Value-based Arrangements

If Direct Contracting Model Dies, MA Startups Could Suffer

Some Medicare Advantage insurers could take a hit if HHS decides to cancel an increasingly controversial care delivery model that allows participants to share risk and receive capitated payments for serving fee-for-service (FFS) Medicare beneficiaries.

The Global and Professional Direct Contracting (GPDC) model fully launched in April 2021, with 53 Direct Contracting Entities (DCEs) participating. Although most DCEs were provider-led organizations such as Iora Health, some MA insurers also threw their hats into the ring, including startup Clover Health; Humana Inc., under the CenterWell brand name; and Anthem, Inc., under the CareMore brand name.

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Experts Discuss Pros, Cons of Risk-Based Payment in Primary Care

As transactions and outside investment in primary care become more common, many health care insiders see an opportunity to shift primary care reimbursement toward risk-based payment — but experts warn that value-based contracting can’t solve all of primary care’s problems on its own.

Primary care practices (PCPs) operating on a fee-for-service basis faced a crisis in 2020, when the pandemic discouraged patients from making routine visits to the doctor’s office. Many PCPs turned to outside financing to fund capital investments or make payroll. Others combined horizontally with other PCPs or sold to health systems.

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In Blow to PBMs, CMS Floats Reform of Part D Price Concessions

As part of a sweeping new Medicare Advantage rule, CMS recently proposed a policy aimed at reforming a reimbursement system that local pharmacies have long claimed is straining them to the breaking point. PBMs, on the other hand, argue that the proposal could hamper value-based contracting in Part D and potentially increase Medicare spending.

At issue are arrangements in which Part D plan sponsors can recoup money from pharmacies for dispensed drugs if the pharmacies do not meet certain metrics. Generally speaking, these payments to plan sponsors are known as price concessions, and when assessed retrospectively — as they currently are — they are counted as direct and indirect remuneration (DIR).

In Blow to PBMs, CMS Floats Reform of Part D Price Concessions

As part of a sweeping new Medicare Advantage rule, CMS recently proposed a policy aimed at reforming a reimbursement system that local pharmacies have long claimed is straining them to the breaking point. PBMs, on the other hand, argue that the proposal could hamper value-based contracting in Part D and potentially increase Medicare spending.

At issue are arrangements in which Part D plan sponsors can recoup money from pharmacies for dispensed drugs if the pharmacies do not meet certain metrics. Generally speaking, these payments to plan sponsors are known as price concessions, and when assessed retrospectively — as they currently are — they are counted as direct and indirect renumeration (DIR).

PBMs Will Face Pressure From Transparency Rules, Startups

This year, PBMs will continue to face growing pressure from plan sponsors, regulators and policymakers to prove that they deliver value and keep drug costs down — and could face additional legislative or regulatory challenges to the way they do business. Meanwhile, investors are likely to put even more capital into startups that challenge the traditional pharmacy benefit paradigm, and the post-pandemic boom in risk-based contracting could expand into pharmacy benefits.

Federal and state regulators have increased scrutiny on PBMs in recent years. In particular, state efforts to regulate PBMs were buoyed by the Supreme Court’s 2020 decision in Rutledge v. Pharmaceutical Care Management Association (PCMA), a lawsuit in which the justices held that states were not in violation of the Employee Retirement Income Security Act of 1974 (ERISA) in attempting to regulate the rates at which PBMs reimburse pharmacies. According to the National Academy for State Health Policy (NASHP), a think tank and policy advocacy group, so far this year 42 states considered 111 bills relating to PBM regulation in 2021. That activity is likely to continue in 2022.

CVS Health Will Spend Up to $25 Billion on Provider M&A

At the firm’s annual investor conference, CVS Health Corp. executives promoted closer vertical integration and promised to move even further into care provision. CVS, which acquired Aetna in 2018, emphasized virtual care and its retail HealthHUB clinics in recent months, and it has indicated it has a strong interest in acquiring providers, particularly in primary care.

Other large carriers have made similar moves in recent years. UnitedHealth Group owns both the U.S.’s largest health insurer, UnitedHealthcare, and a growing provider arm, OptumCare. Humana Inc. has moved to acquire in-home and primary care providers. Meanwhile, CVS’s largest retail pharmacy competitor, Walgreens Boots Alliance Inc., is purchasing clinics with the goal of becoming a major primary and urgent care provider. According to CVS Health CEO Karen Lynch, the firm’s position astride all three businesses — retail, care delivery and benefits management — is why it will perform better than its rivals.

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BCBST, Oncology Group Launch Oncology Medical Home

BlueCross BlueShield of Tennessee (BCBST) and community oncology practice Tennessee Oncology recently launched a value-based cancer care program aimed at providing high-quality, cost-effective health care. The oncology medical home (OMH) will be a model for future programs, says the Blues plan.

The initiative launched in October for BlueCross commercial networks P, S and L members. It will support members beginning with their diagnosis and then through treatment and follow-up care. The partners will work to make sure that best practices in care planning and treatment are followed, that care guidelines are met, that patients get the correct treatment at the right time and that patient-centered care is provided.

Insurers Applaud New CMMI Push for Risk-Based Contracting

The Biden administration has revamped the strategy of the Center for Medicare and Medicaid Innovation: In the coming years, CMMI will focus on consolidating models, increasing insurer and provider participation in models, and advancing equity — and it aims to have most Medicare and Medicaid members served by value-based payment models by the end of the decade. Health care insiders applauded the new direction, saying the “strategy refresh” should bring the agency closer to its original mission and make its budget go further.

CMMI has tested more than 50 models since its creation in 2010 as part of the Affordable Care Act. Experts outside the agency have criticized the proliferation of models: The Medicare Payment Advisory Commission (MedPAC) recommended in June that HHS “should implement a more harmonized portfolio of fewer alternative payment models that are designed to work together to support the strategic objectives of reducing spending and improving quality.”

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Frustration Grows Over ‘Relentless’ Employer Plan Premium Rise

The premium costs of employer-sponsored health plans increased by 4% this year, according to the Kaiser Family Foundation’s (KFF) annual Employer Health Benefits Survey. KFF analysts and health care purchasers alike say the annual growth rate in health care costs — employer plan premiums for a family have grown by 47% since 2011 and 283% since 1998, according to KFF — causes unsustainable financial strain for both employers and plan members.

KFF also identified several emerging trends in employer coverage driven by cost growth and the COVID-19 pandemic. Deductibles and other forms of member cost sharing have increased in recent years. The share of employees in high-deductible plans declined slightly in 2021, but accounted for roughly a quarter of employer enrollment, a similar figure to recent years. Employer insurance experts have mixed opinions on whether these trends will continue. Meanwhile, in response to the pandemic, firms expanded their telehealth offerings and behavioral health benefits this year.

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