The US healthcare system’s shift from volume- to value-based reimbursement for treatment in order to lower costs and improve patient care is disrupting healthcare business models. The high-profile government–led accountable care organizations (ACOs), which put financial pressure on payers and providers to share responsibility for meeting quality and cost goals, is no exception.
About 10% of the US population, or 34 million people, will be enrolled in either government-funded or commercial ACOs by 2015, according to consultants, up from 12 million in 2013. While the numbers are small some estimate that, for a variety of reasons, ACOs’ influence is much greater, with up to 170 million covered lives in the US affected either indirectly or directly.
The Centers for Medicare and Medicaid Services (CMS) established the ACO initiative, which essentially aim to improve coordination and management of patients while lowering the cost of care. Key to their effectiveness are financial rewards for meeting or exceeding pre-determined quality and cost metrics—or, in some models, penalties for falling short. The degree to which providers have a stake in the game and the kinds of goals they must meet vary depending on the model they follow and whether the organization is aligned with the CMS or a private insurer.
Whether ACOs survive in their current form and expand coverage to a vast majority of the population is uncertain, but, regardless, they are changing the way the US looks at health care. CMS announced first-year results of the program, started in 2012, earlier this year. The impact wasn’t major—the agency estimated that the initial crop of ACOs achieved a total savings of about $275 million out of a $1 trillion budget–but many experts believe the model is on the right path.
Much of the focus has been on implications for providers and patients, but these pilots affect suppliers as well. Not too many forums to date have focused on how ACOs can work with life sciences companies. That’s partly because ACOs have been preoccupied getting off the ground. Managing pharmacy costs hasn’t been a top priority. And because the field is evolving so rapidly and in such a fragmented fashion, efforts to look at it systematically are complicated. Regulatory and other barriers prevent ACOs and life sciences companies from working together and those are not easing. For more on this see The RPM Report May 2014.
That said, industry’s engagement with these new entities will test traditional commercial models and ultimately could have broader effects and access to medicine. Results released earlier this year of a Health Strategies Group study involving 110 ACOs provide some insights into their approach to pharmacy. The survey included online queries of top executives, followed by 30 “deep-dive” interviews in order to better understand life sciences companies’ opportunities for partnering with ACOS and the likely pain points involved in doing so. Respondents were senior executives at ACOs. Given ACOs’ expanding influence, it’s worth a look.
Among the survey’s findings, as presented at a recent ExL Pharma conference on the topic:
ACO are organized in many ways depending in part on whether they are operated by physician groups, health plans or health systems. Decision-making authority varies as well, with health system-run ACOs viewing themselves as being the dominant arbiter within their organizations in determining risk arrangement and services, but they recognized physician groups have an important role and health plans less so (40%). Health plan-led ACOs indicated more sharing of decision making authority among themselves, health systems and physician groups. These differences are important for pharma and other suppliers to understand as they figure out who to talk to within ACOs, said speaker Robert Shewbrooks, a principal at HSG and leader of its syndicated research practice.
For suppliers, the nuances are important, as companies tailor information about their drugs to specific kinds of customers. Government-aligned ACOs technically do not include the pharmacy benefit (typically covering self-administered oral and injectable drugs) in their risk arrangements, although many executives surveyed consider it to be part of the mix indirectly because it affects the total cost of care. That means that ACOs conforming to CMS Medicare standards are not on the hook financially for pharmacy benefits–at least yet. CMS has submitted a request for public comments to assess how and when drug utilization should be included in risk calculations, Shewbrooks noted, although he added that the timing isn’t clear. ACOs aligned with commercial payers and Medicaid are much more aggressive about including pharmacy benefits directly in their risk calculations.
Date: June 17, 2014