As healthcare evolves, reimbursement models continue to shift from volume to value. That means more providers are taking risk and moving into value-based reimbursement models. One such model is the Accountable Care Organization (ACOs) in which the provider has accountability for achieving quality improvements and spending reductions.

ACOs are not the only model. In today’s market, providers often form and/or contract with entities such as Managed Services Organizations (MSOs), Clinically Integrated Networks (CINs), or Independent Physician Associations (IPAs). For providers, the benefit of these organizations is clear: they supply the infrastructure and tools to be successful in meeting quality and cost targets required for their value based contracts. The result is better care for patients (especially the chronically ill), reduced waste and inefficiencies and financial incentives that are structured on quality benchmarks. ACOs, MSOs, CINs, and IPAs all incentivize primary care providers (PCPs) to improve the health of their entire patient population.

There are hundreds of these organizations across Medicare, Medicaid, and Commercial lines of business and many are executing value contracts and already realizing shared savings for primary care.  As they come together, the providers develop increased access to enhanced technology and expanded patient reach.  As these organizations mature, they are also beginning to engage specialists in value initiatives.

Magellan’s view of value is Specialty Care

To support value in specialty care, Magellan has developed a provider solution that is centered on behavioral health and physical health integration. It is designed specifically for provider organizations to successfully manage population health and take on risk under value based reimbursement through clinical, operational, and digital capabilities. Program components support the entire continuum of care and include:

• Screen & Engage: More accurate diagnosis through tools that are embedded into the primary care practice workflow
• High Performance Networks: Increased access to providers with improved quality and efficiency scores who embrace the vision of population health and support value based payment
• Case Management: Collaborative approach with warm hand-offs between the primary care office to Magellan to drive better outcomes
• Collaborative Care Model: Team-based integrated behavioral healthcare driven by Magellan expertise and digital screening capabilities to track patient progress and treat to target
• Authorization Support, Concurrent Review  & Transitions of Care: Discharge planning and case shaping to support patients transitioning from an inpatient facility to their home
• Telehealth: Increased access to care through a network of telehealth providers and text therapy providers
• Other Digital Solutions: Digital Cognitive Behavioral Therapy (D-CBT) for patients that is integrated with Magellan’s Smart Screener

In addition to the core solution set, Magellan has a comprehensive suite of behavioral health, specialty, and pharmacy products that can be customized for provider organizations. Magellan also supports providers in developing accountable care organizations for complex specialty care such as cardiac conditions. This approach supports and incentivizes cardiologists to proactively managing patients to improve quality and reduce costs. Magellan recently entered into its first specialty ACO relationship and will continue to develop and launch these types of relationships.

Magellan Health Insights: Hi Gina, thank you for sitting down with us. What can you tell us about the ACCOM Pilot project?

Gina Vehige: ACCOM—Accountable Cardiac Care of Mississippi—is the name of a venture between Cardiology Associates of North Mississippi (CANM) and Magellan Health. In November of 2017, CANM and Magellan came together to explore ways for both organizations to gain experience and succeed in a value-based reimbursement environment.

CANM physicians, nurse practitioners, and staff provide and oversee patient care. Magellan provides the data analysis as well as case management, and systems such as utilization management and clinical decision support, case management, and behavioral health screening tools.

ACCOM’s first value-based reimbursement contract is with Blue Cross and Blue Shield of Mississippi. Blue Cross and Blue Shield of Mississippi provides the claims data for Magellan to analyze and set mutual performance targets for cost and quality with CANM.

MHI: Can you explain what value-based reimbursement means and why it’s important?

GV: Value-based reimbursement is a new way of paying for medical care. With value-based reimbursement, providers are given cost and quality targets and the associated responsibility for achieving those targets in order to be paid their fees and a share of the savings as well as quality incentives.

Under the old fee-for-service model, providers ordered tests, procedures, office visits, and so forth and were then paid per service performed. Essentially, the more services provided, the more fees could be made. As a counter balance, payers managed utilization and quality through top-down utilization management measures and quality improvement incentives. These efforts often resulted in additional work for providers to justify each procedure and obtain authorizations by fax, telephone, or web portal. The effectiveness of the utilization management and quality improvement under fee-for-service was debatable.

MHI: You mentioned analytics – why are analytics so beneficial to these arrangements?

