Key takeaways:

• More than 60% of executives said specialty pharmacy optimization will have the greatest impact on their business.
• Nearly half said payer-provider integration will impact coordination of care for patients.

Executives from the largest U.S. health care payers cited proactive management of high-risk patients, biosimilar use and site-of-care steerage as their top tactics to lower care costs, according to a survey from Spherix Global Insights.

Spherix surveyed 27 decision-makers from nine of the leading managed care organizations and pharmacy benefit managers (PBMs) in the United States: UnitedHealth Group, CVS Health, Cigna, Kaiser Permanente, Elevance Health, Humana, Health Care Service Corporation, Molina Healthcare, and Centene Corporation. The respondents included directors of pharmacy, planning and network strategy, along with vice presidents of pharmacy strategy and chief medical officers.

“The purpose of this study is to get a deep understanding of the top nine payers in the U.S. market today and highlight how each approaches the market differently,” Sybil Mead, vice president of market access at Spherix Global Insights, told Healio. “The mixed quantitative and qualitative methodology is best to get us beyond the publicly available financial and other secondary-sourced information, to the nuance of strategy and outlook directly from the decision-makers’ perspectives.”

The survey was meant to detail specific areas of the U.S. health care market, including positioning, growth strategy, partnerships and engagement with biopharmaceutical companies, and future drivers, according to Mead.

“The volume of these top payers is compelling for drug access,” she said. “Large leading payers, serving the most significant number of insured individuals, set the scene for business priorities and innovations across the industry. These leading nine payers have distinct operating models with different approaches to integration, pharmacy management and growth.”

Relationships and partnerships between payers and industry can shape real-world prescribing patterns, sometimes as much or more than clinical guidelines do, according to Aaron Broadwell, MD, assistant professor at the Louisiana State University Health Sciences Center.

“It is critically important for physicians to understand how payers view the health care system, because payers increasingly influence the environment in which we actually deliver care,” he said in an interview. “Clinical evidence tells us what treatments can work, but coverage policies, prior authorization, formularies, site-of-care requirements, network design and reimbursement policies often determine whether and how a patient actually receives that treatment.”

The survey results can offer important insight into the incentives driving those decisions, he added.

“Payer executives are clearly thinking about total cost of care, specialty drug spending, vertical integration, analytics and automation,” Broadwell said, advising that the clinical community should not be left out of these conversations.

“A policy that looks efficient on a spreadsheet frequently has unintended consequences at the patient level,” he said. “The best outcomes are going to come when payer data and economic expertise are combined with the experience of clinicians who understand what happens to actual patients when access is delayed, treatment is changed, or care is fragmented.”

A close examination of the survey responses, including the opinions expressed on integration of care between payers and providers, could shed light on whether those outcomes can be achieved.

‘Changing the basic infrastructure’

As part of the survey, respondents were asked about the impacts of integration of care between payers and providers. Results showed that 48% of respondents said it would impact coordination of care for patients, while 44% each reported that it would impact the ability to influence site-of-care decisions for specialty medications and the integration of health care services across care. Further data showed that 41% of respondents suggested that integration would impact negotiated provider reimbursement rates and medical pricing dynamics.

“The greatest effects of integration are not necessarily traditional formulary decisions,” Broadwell said. “They are coordination of care, site-of-care decisions, integration of services, and provider reimbursement and pricing.

“That tells me vertical integration is changing the basic infrastructure through which care is delivered,” he added.

Integration creates potential conflicts that payers need to acknowledge, according to Broadwell.

“When the same corporate entity has influence over the health plan, the PBM, the specialty pharmacy and portions of the provider network, a decision about where a patient receives a medication or which channel supplies it may have both clinical and financial implications,” he said. “We have to be careful not to assume that moving a patient to an affiliated site or pharmacy is automatically synonymous with better coordination or lower total cost, but we can be sure it is what is the most profitable for the insurer.”

