Other solution design considerations
Beyond the financial models, FoCUS discussions have highlighted additional considerations for payers and other stakeholders as they think through complete solutions to enable sustainable patient access to these therapies.
A brief overview of several of these key issues is provided below.
Outcomes tracking over time Patient mobility Provider accreditation / Centers of Excellence Provider financial considerations Out-of-state networks Buy and bill State plan amendments Patient financial implications
Tracking patients who are administered durable therapies is important from both a safety and an outcomes perspective. FDA guidance suggests monitoring patients for 5-15 years after administration. To the extent that a performance-based financial contract is signed between payers and manufacturers, outcomes tracking is also needed to support performance evaluation. Additional information may be found in the research brief “Payer perspectives on outcomes tracking for value-based payment arrangements (VBPs)”.
We define ’outcomes tracking’ as all of the processes and rules specific to performance and payment data required for precision financing to work. These include:
- What data are needed?
- Developer and payer alignment on expectations for demonstration of efficacy, durability, safety and value.
- Developer and payer alignment on expectations of long term requirements of collection frequency, duration, endpoints.
- Who collects these data?
- Identify any infrastructure in place for data collection. Can it reduce duplication of efforts?
- Who can analyze and determine sharing of these data?
- Proper informed consent
- Communication protocols for providing relevant information to regulators regarding adverse event detection.
- How are data stored?
Tracking of patient outcomes to ensure either agreed performance metrics or milestones have been reached may include utilizing real world evidence (RWE). If a patient moves from one payer to another after receiving a high cost therapy, a tracking mechanism to follow the patient needs to be in place. It is thought that data from claims, medical records, registries, PROs, and monitors/wearables could be used to provide real world evidence. HIPAA (Health Information Portability and Accountability Act) issues would need to be addressed, but it is assumed these could be handled in the upfront patient therapy consent form.
Tracking patients over time may present challenges – particularly for patients with therapy- transformed health who may become less connected to a specialist. Patients may not prioritize the ongoing testing and tracking required for performance guarantees. Incentives of waiving co-pays, or even perhaps refunding a portion of a patient’s initial deductible if they undergo evaluation may be required to obtain the needed performance data. This would all need to be baked into the initial agreement the patient accepts in order to receive treatment.
Longer-term tracking may also lead to collaboration opportunities to reduce data tracking costs by developing mechanisms that include multiple products in an indication, and perhaps coverage for broader disease areas served by the same providers. For example, blood disorders from hemophilia to sickle cell anemia and beta thalassemia among others might benefit from a multi-payer, multi-developer, multi-provider system for tracking patient outcomes. The CIBMTR® (Center for International Blood and Marrow Transplant Research®) and its outcomes database of every allogenic transplantation and many autologous transplantations may be a model for other areas.
Policies supporting precision financing can help provide infrastructure to facilitate the capture, sharing, and quality control of patient data as well as provide clear guidance on the type of data that should be captured and shared to enable performance-based contracts.
Patients may change payers and providers over time. This can be due to changes in life circumstances – geographic relocation, getting married, a new job, etc. – or due to changes in health insurance coverage or provider preferences. Lower-income individuals in particular may move across payers as they shift between Medicaid, exchanges and business coverage based on employment and income levels.
Such patient mobility raises several issues for durable therapies. First, it complicates follow-on patient monitoring and outcomes evaluation over time, something that will be important as we seek to better understand the performance of these new, innovative therapies. Second, for multi-period precision financing solutions, patients moving across plans may be a risk in today’s market for the first payer, who bears the durable therapy expenditures, while the next payers reap the lower future expenses potentially associated with cost offsets. Thus, the first payer may have an incentive to avoid treating the patient with the durable therapy, even if from a system-level it would be the optimal choice. Patient mobility also inhibits the patient tracking that the first payer needs to adjudicate a performance-based outcome, as transferring the first payer’s contractual terms to subsequent payers is unlikely.
In creating access solutions for a new durable therapy, stakeholders will want to develop a clear approach for monitoring patients over time. Any contractual agreement for a multi-period precision financing solution will also need to explicitly address potential patient mobility and adjudication of patients lost to follow-up.
Additional discussion of issues associated with patient mobility may be found in the FoCUS Research Brief: Impact of Patient Mobility on Annuity/Performance-based Contracting.
