Payment over time or installment financing helps payers manage payment timing risk by spreading the cost of a therapy over time. It requires a contract term of greater than one year. By spreading payments over multiple years, it also partially mitigates the actuarial risk of both a surge from patient backlog and rare, but high-cost, cases.

As the figure below illustrates, this approach might include an upfront payment of some portion of the product cost, as well as a commitment to further payments from the payer every year for a defined number of years.

Figure: Conceptual payment over time contract

Patient financial implications of payment over time models need to be considered. Under the FoCUS scenario, patients should not incur future copays or deductibles related to these annual payments. But implementing this model will require operational changes; in some cases, the insurer may need to file plan amendments with state regulatory bodies. Payers that do not share the FoCUS perspective on this point may design their patient benefits to require copays in each period. If contract responsibility travels across payers with changes in patient coverage, future payers may require copays if they take on responsibility for future payments. FoCUS strongly recommended that safeguards for patients be established to prevent ongoing patient payments. Additional detail on patient financial implications may be found here. Additional discussion of issues associated with patient movement across plans and/or providers may be found here and in the FoCUS research brief: Impact of Patient Mobility on Annuity/Performance-based Contracting.

A performance contract can be added to the payment over time model. This is discussed in the performance-based annuity contract section of this toolkit. Payment over time raises both accounting and pricing regulation considerations (particularly Medicaid Best Price rules), which are discussed in FoCUS’s white paper Precision Financing Solutions for Durable / Potentially Curative Therapies and the Additional policy considerations of the toolkit respectively.

A real-life proposal for payment over time was made by Avexis for ZOLGENSMA®. Avexis arranged for an independent third party, Accredo Specialty Pharmacy, to provide a payment over time option.