GV: Quite simply, physician practices still exist in a void of actionable information. Historically, practices were limited to the data provided in their billing and scheduling systems. Even electronic medical records (EMR) typically evolved to emphasize the storage of patient demographic and encounter data only. If physicians can ONLY get to their own data, they can’t compare or benchmark their cost and quality performance to their competitors.

Magellan’s expertise in analyzing claims data provides physicians with insight into their practice and provides them with the ability to identify opportunities for improvement. It allows them to ask the critical questions that help them manage a population:

• How many patients who were prescribed a medication actually stayed compliant (consumed and refilled) their medication as often as should be expected?
• How many patients with congestive heart failure are actually on the recommended therapy for that disease?
• How many patients who received an implantable device were tried on optimal medical therapy for a sufficient time before an invasive intervention was implemented?
• What percentage of patients are achieving their blood pressure and cholesterol management goals?
• What percentage of patients are keeping their follow-up appointments?

Those are important questions for physicians to have answers to. By having access to this information, a physician can improve outcomes, reduce costs, and improve patient and provider satisfaction.

MHI: What other expertise does Magellan bring to a group like CANM?

GV: The ability to manage the patient across the continuum of care and time—even while they are home— is key to managing the chronic conditions often associated with heart disease. For patients at risk, regular contact with a case manager to ensure treatment plan and medication compliance, can provide motivation and support to deal with the burden of disease. Beyond our analytical capabilities, Magellan brings population management expertise and systems that help the practice manage the patient through their entire case experience, not just when they are hospitalized or seen in the physicians’ office.

Another key toolset that Magellan provides is clinical decision support and utilization management, through the use of our guidelines and systems. These help the providers ensure that the services provided meet national guidelines wherever appropriate. Whenever guidelines are not met, but the procedure or tests are still felt to be appropriate, physicians will enhance the validity of the medical record by thoroughly documenting why exceptions should be made for an individual case. Magellan provides the staff, training, guidelines, and tools that are the basis for such reviews.  The associated reporting that goes along with this activity can help the practice identify opportunities to be more efficient in the provision of care.

Finally, Magellan brings a great deal of expertise in case management. Our services and tools allow the case managers to engage patients and identify priorities for improving their overall health. Regular outreach with patients help provide crucial support and can identify changes in condition that can be addressed via office visits or medication adjustments before symptoms exacerbate and the patient requires emergency room visits or hospital stays. This additional level of contact with healthcare professionals can also be comforting to patients who are anxious about their disease.

MHI: Why CANM—Why were they a good fit for Magellan?

GV: CANM is a large cardiology practice (13 physicians, five nurse practitioners, one pharmacist) based in Tupelo, Mississippi, and supporting the surrounding 26 counties. They have a history of being at the forefront of technology and high quality cardiac care. In addition, CANM embraced the cardiovascular guidelines presented by Magellan. CANM also took the lead on reviewing the pharmacy claims data compiled by Magellan to develop their own practice formulary, focusing on lower cost generic medications wherever clinically appropriate. CANM also engages in cardiology research, helping to identify the best cost and quality interventions to improve cardiac health.

MHI: What are the challenges facing cardiologists in the current marketplace?

GV: Right now, a typical cardiologist “controls” 90 percent of the cardiac spend, but makes in fees about 10 percent of those dollars. For example, if the physician orders a test to be performed in a hospital setting, he or she may get a fee for examining the patient and interpreting the test, but they do not get money for the use of the facility, equipment or staff to run the test. A similar situation occurs when physicians order a medication.

In the fee-for-service environment, income from procedures is high, but under pressure from the focus on utilization management. Time spent counseling and supporting patients to modify lifestyle risks—while vitally important to overall health and cardiovascular disease risk reduction—is less valued. Furthermore, physician satisfaction is at an all-time low, across all specialties. By rewarding providers for managing high-cost procedures and spending time helping patients during and between office visits do more to manage their life-style risks, physicians achieve greater satisfaction from their work and less burn-out.

MHI: What’s next? Where do you see new challenges in the future and how do we meet them?

GV: I see a continued migration to value-based reimbursement arrangements. Provider groups will come together with other provider groups in an attempt to better manage risk within their populations. These provider groups will be the market of the future, and it will serve us well to prepare to serve that market with the valuable services we have established over years of experience serving health plans. Payers will increasingly leave it up to the providers to find the most efficient and effective ways to deliver the full continuum of care with the right partners. Magellan can utilize and improve our existing tools to serve these new markets to help both health plans and providers succeed.

