Alternative Payment Models and Pharma’s Decisive Position for Payer/Provider Collaboration

By Shane Devereux

The Kinetix Group hosted its second annual Health Systems Advisory Panel in association with the AMGA Annual Conference, discussing value-based care in the transitioning healthcare landscape. Among one of the many topics, the group of renowned healthcare experts discussed the shift from Merit-Based Incentive Payment System (MIPS) to Alternative Payment Models (APMs) under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

Read on to learn more about the impact this policy will have on the pharmaceutical industry.

What are MIPS and APMs?

Under MACRA, Congress’s Final Rule established two payment tracks: MIPS and Advanced APMs. MIPS establishes a new quality-based payment framework, whereby qualifying clinicians must report on four metrics:

  1. Quality
  2. Improvement activities
  3. Advancing care information
  4. Cost performance (not included in the first year of reporting).

Alternatively, clinicians can opt to participate in high-risk, coordinated care models, or the Advanced APMs pathway. To receive financial bonuses within an Advanced APM, clinicians must receive 25% of their Medicare Part B payments or see 20% of their Medicare patients through an Advanced APM.1

Anticipation of MIPS/APM:

The Quality Payment Program (QPP) has established comprehensive key dates for providers to gauge payment adjustments from 2017-2019. In a recent survey, conducted by the American Medical Association and KPMG, physician readiness for MIPS was markedly negative: 90% of practices planning to participate felt that the MIPS requirements are slightly burdensome (37%) or very burdensome (53%). The survey also revealed that only 8% feel ‘very prepared,’ 58% felt ‘slightly prepared’ and 26% don’t feel prepared at all.2

The Shift from MIPS to APMs:

Most providers are participating in the QPP partnerships through MIPS, but a considerable number are interested in moving into APMs where there is higher-risk and reward opportunities. The transition to APMs also exempts qualifiers from MIPS, which entails heavy reporting on the four categories of metrics discussed above. 2017 is regarded as the transitional year of the QPP, whereby health care clinicians can ‘pick their pace’, determining their payment adjustments in 2019. CMS estimates that more than 125,000 clinicians will participate in Advanced APMs and qualify for a 5% incentive payment in 2018.3

Pharma’s Opportunity to Partner with Payers and Providers:

As the healthcare landscape shifts into value-based payment and risk-based reimbursement models, there is a greater opportunity for pharma to move with the tide and embrace partnerships with payers and providers on the cusp of implementing alternative payment models. This reform in the structure of healthcare economics is enticing pharma to re-strategize.

For example, the recent partnership between Merck and Aetna highlights this movement toward value-based contracting between payers and pharma. The baseline stipulations of the contract infer that Merck assumes part financial risk for its medications. If Aetna customers, who are using Merck’s diabetes drugs, don’t meet a certain set of targets, Merck is charged with paying a rebate to Aetna. Through this, the partnering companies’ aims are to improve health outcomes, by improving medication adherence and care coordination for patients with type-2 diabetes.

As alternative payment models become more prominent, pharma must provide technical assistance programs and other resources to ensure shared success in the new payment environment. Under the guidelines of the QPP, providers will be risk-bearing, but in promoting successful partnerships to create the most effective solutions for episodes of care, pharma is in a decisive position to help shoulder some of that risk.

References:

  1. APMs Overview. Quality Payment Program. https://qpp.cms.gov/apms/overview. Accessed August 1, 2017.
  2. Are physicians ready for MACRA/QPP? Results from a KPMG-AMA Survey. American Medical Association. https://assets.kpmg.com/content/dam/kpmg/us/pdf/2017/06/8025-KPMG-AMA_MACRAsurvey-6-27.pdf. Published January 2017. Accessed August 1, 2017.
  3. The Quality Payment Program Overview Fact Sheet. Centers for Medicare and Medicaid Services. https://qpp.cms.gov/docs/Quality_Payment_Program_Overview_Fact_Sheet.pdf. Accessed August 1, 2017.