These are not the best metrics to assess the effectiveness of a health care strategy, according to Broadwell.

“The appropriate measure of successful integration is not how much care is captured within an organization’s own ecosystem,” he said. “The measure should be whether patients have better outcomes, more timely access, less fragmentation and a lower true total cost of care, not more profit for the insurance plan.”

The data may speak less about patient care than they do about control of the system, according to Mead.

“In general, payers have embraced vertical integration to expand control across the care continuum, with increased investment in provider assets, specialty pharmacy and data capabilities,” she said. “These moves are enabling tighter coordination between medical and pharmacy benefits, and more influence over access and utilization decisions.”

This can have implications at the systemic and individual level, according to Mead.

“When providers are owned by or affiliated with the payer, clinical decisions will be tightly aligned with financial decisions,” she said. “Owned physicians are much more likely to be compliant with formularies and pathways than non-owned providers.”

For independent providers, losing site-of-care control is much more of an issue than formulary pressure from payers, Mead added.

“Independent specialists risk referral and buy-and-bill revenue erosion as payer-owned networks capture more of the specialty care pathway, even though they are largely exempt from the formulary-compliance tracking their employed peers face,” she said.

Mead also suggested that vertical integration turns provider reimbursement from a negotiated cost into a management lever.

“It may also become a way to move where profit shows up on the books,” she said. “This can impact how medical loss ratio can be calculated because the payer can pay the rate for a claim as an intercompany transfer and not a market negotiation. This gives payer-owned groups the flexibility a non-integrated payer does not have.”

All these changes in the health care system could impact the total cost of care.

‘Identify the patients at greatest risk’

Total cost of care (TCOC) is becoming a central organizing shift in how payers are thinking about drug coverage, “at least in theory,” according to Mead.

“Today, 30% say their benefit design philosophy is primarily TCOC-driven, and this percentage will increase to 56% in 3 years,” she said.

In addition, 54% of survey respondents suggested that identifying and proactively managing high-risk members is a way of reducing total cost of care, while 46% suggested increasing biosimilar and generic use, and 42% noted site-of-care steerage as leading strategies to address TCOC.

“One of the most encouraging findings is that the leading strategy was proactively identifying and managing high-risk patients,” Broadwell said. “That is an area in which physicians and payers should have tremendous common ground. In rheumatology, there is a major difference between the cost of treating a controlled patient and the total downstream cost of poorly controlled inflammatory disease.”

However, Broadwell was less enthusiastic about some of the other methods of controlling total cost of care.

“The next several priorities show that payers are also concentrating on cost levers that they can implement relatively quickly,” he said. “My caution is that we should not confuse reducing one line item with reducing total cost of care. A lower drug acquisition cost is meaningful, but it is not the entire equation. If a formulary change, site-of-care mandate or utilization management policy delays effective treatment, disrupts a stable patient or fragments care, the apparent short-term savings may often be offset by other medical costs and worse outcomes.

“I am not opposed to biosimilars or lower-cost sites of care,” Broadwell added. “I am opposed to assuming that the lowest unit price is automatically the lowest total cost of care. Those are not always the same thing.”

A companion issue is that biosimilars have led to mandatory switching of medications, which can lead to gaps in care and subsequent loss of response for patients, according to Broadwell.

These patients may additionally lose copay assistance, he said.

“The real opportunity is to take the first finding seriously: Identify the patients at greatest risk, get them to the right treatment efficiently, improve adherence and persistence, and then measure the entire patient journey,” Broadwell. “That is a more meaningful TCOC strategy than simply moving cost from one column of the health plan’s budget to another.”

The shift toward TCOC measurement in the arena of drug access exposes individual providers to financial risk-sharing, according to Mead.

“Provider value-based arrangements are important to payers, but actual risk-sharing penetration lags,” she said. “In cases where risk-sharing does occur with physicians, pharmacy is often carved out of the risk calculation, meaning drug selection is omitted from any upside or downside potential.”