In late January, Magellan held its second annual Magellan Open Vision Exchange (MOVE) conference in Scottsdale, Ariz. MOVE brings together a large cast of voices from the healthcare industry to discuss the future of healthcare for patients, plans and providers. Over two days, we heard from private industry experts, government leaders, as well as other subject matter experts and thought leaders both from inside and outside the healthcare industry.

The Future of Healthcare Beyond the Affordable Care Act

Obviously, the continuing debate over the future of healthcare and the Affordable Care Act were a central topic of the conversation at this year’s MOVE. A number of speakers talked about the impact of the Trump Administration’s efforts to repeal the Affordable Care Act. Former Utah Governor Michael Leavitt, who also served as the secretary of the Department of Health and Human Services, said that while he expects repeal and replace legislation will pass, significant parts will be deferred for three or four years. Brian Coyne, VP of federal affairs at Magellan Health, said that he feared gridlock over the next couple of years.

Managing Transformation in the Healthcare World

One of the key topics discussed at this year’s event was the immediate future of the healthcare industry. After a long period of explosive innovation, there was consensus that disruptive change will continue. Magellan Healthcare CEO Sam Srivastava posited that we are currently in a tech-bubble that is about to burst. The industry is waiting to see which of the early healthcare technology entrants will survive and how technology and healthcare will continue to interface with each other.
Leavitt spoke extensively of the need to manage transformation, especially in healthcare. Leavitt stressed that systematic healthcare change takes hold over three to four decade cycle, and he believes we are less than mid-way through the current transformation. Using an analogy of a cattle herd, Leavitt made the point that you can’t drive a herd too quickly, or you risk a stampede. You also can’t push the herd too slowly or it will meander. Applied to healthcare, the idea is simple but true: If we push change too quickly there will be chaos, but if we fail to adapt and change, we will stagnate. Allowing ourselves to be “lulled into inaction” is a recipe for disaster.

Value-Based Healthcare

A critical area of discussion was the expansion of value-based care. Speakers agreed that demand for value-based care is accelerating. Leavitt said he believed this was true regardless of the Trump Administration’s plans for healthcare. Billy Millwee, President and CEO of BM&A Public Policy, cited broad bipartisan support for the value-based model and agreed that it was here to stay.

Chet Burrell, president and CEO of CareFirst BlueCross BlueShield, spoke clearly on the approach that his company was taking: “We started and ended with common sense.” He went on to explain that they had built their model with the primary care physician at the center (PCP). The PCP knows the patient best and is therefore in the best position to make decisions regarding who to refer and to whom. By taking this approach, Burrell relayed, CareFirst was able to build a patient centered medical home model that improved care while reducing costs.

Despite the level of change being experienced throughout healthcare, a common theme was one of our industry being grounded in helping people get the high-quality care they need, affordably. This is the essence of why healthcare is our chosen industry and why we are driven to innovate.

An interesting takeaway was that across the conference and speakers, there was a clear common theme: while the ultimate structure of the pay-for-value transformation is uncertain, the movement will continue. Experimentation, promoted by both public and private payer initiatives, will drive innovation and change. Some will be better prepared than others to handle this paradigm shift.

You’re buying a car. Before you hit the lot, you do your planning and research, establish a budget, figure out what features you want and what style you’re looking for. You probably search online for car and dealer reviews, prices and sales. Based on all of that work, you make a decision, negotiate and pay for your new car.

Your car research was relatively easy. But finding a healthcare provider? Not so much.

While you may know what you want in a provider, very little information is available about the services they provide, appointment costs, reviews and other important details to help you make an informed choice about your care. And if you ARE lucky enough to find someone who seems to fit your needs, you’re often still left wondering what kind of quality you can expect from your treatment experience.

The bottom line is that it’s easier to buy a car than it is to find a healthcare provider. Silly, right? We think so, too – which is why Magellan is bridging these information and quality gaps by employing value-based purchasing models.

Rewarding quality care yields informed choices

Value-based purchasing takes various forms. But it generally operates on the premise that aligning providers’ incentives and reimbursement with organizational and individual goals incents behavior and drives positive outcomes, ultimately benefiting all involved in the healthcare continuum. This includes consumers, customers and payers, in addition to the providers themselves, who also enjoy improved reputations through public reporting.

