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Survey: 70 Percent of Health Plans Bullish on Outcomes-based Contracts

June 1, 2017
by Rajiv Leventhal
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Just one-quarter of respondents said they have a value-based contract in place already, however, as plenty of challenges do exist

Most health plans have favorable attitudes toward outcomes-based contracts and many are actively pursuing them, according to a new survey from Avalere, a Washington, D.C.-based consulting firm.

While the health plans surveyed for this report recognize the operational challenges associated with outcomes-based contracts, they have broadly positive opinions about the value of deploying these contracts within their organizations. A total of 50 qualified representatives participated in the survey, representing 45 different health plans. Health plans included in the study represent 183 million of the covered lives in the U.S., including Medicare Advantage and Medicaid managed care lives.

In this survey, 70 percent of health plans reported specifically that they have favorable attitudes toward outcome-based contracts. One-quarter of the health plans surveyed said they have at least one of these such contracts in place already. Of this segment, 12 percent said they have five or more contacts of this type in place, 4 percent said they have between two and five contracts in place, and 8 percent said they currently have one outcomes-based contract.

Another 30 percent reported they are negotiating for one or more value-based contracts now, while 29 percent reported that they are not planning to undertake any.

Among payers with these contracts in place, most indicated they plan to pursue more. What’s more, today, most outcomes-based contracts in place by the survey respondents address four common therapeutic areas—endocrine (55 percent), infectious disease (45 percent), cardiovascular (42 percent), and respiratory conditions (41 percent)—but payers indicated they are interested in expanding the contracts within these areas and to new therapeutic areas, like immune/inflammatory diseases.

“Health plans, providers, and patients demand innovative, data-based methods to improve outcomes and manage cost,” Dan Mendelson, president at Avalere, said in a statement. “Outcomes-based contracts offer the opportunity to deploy data, analytics, and interventions to deliver on these goals for pharmaceuticals—particularly to better integrate therapy into medical management.”

Kathy Hughes, vice president at Avalere, added, ““While some plans have experienced administrative and operational challenges in implementing outcomes-based contracts, most are figuring out ways to benefit from these types of contracts in multiple therapeutic areas. Solutions in data connectivity, contract monitoring, and direct clinician intervention streamline the administrative burden and enable transparency for all parties.”

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