Mead added that when payers have value-based contracts with pharmaceutical companies for their drug products that may involve TCOC measures, their contracts would then not align well with the risk arrangements of the providers.

“As a result, the incentive design does not necessarily change clinical behavior,” she said.

However, provider behavior may change as innovative care models are adopted.

Specialty pharmacy optimization

“Innovative care models are key future levers for cost and utilization control,” Mead said.

According to the Spherix survey, specialty pharmacy optimization was reported as a key innovative care model by 63% of respondents, while 58% suggested dynamic utilization management and 48% cited TCOC-driven formulary and benefit design.

“Virtual care and remote patient monitoring are much lower despite that being a patient and physician priority,” Broadwell said.

This sends a clear message to clinicians, according to Broadwell.

“From the payer perspective, the next wave of innovation is largely about making management of care more sophisticated, more data-driven and more dynamic,” he said. “That is not inherently good or bad. The question is how the tools are used.”

Broadwell offered an example of how those tools might be used.

“Predictive analytics could help identify a patient with rheumatoid arthritis who is repeatedly requiring corticosteroids, has poor medication persistence or is at high risk for hospitalization,” he said. “AI and automation could also eliminate repetitive prior authorization work and approve straightforward cases in real time. Those would be meaningful improvements.”

However, advancement often comes with tradeoffs, according to Broadwell.

“The concern is that the same technology could be used to create increasingly complex restrictions, apply rigid population-level rules to individual patients or automate denials at scale,” he said. “The goal should be to use technology to eliminate unnecessary friction and help patients receive appropriate treatment more efficiently, not simply make utilization management more technologically sophisticated.”

According to Broadwell, the formula for innovation in medical care should be straightforward.

“I would define successful innovation as getting the right patient to the right therapy sooner, supporting adherence, monitoring outcomes and intervening before disease activity produces irreversible damage or expensive downstream care,” he said.

Mead also had some reservations about these data points, particularly regarding the field of rheumatology.

“For rheumatology, this is a direct threat to a real revenue line for physicians — drug margin on administered specialty products — and adds the logistical burden of coordinating drug delivery, storage and waste management for products the practice no longer procures itself,” she said.

The data set contains other key messages for rheumatologists in particular.

‘Should not surrender’

According to Mead, rheumatology likely will become a larger management target for leading payers, “at least without a value-based contracting framework to channel that pressure into partnership rather than pure restriction.”

“Timing is important as pharmaceutical companies in rheum have a window to shape outcomes-based/risk-sharing models before payers default to blunt tools like stricter prior authorization and step therapy, which are already broadly applied,” she said. “So, rheumatology’s most useful angle is the gap between rising payer scrutiny and the current absence of value-based contracting infrastructure to match it.”

Rheumatology ranks fourth among therapeutic areas where payers report planning to increase disease-management focus over the next 3 years, at 40.7%, according to Mead.

“It also ties for the second-highest tier of specialty areas payers are targeting for vertical integration/acquisition, at 25.9%,” she said.

However, Mead also noted that outcomes-based contracting in rheumatology is nearly nonexistent today.

“Only 7.7% of payers currently have an outcomes-based contracting in place for rheumatology, which is tied for the lowest,” she said. “Even looking out 3 years, 53.8% of payers still say they have no plans to implement one. With the introduction of cell and immune reset therapies poised to come to rheumatology in the coming year, there may be more focus on innovation in disease management and contracting.”

Regardless of the payer data, Broadwell counseled rheumatologists to keep patient care their first priority.

“Physicians should not surrender the concept of value to payers or manufacturers,” he said. “We know our patients, we understand the consequences of delayed and fragmented care, and we should be active participants in defining both outcomes and total cost of care.”

For more information:

Aaron Broadwell, MD, can be reached at ABroadwell@rosdrs.com.

Sybil Mead can be reached at sybil.mead@spherixglobalinsights.com.