In fact, one of the key tenets of Magellan’s value-based collaboration and purchasing models is to ensure stakeholders become more informed as a result of these initiatives:

• Customers benefit by knowing whom to partner with for network management;
• Payers benefit by knowing whom to pay for value; and
• Consumers, of course, benefit by having those online provider reviews become a lot less elusive, enabling them to make an informed decision about whom to choose for their care.

Magellan’s models also center on:

• Engaging and empowering providers in compensation model evolution. We partner with provider leaders around compensation design, employ transparency to ease the compensation shift and create meaningful incentives for providers to encourage active engagement. (1)

• Building provider compensation for an evolving healthcare market. Our priorities center on population management, team-based care and member access. We integrate new quality and efficiency standards into compensation, and remove compensation barriers to population goals. (1)

Why do we give value-based purchasing strategies the green light?

Take our Assertive Community Treatment (ACT) program as just one example. Through program data analysis and close collaboration with our ACT provider teams, we developed a three-tiered rate structure based on overall program goals to support recovery, wellness, and to improve community tenure. As a result, we saw a 21 percent decrease in inpatient admissions and a 24 percent decrease in the inpatient readmission rate.

Our drive for engagement continues

Providers nationwide are in different phases of readiness, so we keep our wheels in motion by providing a graduated maturity model to move them from the most basic stage—learning the behavior through activity incentives—to the most complex arrangements, which transform care delivery through outcomes-based incentives or other payment structures (2). We look forward to working with stakeholders, providers and consumers as we continue to expand this innovative and exciting model.

(1) Medical Strategy Group Council: “Next-Generation Physician Composition,” The Advisory Board Company

(2) Physician Quality Reporting Initiative: The Advisory Board Company

Uncertainty is the name of the game for many industries today, including healthcare. With rapidly emerging technologies, regulations and changing consumer demands, companies must manage differently in order to keep up. Jeff Dyer, innovation visionary and co-author of the highly acclaimed, The Innovator’s DNA and its follow-on publication, The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators highlighted the threat to many companies today – predicting that 50 percent of the S&P 500 will be replaced over the next 10 years.

Human-Centered Innovation

As consumer experiences across nearly every industry become more personalized, on-demand and targeted, he encouraged pushing our thinking beyond meeting functional needs by looking at social and emotional ones as well. By doing so, companies are able to identify unmet needs that can be catalysts for more useful solutions that ultimately win in the market.

The GE Adventure Series Scanner, an MRI scanner designed for children to make scanning a less frightening experience, was a prime example shared of human-centered innovation. While advanced in functional features, what was discovered through observing young patients getting a scan was that the former machine was intimidating – the designer learning that as many as 80 percent of pediatric patients had to be sedated in order to sit still long enough for the scan.  Witnessing this, a new approach was taken, ultimately applying human-centered design methods to redesign the experience as a series of “adventures” for children, delighting and no longer scaring its young users.

The Big Picture in Quality Care

While human-centered innovation can be applied product by product and interaction by interaction, we heard another thought-provoking point from the day’s presentations – that it’s really hard to detect poor quality care through one interaction. The path to a poor outcome most likely includes bouncing from doctor to doctor and breakdowns in coordination and communication between interactions. Often, the big picture reveals the flaws.

The reality today is that many people still get prescriptions from multiple, independent physicians, and many hospital admissions come with undiagnosed behavioral health concerns. The healthcare system has an immense opportunity to come together around the whole patient and to better identify needs at a population level to deliver on value-based care that leads to healthier outcomes.

Physician Collaboration

Our physician panel sparked further ideas in how to collaborate with PCP’s, nurses and other care workers to better meet patients’ needs. Often at the front lines of the patient experience, creativity in finding unidentified needs was discussed as pivotal to creating an effective healthcare experience. While concepts of self-directed, consumer-focused healthcare and increasing consumer participation in healthcare decisions have become popular, the role of physicians is also being transformed. Their responsibility is increasingly to supplement and put into perspective available information, manage expectations, and instill confidence. The discussion thus encouraged leveraging physicians as “natural, trained problems solvers”, bringing them into the ideation for a better patient experience, and empowering them with action-oriented data and decision support along the way.

We thank all of our leaders, clients and partners for joining us in a memorable and energizing event. We look forward to our next gathering in January 2017.

