Rapid medical and biopharmaceutical innovation is accelerating momentum toward value in healthcare.
Years of rising costs, along with unprecedented innovation, have fundamentally transformed the healthcare system, signaling the urgent need to change the way we pay for healthcare products and services.
As a result, stakeholders are developing new tools to facilitate a transition to value-based care. For example, value-based agreements with payers help biopharmaceutical manufacturers improve patient access and reduce overall healthcare costs by focusing on outcomes.
As participation in value-based agreements grows, policymakers have developed regulatory structures that support the shift to value. Recently, policy changes related to the Medicaid “best price” rule show progress among federal regulators. At the state level, the Centers for Medicare & Medicaid Services has prioritized Section 1115 waivers through the state plan amendment process to make it easier for Medicaid programs to enter into value-based arrangements with manufacturers.
While these initial policy and regulatory barriers have been addressed, operational hurdles are holding back the broader adoption of innovative reimbursement models. This is where digital innovation leveraging blockchain technology presents an opportunity.
The need for value-based arrangements
Unlike the traditional fee-for-service model, which bases payment strictly on the volume of services provided, value-based arrangements link reimbursement for healthcare services and products to outcomes.
At their core, these agreements are a risk-sharing model between payers and biopharmaceutical manufacturers. In entering the arrangement, parties agree to put a portion of the reimbursement “at risk,” contingent on meeting specific patient outcomes. The arrangement, therefore, incentivizes improved access and affordability for inline and new, innovative medicines and ensures all parties are working towards improving clinical outcomes and reducing overall healthcare costs.
Understanding the operational challenges
While value-based contracts between payers and biopharmaceutical manufacturers have been publicly announced since 2009, we have yet to realize their full potential.
That’s because value-based agreements are complex and require evaluating several data sets, including claims and clinical data, to determine whether value is being delivered. Further, implementing these agreements is often challenging and resource intensive.
A central stumbling block preventing the wider adoption and more efficient evaluation of value-based agreements is that the reconciliation process between payers and manufacturers during invoicing has inherently involved siloed data sets and disparate systems from multiple parties. This makes reconciliation time-consuming and burdensome for all parties and can lead to disputes.
The blockchain opportunity
Innovators have learned that such operational challenges are not an insurmountable problem.
For example, Pfizer developed a first-of-its-kind management platform for manufacturers and payers that streamlines administration of value-based contracts. The platform takes the complexity out of operationalizing the agreement by bringing together all partners within a single system, centrally processing multiple data, and delivering a single interpretation of the data in real time.
At the center of this solution is blockchain technology, which helps create a trusting environment for contracting parties by protecting the fingerprint of data and contract analytics. It uses a “smart” contract to codify business rules and creates a timestamped, immutable audit trail of transactions so that no single party can alter the transaction based on individual contract interpretation.
“At Pfizer, we cultivate an environment that encourages exploration of innovative technologies through partnerships with payers and other innovators to drive access and affordability for our patients. Our blockchain-based solution helps overcome challenges around operationalizing value-based agreements and represents an important investment in efforts to support and partner more effectively with the healthcare system.”
Latif Akintade, Senior Vice President, Patient and Health Impact, Pfizer
The shared platform offers numerous benefits in comparison to a siloed environment, including:
- A single source of “truth” for both contract analytics and outcomes data;
- Faster, smoother, and more accurate downstream processes, as a result of doing contract codification upfront;
- Less time spent reconciling claims and resolving disputes since there is no need for a third party to adjudicate the contract; and,
- Real-time contract performance monitoring that opens the door for faster payment and improved contract design.
Bringing the solution to scale
Following program development and a successful pilot phase, Pfizer and strategic payer partners are evaluating extended agreements for additional products within the Pfizer portfolio. A key component supporting the successful pilot phase is gaining payer insight. SelectHealth, a strategic partner in the development of the solution provided feedback on their experience.
“With the implementation of this solution, SelectHealth forecasts an 85% reduction in time required to prepare VBA data — 88 hours saved per contract. Like a dashboard, it simplifies everything, making it easy to dig into details as needed, along with easy data uploads,” said Eric Cannon, Chief Pharmacy Officer, SelectHealth.
Efforts are currently underway to industrialize the solution so that any biopharmaceutical manufacturer and payer can leverage and benefit from the platform. While Pfizer’s current focus is on the United States, the company plans to extend the solution to markets in other regions like Latin America, Canada, and Europe, further unlocking the potential of value-based contracts worldwide.
Harnessing the power of blockchain technology in value-based agreements is just one step in addressing the technical, structural, and financial barriers to delivering value to patients. The blockchain platform holds extraordinary potential to revolutionize how value-based contracts are executed and ensure the long-term sustainability of the healthcare system.
For more information, email Dorothy Hoffman.