lawmakers, data from the since-renamed Global and Professional Direct Contracting (GPDC) Model suggests that it is making significant strides, with participants driving gross savings exceeding $870 million in 2022, more than seven times the $117 million in gross savings reported for performance year 2021. At least five known Medicare Advantage sponsors have subsidiaries participating in the model, which allows Accountable Care Organizations (ACOs) to share risk and receive capitated payments for serving fee-for-service (FFS) beneficiaries.

CMS, in a fact sheet highlighting the performance year 2022 data, observed that the total financial savings increased year over year because of “growth in model participation, a longer performance period in PY2022 (12 months vs. 9 months in PY2021), and performance improvements by model participants as they gained experience.” Last year, 99 Direct Contracting Entities participated in the model, up from 53 DCEs in 2021, with 21 million beneficiary months, compared with 3 million beneficiary months in 2021.

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With Mixed Results Across ACOs, Direct Contracting Model Serves Up Seven-Fold Increase in Savings

Despite the program receiving continued pushback from progressive lawmakers, data from the since-renamed Global and Professional Direct Contracting (GPDC) Model suggests that it is making significant strides, with participants driving gross savings exceeding $870 million in 2022, more than seven times the $117 million in gross savings reported for performance year 2021. At least five known Medicare Advantage sponsors have subsidiaries participating in the model, which allows Accountable Care Organizations (ACOs) to share risk and receive capitated payments for serving fee-for-service (FFS) beneficiaries.

CMS, in a fact sheet highlighting the performance year 2022 data, observed that the total financial savings increased year over year because of “growth in model participation, a longer performance period in PY2022 (12 months vs. 9 months in PY2021), and performance improvements by model participants as they gained experience.” Last year, 99 Direct Contracting Entities participated in the model, up from 53 DCEs in 2021, with 21 million beneficiary months, compared with 3 million beneficiary months in 2021.

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