The room at the inaugural Magellan Open Vision Exchange (MOVE) this past March was a sight to see. Filled with a buzz of energy and openness to think differently, Magellan executives, clients and partners gathered in shared pursuit of a better, more efficient healthcare experience of tomorrow. Collectively, the leaders in the room had impact over the healthcare experience for a significant portion of America. Yet, the focus of the conversation was clearly in how to pivot care to be more accessible and effective, one person at a time.

Help One, Help Many

The event kicked off with stories from Mick Ebeling, CEO of Not Impossible Labs, whose commitment to changing the lives of a few individuals has sparked a few of the most impactful innovations in healthcare. From his entrée into healthcare innovation with the eyewriter, helping a graffiti artist paralyzed by ALS to create art again using his eyes, to Project Daniel, a 3D prosthetic printing process that started with the goal of creating an arm for a Sudanese boy, he challenged the group to “recognize an absurdity” and then to “just commit to figuring it out.”

Neither an engineer nor a healthcare expert, his “open source” method for creating healthcare inventions turned heads. He demonstrated a commitment to designing a solution through the eyes of the individual suffering, which made all the difference in his ability to impact lives. He reminded us that he did not have all of the answers -far from it. But asserted that a key point to breaking the mold was to think of challenges as “not impossible.” He reminded us that it would be very difficult to name something that is possible today that wasn’t at one point thought of as impossible.

Healthcare as an Experience

Our client presentations continued to emphasize applications of human-centered innovation in healthcare, sharing approaches grounded in first understanding the behaviors that drive and influence healthcare experience. Key takeways included:

• Remembering that the most common reasons for a hospital stay are the more common ailments of mankind, from childbirth to respiratory and circulatory conditions, musculoskeletal conditions and mood disorders. While emphasis is often placed on advancement in rarer, more specialized conditions, a significant portion of patients can be impacted by anticipating the needs for more routine healthcare experiences.
• Listening to what’s working, and what’s not, disease state by disease state. From crowdsourcing feedback from patients to understand what helped them get better, to creating focused innovation platforms within organizations to spawn creative solutions unencumbered by traditional perceived barriers, we learned of many approaches to closing gaps in the system.
• Speaking to people successfully living with their conditions provides tremendous perspective for recovery and chronic condition management programs. When the formula isn’t as simple as issue identification + treatment = healthy, concepts like peer support become an opportunity to support living well with a physical, mental or emotional challenge by empowering the patient to learn to thrive through peer experience.
• Re-positioning healthcare leaders as “chief experimenters.” It was underscored that healthcare leaders today can’t simply focus on making decisions, they must design and enable experiments to truly push the healthcare experience forward.

Stay tuned for Part 2 of our event recap.

Looking for more information about MOVE, our gathering of healthcare innovators and thought leaders? View media and request an invitation to our January 2017 event. For questions, contact mediarelations@magellanhealth.com.

**The following blog post was co-authored by Dr. Maria Lopes, chief medical officer of Magellan Rx Management, and Dr. Karen Amstutz, chief medical officer of Magellan Health.

Value is more than a buzz word among health care stakeholders, but stakeholders – payers, providers, patients and pharmaceutical manufacturers — define value differently, based on their needs, obligations and roles within the evolving healthcare and managed care paradigm. Each stakeholder, while looking out for its unique interests, must also consider how its priorities, perspectives and business model affect the others — their counterparts, and in some cases, partners. Payers are a common thread intertwined within this continuum of healthcare services, interfacing with each stakeholder in a significant, although different manner. As they navigate the changing managed healthcare marketplace, payers must proceed in a manner that protects their interests, even as they give consideration to the impact their strategies and initiatives may have internally and upon other healthcare stakeholders. One unique opportunity for payers exists within the management of prescription drug utilization, specifically in assessing and refining expectations surrounding their pharmacy benefit management (PBM) services and relationships, and how these translate into value for payers and ultimately, all healthcare stakeholders.

Historically, measures of success in the PBM industry focused on leveraging volume as a means of managing drug costs. PBMs demonstrated value by offering what are now considered standard, or core services. Typically these offerings consist of claim adjudication, utilization management, mail order, customer service, some clinical support services, and of course, financial support in the form of volume-driven rebates and discounts. Times have changed as the Affordable Care Act (ACA), increasing government regulation, rising drug prices, and growing availability and demand for specialty pharmacy drug products have profoundly impacted the use, costs, and management of prescription drug therapies within the managed healthcare marketplace.

