Value-Based Care Is Becoming Real: Are You Prepared?

Health Care Was Already a High-Stakes Game…and the Stakes Just Got Higher

When it comes to health care, value is in the eye of the beholder. For patients, the value of a medication lies in its ability to improve quality, or quantity, of life. For payers, “value” gets a little more complex. A drug has value if it effectively treats the patient, to be sure, but that value comes from the idea that the payer won’t have to cover the costs of repeat hospital admissions or clinical interventions down the line, for example. For pharmaceutical manufacturers, value means a drug meets FDA requirements, hits the market, and turns a profit without any significant adverse effects. A healthy patient is the end goal for all stakeholders, but the bottom line is different for each party. Measuring that value with precision is not always easy.

The stakes are perhaps even higher when it comes to defining value for specialty pharma drugs. Specialty drugs are often used to treat conditions such as cancer, HIV, AIDS, hemophilia, and multiple sclerosis; conditions that are chronic, which means ongoing physician care—perhaps hospital care, too—and prescriptions that are required for the duration of a patient’s life.

These treatments are commonly more expensive than other medications. According to a report from IMS Health, Medicines Use and Spending in the US: A Review of 2015 and Outlook to 2020, specialty drug spending grew more than 15% from 2014 to 2015, contributing $150.8 billion to total US drug spending in 2015. In addition to costs, specialty drugs often have a complex system of delivery to the patient that may include infusions, specific treatment sites at hospitals, home health aides, and follow-up care. For all these reasons, value becomes more important than ever—for both the patient, for whom treatment might literally be life or death, and for the payer.

Beyond Data Transparency: Health Care Needs Data Specificity

As medical technology and clinical science advance (think HIV moving from a death sentence to a chronic illness), the use of specialty drugs is on the rise. The IMS Health report revealed that specialty drugs account for 36% of total spending and 67% of new brand spending growth, whereas traditional medicines account for 64% of total spending but only 33% of new brand spending growth. It’s not surprising that payers are requiring pharmaceutical manufacturers to demonstrate outcomes before covering specialty drugs.

The problem is that you often do not see the benefits of many drugs for a long time, and capturing clinical data with this level of accuracy has historically been the industry’s blind spot. It’s only with the help of an analytics company that has access to the 11-digit National Drug Code pharmacy data that providers and manufacturers can extricate the necessary data from within the 4 walls of the hospital. When manufacturers can tie the value of a specialty medication to proxy measures, such as length of stay, readmissions, or medication changes, then payers will be able to deliver financial rewards, and providers, specialty pharmacies, and patients will experience the benefits.

Using such proxy measures to determine the value of specialty drugs is a growing trend. Payers and pharmaceutical manufacturers frequently purchase analytics from vendors who have built massive claims databases; however, these sources all tend to have a common Achilles’ heel in that they weren’t built with source data. Furthermore, when the data are acquired from other sources, they are not always clean and not as easy to match back to individual patient records.

To truly answer these challenging questions about value in a meaningful way, hospitals need a longitudinal patient data set (that tracks the same patients over the course of many years), which can help them to accurately match individual patient medical records across dozens of sources with hundreds of data elements. This will allow all stakeholders to appropriately group and analyze patient cohorts in a way that is both meaningful and, more important, actionable.

Having the right cohort can be incredibly valuable when determining the right combination of specialty drugs and treatments for a 45-year-old male diabetic patient with kidney failure. Compounding this issue is that various hospital information systems have different measures and values than what is reported in the electronic medical record (EMR), and there are differences among individual EMRs, such as Epic and Meditech. Due to the difficulty of efficiently matching data from disparate sources, many forms of clinical and pharmacy data are simply not available in traditional data warehouses. Because they don’t have source data, claims database vendors are frequently unable to connect the dots in a way that is meaningful to real-life scenarios that affect the bottom line.

In Value-Based Care, All Stakeholders Are Becoming Increasingly Interdependent

The conundrum the industry is facing is that value—and profits—trickle downhill. Pharmaceutical manufacturers must create medications that offer value to patients and payers while keeping costs as low as possible and still earning a profit. Risk-bearing entities must also see financial gains in covering a drug, or at the very least, not a financial loss. And the physicians, who control more than half of all health care costs through their prescribing patterns, must have the right data available to inform better decisions. Then, there are the scripts that are filled at specialty pharmacies that, because of the high cost of specialty medications, also stand to gain from value-based care. When the trickle-down effect is successful, patients can count on receiving the value that matters most from their perspective: the lifesaving medications they need at prices they can afford.

Through value-based care initiatives, payers are increasingly holding both providers and pharmaceutical manufacturers accountable for choosing the right combination of drug regimens and treatment protocols to deliver the best possible outcomes at the lowest total cost of care.

Measurement and Reporting for Value-Based Care Has Matured—Are You Ready?

The health care industry has historically lacked the sophistication necessary to manage this delicate symbiotic relationship. However, there are real-time longitudinal databases that exist today with the ability to capture, measure, and report proxy measure outcomes. Are you and your team prepared to adapt and embrace the future?