Provider accreditation and/or Centers of Excellence
The cost and the complexity of administering some durable therapies is leading payers and also manufacturers to certify which providers may offer the products. Both Gilead/Kite and Novartis have limited access to their CAR-T therapies to company-certified treatment centers. Beyond core medical competence, some stakeholders suggest providers should meet additional quality procedure standards and/or reporting requirements. Insurers may want assurances that providers have sufficient expertise and that the laboratory and other sources needed by patients on these treatments are readily available. Therapy-specific certification programs may be an avenue to define standards and criteria for providers who wish to provide these more complex treatments and services. Certification will require provider organizations to expend time and resources.
Centers of Excellence
As the cost and the complexity of administering some durable therapies is leading payers and also manufacturers to certify which providers may offer the products, we may also see movement towards centers of excellence (COEs). Current centers of excellence exist in the form of academic medical centers and speciality hospitals. A patient seeking treatment for a rare condition often travels to these types of hospitals for treatment. In the future, we would expect to see further COE development.
A center of excellence is “a program within a healthcare institution which is assembled to supply an exceptionally high concentration of expertise and related resources centered on a particular area of medicine, delivering associated care in a comprehensive, interdisciplinary fashion to afford the best patient outcomes possible.” (Elrod, JK, et al., Centers of excellence in healthcare institutions: what they are and how to assemble them)
Establishing centers of excellence as part of a specialty network typically includes defining:
- Selection criteria
- Volume/outcome reporting requirements
- Quality improvement plans
- Designation/de-designation processes
- Clarity in how members can identify designated centers
- Care coordination
- Benefit language
- (Maybe) contracting strategies
Ideally, COE networks will help to ensure a consistent quality of patient care and encourage better clinical outcomes, while creating incentives for cost-effective care with disincentives for waste. Challenges will include implementation of consistent but minimally burdensome reporting and quality standards, and broad access to patients regardless of geography, clinical need and socioeconomic background. Additional detail may be found in the FoCUS Research Brief: Role of Centers of Excellence (COE) Networks in the Delivery of Curative Cellular Therapies in Oncology.
To control costs, some plans may restrict their provider networks, establishing "narrow networks." Moreover, for durable therapies, there may be limited providers (centers of excellence) who are authoritized by either a developer or a payer to deliver a particular therapy to ensure quality administration.
Patients may need to seek out new providers or travel -- perhaps even across state borders -- in order to access treatment. This can have cost implications for patients, in addition to time lost from work, and may require payers to establish specific processes for patients to access providers who are not typically "in network." This is particularly relevant for Medicaid payers who may traditionally work only with in-state providers.
Provider financial considerations
The availability of durable therapies may raise both temporary and more unique provider financial challenges that payers will need to consider in finalizing a coverage strategy.
Temporary barriers could include:
- Delay in availability of billing codes: The amount of time it takes for new billing codes to be provided and how providers will be able seek reimbursement during that period
- Inadequate DRG rates: Existing inpatient DRGs will not include the costs of durable/curative therapies. This may be partially addressed by Medicare New Technology Add-on Payments, but these often significantly lag the therapy launch, are not approved, and only provide partial coverage.
- Unavailable or inadequate outpatient reimbursement: A therapy administered in an outpatient setting may need to receive a distinct and separate code, e.g., a “J code,” to enable reimbursement filing. Code issuance is often delayed, with commensurate patient access delays and significant financial risk to providers during the interim. Once issued, adequate federal and private reimbursement levels are not assured. Providers may find existing infusion, office visit and other follow-up reimbursement codes sufficient for their services. We assume these would be adjusted over time.
More broadly, a provider may also face product inventory risk. Under a buy-and-bill model, providers acquire the product, administer it and then receive payer reimbursement later with a mark-up. During that time the provider bears stocking and inventory carrying costs, as well as risk of wastage, contamination and expiration. These costs and risks increase with a therapy’s cost and any payment timing delays. Given this, providers are unlikely to stock these treatments, but rather would arrange just-in-time delivery. Additional details on buy-and-bill considerations may be found here.
Cell and gene therapies may also result in financial risks due to changing provider service patterns. Gene therapy may replace existing treatments. If the administration of gene therapy is performed by a different provider or if the provider was dependent on income from administering existing treatments, the advent of gene therapies may require re-evaluation of the services the provider offers, alternative approaches to achieve greater efficiency in service delivery, and/or re-negotiation of payer reimbursement levels for remaining services. This type of financial risk is particularly a concern where providers may be informally cross-subsidizing one service with another’s income. A concrete example of how gene therapy might affect Hemophilia Treatment Center income and services may be found here:
Buy and bill
For some categories of medicines today in the US – specifically medicines administered by providers in the outpatient setting – a provider may buy the medicine from a manufacturer and then bill payers once the provider administers the medicine to patients. Some payers reimburse providers for these buy-and-bill medicines as a percentage of the price of the medicine.
