1. Assessment of Payer ACOs:
Industry’s Role
Todd Berner MD
Medical Director
Head Global Medical Affairs Strategy, Immunology
7th
Partnering with ACOs Summit
June 6, 2016

2. Muller RW, ECRI Institute Conference 11.28.2012

3. Global Downward Trends in
per capita Healthcare Spending
Deloitte Health Care Current 2016

4. Winning under reform:
Critical success factors
 High quality; reduce costs
 Ability to aggregate clinical capabilities and deliver
evidence-based care
 Access to capital
 Ability to aggregate lives
 Physician / Hospital alignment
 Ability to aggregate and analyze data
 Ability to engage consumers
 Manage transition with one foot in FFS and stepping
into risk-based contracting
 Ability to manage risk
 Understand benefit design

5. Commercial ACO Growth
Health Value Summit – Leon Panetta

6. "The drawback to ACOs,
is losing money"
-Deborah Dorman-Rodriguez, Attorney

7. Organizations with private ACO
contracts tend to be larger and more
advanced than those with public
ACO contracts only

8. Size of private payer ACOs
• Cigna operates 114 collaborative accountable
care initiatives in 28 states, encompassing
more than 1.2 million customers and more
than 48,000 doctors.
• United Healthcare reports that 11 million
beneficiaries are enrolled in accountable care
type programs. It expects total payments to
physicians and hospitals in these
arrangements to reach $43 billion in 2015 and
$65 billion by the end of 2018.
Philips Financial Report 2015

9. ACO Contracts are Defined by Risk
They hold a group of providers collectively responsible for both
the total cost of care and the quality of care for a defined
patient population
This would exclude pay-for-performance that does not include
responsibility for total cost of care, and capitation without a
major quality component.
Lewis VA et al AJMC 2014

10. Implementation of Alternative Payment Models
(APMs) in the Private Sector
• Parallels CMS efforts to increase APMs ties to
FFS payments (30% by 2016, 50% by 2018)
• MACRA physician payment strategies will
accelerate change within private sector
payment models
Higgins A et al AJMC 2016

11. Overlap of Private Payer and Public ACO Contracts
Lewis VA et al AJMC 2014

12. Differences between Commercial and
MA populations drive VBC adoption
• Commercial populations do not lend themselves to
investments in population health
 “In MA you look at an attempt at a marriage, whereas in commercial you
look at a one-night stand. In commercial, you are really managing unit
cost – things like maternity and accidents. You are not going to affect
those incidents.”
• Commercial populations are more transient than MA populations
• Employer can move a large group to a different plan;
• Members move due to job changes
• Heterogeneity of commercial populations, member needs and plan
designs across various insurance lines make population health
management much more challenging and elusive than in MA
Deloitte Center for Health Solutions 2015

13. “Understanding the nature of ACO contracts is critical
to even beginning to understand the potential effect
of the ACO model on healthcare costs and quality”
• Most ACOs had only 1 ACO contract (57%)
• About half of ACOs had a contract with a private payer
• The single most common private payer ACO contract was an
upside-only shared savings model (41%), although the
majority of private contracts included some form of downside
risk (56%)
• A large majority of contracts made shared savings contingent
upon
• Quality performance (79%)
• Bonus payments for quality performance (39%)
• Upfront payments, such as care management payments (56%) or
capital investment (17%)
Lewis VA et al AJMC 2014

14. Characteristics of Largest Private Payer ACO Contracts
Lewis VA et al AJMC 2014

15. Types of Value Based Contract Participation by
Providers
Deloitte Center for Health Solutions 2015
65% of
provider
respondents
believe that
participating
in VBC
programs with
CMS will help
them succeed
in VBC
arrangements
with health
plans.

16. Population Health
Deloitte Center for Health Solutions 2015
 “Twenty percent of readmissions are due to patients not
taking their drugs correctly post-discharge. Investing in
pharmacy gives the best bang for the buck. We do this with
highest-risk patients: congestive heart failure (CHF), chronic
obstructive pulmonary disease (COPD), heart attack,
pneumonia. We also have a catch-all category – we call it
“social” – no matter what we do they are at high risk of
readmission. Additionally, the pharmacists can identify
problems; they can send a PA or NP for a home visit, for a
more detailed evaluation.”
-Medical Director, Provider-sponsored Plan

17. Innovative Approaches to Population Health Management
Not yet widely adopted by Providers
Deloitte Center for Health Solutions 2015

18. Health Plans and Providers disagree about biggest
Challenges in VBC Contracting
Deloitte Center for Health Solutions 2015