Accordingly, expectations surrounding prescription drug benefit management among stakeholders have been, and will continue to be, profoundly impacted by the shifting healthcare environment. Specifically, as payers seek to provide patient or member support, access to care and expanded services, while maintaining profitability, they are reassessing business models and relationships. For payers, this includes taking a close look at the manner in which prescription drugs are managed, giving consideration to the clinical and financial impact of specialty drug spending, in particular. In response, payers are increasingly looking to PBMs to refine their services, with an eye toward driving outcomes. It is no longer sufficient for a PBM to provide products at a discounted price. Essentially, payers are looking for PBMs to provide “value over volume.”

Challenges Facing PBMs

This evolution in payer expectations of PBMs is highly driven by the pressures of rising prescription drug costs — particularly specialty drug spending. Make no mistake about it, volume-based savings remain a significant facet of PBM and payer relationships, but they are no longer the key financial objective of payer- PBM agreements, as they once were.

PBMs are now challenged to stretch beyond their traditional scope of offerings to provide the services payers expect — they are tasked with providing and demonstrating value. What is value and how is it defined in the PBM-payer relationship? First and foremost, PBM-payer relationships moving forward must be partnerships in order to successfully navigate these formerly uncharted waters. It’s not sufficient for a PBM to provide expanded services, such as clinical programs, in name only. Successful implementation of these initiatives will require tomorrow’s successful value based PBMs to have an innovative culture, a modular and flexible service model, and a platform utilizing leading edge technology. PBMs capable of providing adequate support to payer partners must actively integrate and apply clinical expertise into programs that support improved patient outcomes and consider patients comprehensively, while giving appropriate consideration of unique patient needs — and offering comprehensive solutions, which may include unique program components, such as integrating behavioral health support as warranted.

Clearly, the PBM of the future must have a new orientation – no longer focused exclusively on volume-based strategies. Tomorrow’s value-based PBM must provide value by looking beyond the current silos that commonly focus upon pharmacy drug benefit approaches that apply “traditional“ utilization management strategies (step therapy, prior authorization, etc.) to maximize rebates and manage prescription drug spending. Effective management of the future must bridge the management of prescription therapies, particularly specialty drugs, via either the medical or pharmacy benefit. Applying innovative strategies to optimize management of the use of and administration of prescription drugs through whichever benefit, medical or pharmacy, the therapy is processed will be an essential attribute of PBMs’ demonstrating value to payer partners. Focus upon coordination of specialty drug management through both the pharmacy and medical pharmacy benefits will only gain importance as the availability, costs, and utilization of expensive specialty therapies rises, as acceleration of specialty drug utilization is projected.

These current and anticipated shifts in the clinical and economic landscape will drive the challenges and amplify the financial importance of managing medical pharmacy spend. PBMs providing value will do so by offering comprehensive prescription drug management support for payers, across the benefit design, with particular attention to effectively managing drug utilization and spending within the medical benefit arm of the organization. As an example, Magellan Rx Management has focused on developing patient and provider engagement strategies, and employing advanced analytics and comprehensive specialty drug management programs for both the medical and pharmacy benefit.

Interpreting Data is Key

This application of advanced analytics is integral to the service and offerings of the value-based PBM of the future. It is insufficient to simply capture and possess data. Going to the next level, the ability to analyze and report data, while beneficial, falls short of having a demonstrable clinical and economic impact. Data capture and reporting alone are inadequate as a means of providing value to payers if this data is not properly evaluated, interpreted, and then integrated into effective clinical management strategies. These identified strategies must be capable of serving as a platform for significant clinical improvement and development of cutting edge programs that enhance care and manage costs, across both the medical and pharmacy components of the benefit. PBMs with an eye to the future are those capable of:

• Providing rigorous analytical support to payer data in order to help payers identify opportunities to improve outcomes, while realizing savings
• Collaboration to ensure providers have information needed to optimize treatment –promoting access to and use of the most efficacious and cost-effective drugs
• Enhanced customer-facing strategies to increase member understanding and effective utilization of pharmacy and medical benefit therapies

With data management capabilities as a cornerstone, the value-based PBM is poised to assess payer data, applying predictive analytics as appropriate to conduct a robust and meaningful cross-functional analysis of costs, utilization of therapies, and outcomes. A well-constructed and executed analysis supports both the financial and clinical objectives of the payer – financially supporting cost management while simultaneously creating an opportunity to identify and address existing or emerging gaps in care. As a result of these analyses, payers will be poised to support providers, provider groups, hospitals, outpatient treatment facilities and other partners such as accountable care organizations

(ACOs) by providing feedback regarding current clinical and economic opportunities to improve outcomes and manage costs – ultimately benefiting the patient. As one dimension of these analyses, value-based PBMs can support payers in developing targeted initiatives that address identified gaps in care. For example, programs may be developed to improve member adherence with therapy and the selection of the most clinically appropriate treatment, as they simultaneously support payer objectives such as improving the identification, recognition, and understanding of opportunities for managing trend drivers and helping to identify other areas of concern or opportunities to improve care.