Gene and cell therapies raise two questions with respect to buy-and-bill. First, for a high-priced medicine, a typical percentage fee for purchasing, storage and administration may be a large number in dollar terms. Payers may avoid using fixed percentage markups for provider reimbursement. For example, an early gene therapy (LUXTURNA™) allows payers to purchase this physician-administered therapy directly from a specialty pharmacy. Payers and providers would then also need to negotiate the appropriate separate reimbursement for administration services.
Second, some providers may rely on profits from current buy-and-bill medicines to defray the cost of providing other services to the patient that cannot be directly billed (e.g., social workers providing patient support). Their ability to continue to provide these services may need to be reconsidered in the face of a potential loss of that revenue if the new therapies that replace them are transacted directly between the payer and the developer. In this event, payers and providers may also need to re-evaluate the appropriate reimbursement for other services where cross-subsidization may have occurred.
State plan amendments
A Medicaid state plan is an agreement between a state and the Federal government describing how that state administers its Medicaid program. The agreement ensures that a state will abide by Federal rules for its program activities and includes details of individual coverage, services provided, reimbursement procedures for providers and administrative activities that are ongoing in the state.
When a state is planning to make a change to its program policies or operational approach, the state sends a State Plan Amendment (SPA) submission to CMS for review and approval. States also submit SPAs to request permissible program changes, make corrections, or update their Medicaid state plan with new information.
Due to federal regulations, states will need to submit a State Plan Amendment (SPA) in order to agree on several of the solutions described in this toolkit. Several state Medicaid plans (Oklahoma, Colorado, Michigan and Massachusetts) have successfully applied for and received an SPA authorizing the state to negotiate value-based purchasing arrangements with drug manufacturers. An SPA does not expire. As such, a value-based contract as permitted by an SPA will be subject to the terms of the agreement between a state Medicaid plan and the drug manufacturer and can be negotiated on a year-by-year basis without CMS involvement.
A Medicaid-specific FoCUS white paper has been developed that lays out additional detail on how the 1-year milestone-based contract (MBC) could be implemented in that context. The paper includes a toolkit of resources includes an example of an approved state plan amendment (SPA) application, an example Value-based Supplemental Rebate Agreement, and a worksheet for negotiating a Milestone-based Contract. The resource may be found here.
Patient financial implications
Many patients affected by conditions targeted by durable therapies often already face high financial burdens. Patient direct healthcare out-of-pocket costs include co-pays, coinsurance payments, deductibles, and high annual cost sharing limits. Some patients may have separate medical and pharmacy deductibles. For example, if a cell or gene therapy is covered under the medical benefit, Medicare patients will be subject to either an un-capped 20% out of pocket cost or the share of cost dictated by their Medicare Advantage plan or Medigap plan. Should the treatment be covered under the pharmacy benefit, Medicare Part D patients will face an un-capped 5% coinsurance payment after meeting their plans’ initial deductibles and coinsurance payments. Patients covered under Medicaid typically have very modest copays. Commercial plan coverage has 58% of patients paying over $1000 in deductibles and 29% paying over $2000 annually (Kaiser/HRET survey of Employer Sponsored Health Benefits, 2021). Just as for payers, the concentrated upfront payments for years of subsequent benefit present barriers. Additionally, patients have non-medical out-of-pocket costs including travel and possible loss of income due to treatment.
Payers and developers will want to consider the implications of precision financing solutions for patients of these therapies in finalizing their approaches. Patient copay costs primarily serve to encourage patients to make more appropriate healthcare choices when effective, lower cost options are available. For durable therapies this design objective is often moot given the alternatives. Plus, the cost sharing is a small portion of the total cost. FoCUS participants, including several payers, suggested that co-pays, deductibles and coinsurance be waived for these products provided it could be done without inducing adverse selection. That said, doing so can require State insurance approval for the change in benefit design and may take up to 18 months.
Elements of solutions that have already been offered by stakeholders for some therapies or considered more broadly in the FoCUS discussions include pharmaceutical assistance programs, patient access support programs (not available for patients covered by government payers), provider discounts and charitable write-offs, benefit design waiving co-pays, deductibles and coinsurance for these products provided it could be done without inducing adverse selection and continued innovation in financial service offerings. Additional detail on this topic may be found here:
A FoCUS Research brief on State Insurance Regulations Regarding Benefit Design (Deductible and Co-Pay Waivers) may be found here.