19. Population Health from the Perspective of the
Private Payer
• Focus on managing high-risk populations – populations with co-
morbidities and chronic conditions that use a lot of health resources and
are ultimate drivers of additional costs in the healthcare system
• Holistically manage the health of high-risk populations., like insurer providing
care coordinators and even embedding clinical staff onsite with the providers
• Per member – per month care coordination fees and other types of
compensation that incentive providers to population health management
• Moving providers towards a shared savings or shared risk compensation
model incentivizes population health management because the provider
knows they are financially responsible for a defined population
• Programs and models of care similar to ACOs and patient-centered medical
homes
• Cost savings from avoiding hospital or ER readmissions, Shifts provider
mindset as provider will see additional revenue from avoiding that type of
care
Deloitte Center for Health Solutions 2015

20. Population Health from the Perspective of the
Private Payer
Deloitte Center for Health Solutions 2015
• Health plans generally have better data about member behavior and utilization patterns
than Providers, and can analyze the data at the member, physician, and population level
• Health plans have deeper data analytic capabilities than the typical provider organization
– Predictive models to identify high-risk beneficiaries for Care Management interventions
• Many Health plans already share their data with Providers, but often there is a
considerable time lag; the information is poorly integrated in providers’ workflows
• Data exchange between health plans and providers will likely evolve to combine claims
history and clinical information from EHRs; providers then would be able to access the
data on demand and at the point of care in real time
 From an Industry perspective:
 Providers recognize the need for analytic capabilities, and while it may not
be feasible for health plans to directly fund analytics software for providers,
sharing data in new ways and lending support in collecting and analyzing
providers’ own clinical data could ameliorate this need. In other areas (e.g.,
data sharing, clinical care pathways, and staffing) plans’ investments appear
to align with what providers value

21. “We share data with
health systems,
showing 30-40 percent
leakage from their
network of employed
physicians. Because we
have more visibility into
longitudinal care – care
outside their walls – we
show we can increase
keepage in their
system. We are able to
track progress over
time, showing
providers incrementalʼ
changes in their
utilization patterns.”
-Medical Director,
National Health Plan
Deloitte Center for Health Solutions 2015
Alignment of Health Plan Investments with Provider Needs

22. Payer ACOs Technical Assistance to Providers
Higgins A et al AJMC 2016

23. Payer ACOs Provider Eligibility Criteria
Higgins A et al AJMC 2016

24. Characteristics of Providers with
Private ACO Contracts
• Providers with private contracts are more likely to be
integrated and anchored by a hospital
• Achieve higher levels of electronic health record meaningful
use among their primary care physicians
• Have more full-time equivalent primary care physicians and
specialists
• Experienced in pay-for-performance initiatives and other
reforms

25. “When you come to a wall that is too
high to climb, throw your hat over the
wall, and then go get your hat.”
-Old Irish Adage

26. Increasing ACO Focus on
Cancer and Specialty Conditions
HIRC Report
ACOs: Specialty and Oncology Management Initiatives 2015-2018

27. ACOs with commercial contracts in-place can be
responsible for drug costs as part of total cost of care
measures
HIRC Report
ACOs: Specialty and Oncology Management Initiatives 2015-2018

28. Specialty Pharma’s ACO Care Management Support
HIRC Report
ACOs: Specialty and Oncology Management Initiatives 2015-2018

29. Listening to the Patient Voice in
Research

30. Value Evidence Generation
Access

31. Real World Evidence:
Efficacy vs. Effectiveness
Example-
• RCT data
• Extremely high placebo response rates
• Difficult to show efficacy for drug compared to placebo
• It is essentially all non-pharmacologic therapy compared to
non-pharmacologic therapy + drug
• Real World data
• All of the behavioral, non-pharmacologic intervention
associated with the RCT moves over to the drug side of the
ledger
• This becomes a comparison of activated, engaged Rx
recipients vs. those with just an Rx

32. Identifying the various Stakeholders

33. Opportunities for ACOs to Better
Manage Costs
• Consider distinctions among medications
• Acquisition costs
• Utilization
• Overall medical costs
• Identify interventions
• Utilization management strategies
• Drug formulations
• Best practices for risk management
• Care coordination
• Developing a ‘Change Package’
• Forging new types of relationships to answer questions of
relevance to ACOs
• The Imperative to Remain Relevant

35. Implementation of Alternative Payment Models
(APMs) in the Private Sector
• Consumerism in health care may trigger the industry to
change even more rapidly than before
• Awakened by consumer-driven trends in other industries
• Driven by high deductibles and high co-pays
• Health care consumers are beginning to seek out
organizations that approach health care with the same
technological and value-driven focus as the financial and
consumer products industries
• New ventures are shaking up traditional business models and
placing the consumer at the forefront
Higgins A et al AJMC 2016

