Insurers favor value-based contracts, but few are available

Most health plans responding to a Avalere Health survey said they have favorable attitudes towards value-based contracts, though smaller numbers of insurers are actually pursuing or have entered into those agreements.

The survey was completed by 50 “qualified representatives” for 45 health plans. Avalere said the respondents represent 183 million of the covered lives in the United States, including those in Medicaid managed care or Medicare Advantage plans.

A large majority (70) percent reported favoring contracts based on outcomes. Only 24 percent, however, have those contracts in place, with 12 percent having five or more contracts and 8 percent having just one.

Another 30 percent reported negotiating one or more value-based contracts at the time they completed the survey, and 29 percent said they’re not planning to pursue those agreements.

“Health plans, providers, and patients demand innovative, data-based methods to improve outcomes and manage cost,” Avalere President Dan Mendelson 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.”

Among plans which have outcomes-based contracts in place, the results appear to be positive, as most indicated planned to pursue additional contracts. Of the current contracts in place, respondents reported they’re mostly centered on four therapeutic areas—endocrine (55 percent), infectious disease (45 percent), cardiovascular (42 percent) and respiratory conditions (41 percent). Health plans said they’d like to expand to new areas, particularly inflammatory diseases.

Operational challenges remain, however, which could limit uptake among reluctant health plans.

“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,” said Kathy Hughes, vice president at Avalere. “Solutions in data connectivity, contract monitoring and direct clinician intervention streamline the administrative burden and enable transparency for all parties.”

A lack of buy-in from health plans has already slowed down the transition to value-based care. A December 2016 survey from the American Medical Group Association, 64 percent of respondents fewer than 20 percent of local commercial insurers offered risk products in their market, with 18 percent saying none were available in their area.