With the support of value-based PBM, payers have the opportunity to expand specialty drug management capabilities, developing new clinical programs for specific disease states, with the ability to target diseases that are highly significant for each organization, either due to cost, clinical relevance, prevalence, or demonstrated gaps in care. Some examples of programs with such experience that exist within Magellan Rx Management include the clinical programs to guide the treatment of age-related macular degeneration, hepatitis C, and chronic myelogenous leukemia (CML). These programs might include clinical interventions, product preferencing and targeted clinical patient and provider support programs.

A Case in Point

For a large regional health plan, representing about 1 million commercial lives, Magellan Rx Management partnered to offer medical formulary management programs in the following areas:

• Viscosupplementation
• Botulinum Toxins
• Contraceptives
• Gaucher’s Disease

Magellan Rx also worked with this payer to implement a variable reimbursement fee schedule, with a maximum allowable cost (MAC) / least cost alternative (LCA) product selection strategy. A proprietary methodology was applied to promote generic utilization and equalize margins on products within several therapeutic classes, including intravenous immunoglobulin (IVIG), taxanes, folinic acids, ophthalmic injections, viscosupplementation, and antiemetics. Savings in the antiemetic category alone have exceeded $3.5 million since the program’s inception in 2010, by removing incentives for physicians to prescribe higher-cost, branded antiemetics, rather than the low-cost preferred alternatives.

Additionally, value-based PBMs are equipped to support payers in the development and implementation of unique initiatives, such as site of care management programs. These programs create an opportunity to administer initiatives focused on oversight and management of the treatment and administration location for certain high-cost therapies, typically administered at either a provider office or an alternative administration site such as a hospital outpatient administration facility. By encouraging the use of the most clinically, therapeutically and financially cost-effective therapy, site of care management programs offer a means of assuring treatment is administered in the most clinically and financially appropriate setting. As an example of success in this area, Magellan Rx’s site of service netted over a million dollars in savings for two regional health plans in a six-month period. The program, which also received positive feedback from patients, demonstrated the possibilities such programs have to generate savings, while improving patient access to care. Characterized as a solution which places the patient first, the program was overseen by a collaborative team of healthcare professionals, including nurses, pharmacists and physicians.

Innovative strategies, such as outcomes-based contracting, are another means by which value-based PBMs further support payer objectives. Outcomes-based contracts are a unique and customized partnership opportunity that considers stakeholder interests by giving consideration to payer-specific data, supported by robust analytics to define opportunities for optimizing clinical and economic outcomes in the best interest of all stakeholders.

Additionally, value-based PBMs can assist payers in the identification of gaps, and the development and implementation of cutting edge and customized clinical programs designed to improve STAR ratings and HEDIS measures. Such programs are relevant and valuable to payers, as they support clinical initiatives, assisting payers in meeting objectives that translate into financial benefits for the organization.

In light of specialty drug trends, such as a burgeoning pharmaceutical pipeline — dominated by specialty drugs that are estimated to comprise 50 percent of overall drug spend by 2018, payers are changing their view of essential PBM support services. Forward-thinking payers are seeking the support of a value-based PBM with expertise in management of complex and costly therapies, including specialty drugs administered within the medical benefit. With a decade of experience in this arena, Magellan Rx is one example of a full-service PBM, with the distinction of having significant expertise in managing specialty drugs, including those covered under the medical benefit. The additional benefit of clinical expertise and robust analytical support are critical in the development of cutting edge clinical programs that simultaneously support the objectives of payers and consider the interests of other stakeholders in the managed care marketplace. These are critical strengths that value-based PBMs of the future must possesses in order to effectively support payers in meeting the demands of tomorrow’s health care marketplace; providing tailor-made, disease-specific services that provide value and drive healthier outcomes for members.