A Reality Check on Health Care Value Models

June 23, 2016

High drug prices have led to a proliferation of value models that investigate how the United States can control ballooning health care costs. But just how realistic are these models – and their implementation?

Cancer Care Value Models

Consider cancer care value models. A recent poster presentation from the 2016 annual meeting of the Academy of Managed Care Pharmacy looks at five cancer value models—those from American Society of Clinical Oncology, the European Society for Medical Oncology, Memorial Sloan Kettering Cancer Center, the National Comprehensive Cancer Network, and the Institute for Clinical and Economic Review. The prognosis? They don’t take into account “societal considerations and patient preferences.” In short, they don’t reflect reality.

The researchers point out work productivity in particular as a key value factor missing from many models. Lower levels of toxicity, and fewer – or more tolerable – side effects, can impact a patients’ ability to continue working. A related factor may be the option of an oral medicine rather than an infused one. Given the high cost sharing required for some cancer therapies, patients’ ability to continue drawing an income can be crucial for accessing care.

By incorporating this and other patient-centered factors, value models could better reflect the values of actual patients – potentially making such models more viable.

Outcomes-Based Pricing Models

Outcomes-based pricing, one of several proposed facets of the Centers for Medicare and Medicaid Services’ Part B demonstration, also poses problems. The concept involves insurers retroactively negotiating prices with drug companies based on patients’ outcomes with a particular drug.

But problems may arise as ideology becomes practice. Policy experts note that getting rebates from insurers back to patients can be challenging. That’s if it’s possible to track a patient’s success with a drug in the first place, which may be more difficult in the United States, where the availability of multiple health plans allows patients to switch insurers. So far, outcomes-based pricing models have been used in countries with single-payer health care systems.

Implementation Challenges

Then there’s the question of how prepared the current U.S. health care system is to incorporate value-based models. A recent survey of physicians and health care executives found that:

  • 74 percent considered quality measures overly complex, making them difficult for physicians to achieve
  • 65 percent of physicians said they don’t have all the patient information they need to comply with value models
  • 57 percent of health plan executives believe the health care system should be value based, yet only 33 percent of physicians do.

CMS’ Part B Demonstration suggests the federal government’s commitment to addressing the country’s health care cost challenges with experimental models – imminently, on a sweeping scale, and even without patient and physician buy-in. But as emerging value models mature, their proponents might reflect on patients’ own definition of value and on the role of one more, critical factor: reality.

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