36. Implementation of Alternative Payment Models
(APMs) in the Private Sector
• FasterCures, BIO, and Eli Lilly developed independent yet
complementary proposals for Congress as part of 21st Century
Cures to authorize a public private partnership dedicated to
developing tools and methods to support science-based
approaches for collecting patient input
• The Science of Patient Input
• Integrates patient perspectives for research-based methods and tools to
measure the effectiveness of incorporating patient input into the system
and, ultimately, its impact on patient health
• Began as an extension of patient advocacy
• Has evolved into an emerging scientific discipline aimed at understanding
and incorporating patient needs into the processes of developing,
regulating, and delivering new therapies
Anderson M McCleary KK
Science Trans Med 2015

37. Methods of assessing patient preference adapted
from health economics, outcomes research,
epidemiology, social sciences, and marketing sciences
• Despite the increasing number and scope of patient-involvement initiatives, there is
no accepted master framework for systematic patient involvement in industry led
medicines research and development, regulatory review, or market access decisions
• Ensure that patients and their needs are embedded at the heart of medicines
development and lifecycle management
• Clinical Trials Transformation Initiative, National Health Council, University of Maryland’s
Center of Excellence for Regulatory Science Innovation, and PCORI have provided
opportunities to share emerging practices and lessons learned
• Develop structured assessment of benefits and risks, Benefit-Risk Assessment Team from Pharmaceutical
Research and Manufacturers of America, the Centre for Innovation in Regulatory Sciences, and special
interest groups within the International Society for Pharmacoeconomics and Outcomes Research,
FasterCures’s Benefit-Risk Advisory Council
• For medical devices and biologics, FDA’s CDRH and Center for Biologics Evaluation and Research draft
guidance “Patient preference information—Submission, review in PMAs, HDE applications, and de novo
requests, and inclusion in device labeling”
• Medical Device Innovation Consortium (MDIC), a public-private partnership, “Framework and catalog of
methods for incorporating information on patient preferences regarding benefit and risk into the regulatory
assessments of new medical technologies”
Anderson M McCleary KK
Science Trans Med 2015

38. Methods of assessing patient preference adapted
from health economics, outcomes research,
epidemiology, social sciences, and marketing sciences
• Patient organizations have piloted new approaches to meet the
demand for data that supplement personal testimony and
participation of individual advocates as patient representatives in
decision-making bodies
• Parent Project Muscular Dystrophy (PPMD) sponsored a benefit-risk–
preference study among parents of boys with the Duchenne
• FDA opened a public docket to receive comments on PPMD’s guidance
document
• Other patient organizations are following PPMD’s model—seeking academic
partners, building patient registries, and educating their patient
communities about new opportunities to reshape treatment pipelines and
care delivery
Anderson M McCleary KK
Science Trans Med 2015

39. Opportunities for Industry within ACO Delivery and
Management of Specialty Pharmaceuticals
• Commercial ACOs are beginning to focus on higher cost, lower prevalence
disease states , like oncology
• Anthem Cancer Care Quality Program, Cardinal Health P4 program, United Healthcare
and Florida Blue clinical pathways
• Oncology-focused ACOs
• Some ACOs lack the scale and resources needed to extend comprehensive patient
support prior to, during and after therapy
• Commercial ACOs are leveraging the existing infrastructure and expertise of specialty
pharmacies
• Strategies include:
• Drug acquisition and drug regimen selection (clinical pathways)
• Minimizing waste and improving efficiency
• Late stage treatment selection and planning (split filling)
• Reducing avoidable complication and adverse events
• Adherence programs
• Data sharing across care teams
• Patient engagement
Rebecca M. Shanahan,
Chief Executive Officer, Avella Specialty Pharmacy

40. ACOs Managing Site of Care
for Costly Procedures
• Member cost savings achieved when procedures
shifted to outpatient settings
• Angioplasty performed in an outpatient facility, saved an
average of $1,062 per procedure out-of-pocket compared
to when performed at an inpatient facility
• Annual procedure cost trends were greater for inpatient
procedures
• Angioplasties experienced the greatest difference, with
inpatient cost trend at 6.1 percent and outpatient cost
trend at 1.4 percent across the five-year time period
• While outpatient utilization increased over a five-year
period, overall utilization did not increase
• Outpatient utilization increases were offset by significant
decreases in inpatient utilization
BCBSA “How Consumers Are Saving with the Shift to Outpatient Care” [February 2016]

41. BCBSA “How Consumers Are Saving with the Shift to Outpatient Care” [February 2016]

42. BCBSA “How Consumers Are Saving with the Shift to Outpatient Care” [February 2016]

43. Drug Regulation and Pricing
Can Regulators Influence Affordability?
1. Rapid approval of biosimilars
2. Continue to approve ‘me-too’ products
3. Clinical Trial design that demonstrates Value
 EMA Parallel Scientific Advice Sessions
1. Post approval studies that generate relevant
patient level outcomes data
 Entresto
Eichler HG et al NEJM 2016

44. “Knowing is not enough; we must apply.
Willing is not enough; we must do.”
-Johann Wolfgang von Goethe