CBI 14 th Annual Specialty Therapies: Site of Care Optimization and Data Driven Specialty

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1 CBI 14 th Annual Specialty Therapies: Site of Care Optimization and Data Driven Specialty Avalere Health An Inovalon Company January, 2017

2 High Specialty Drug Spend Fuels Interest in Management Strategies for Specialty Drugs United Healthcare spending by site of service for injectable cancer drugs, Due to escalating drug costs, payers have changed the focus of SOC initiatives to drug and drug administration services Source: UnitedHealth Group, Commercial data includes fully-insured membership. 2

3 PPPM Costs Drug Costs in HOPD Significantly Higher than In Other Settings 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, Months after initiation of therapy Office HOPD HOPD: Hospital Outpatient Department; PPPM: Per-patient-per-month Results are adjusted for age, gender, and prior history of cancer Source: Avalere Health Costs of Care for Cancer Patients Receiving Chemotherapy and Radiation Therapy. March Available at 3

4 Payments Vary Across Sites of Care Based on Reimbursement Methods 100% 4% 9% 11% 7% 12% 0% 90% 7% 2% 5% 0% 7% 9% 80% 9% 9% 11% 70% 14% 12% 5% 5% 9% 60% 50% 40% 58% 49% 47% 30% 30% 61% 20% 18% 37% 10% 0% Specialty Pharmacy 18% Nononcologist Physician Office 21% 14% Oncologist Office Outpatient Hospital Home AWP ASP % of Billed Charges Capitation WAC More Than 1 Method AWP: Average Wholesale Price ASP: Average Sales Price WAC: Wholesale Acquisition Cost Source: EMD Serono Specialty Digest: Managed Care Strategies for Specialty Pharmaceuticals, 12 th Edition,

5 Payers Identified Top Challenges in Managing Specialty Products Managing Oncology Drugs and Services 79% Determining Value of Specialty Drugs 71% Ensuring clinically appropriate Use 69% Managing Site of Service for Infusions 64% Responding to the Drug Pipeline 55% Coordinating Across Pharmacy and Medical Benefits 48% Paying Competitive Rates for Infusions 47% Limited Resources for Management Strategies 36% Obtaining "Buy-In" for UM From Patients and Providers 26% Identifying Persons/Departments Responsible for Specialty 5% Source: EMD Serono Specialty Digest: Managed Care Strategies for Specialty Pharmaceuticals, 12 th Edition,

Converging Market Forces Encourage Plans to

SOC Optimization Patient Cost-Sharing Rising

programs provide the opportunity leverage the

6 Converging Market Forces Encourage Plans to Optimize Site of Care Q: Which market dynamics are driving payers interests? Delivery System Changes Physician Consolidation SOC Optimization Patient Cost-Sharing Rising Costs Physician Preferences Site of care (SOC) programs provide the opportunity leverage the intersection of these market forces to shape behavior across stakeholders 2

Site of Care Optimization Encourages Use of Lower- Cost Settings for

Variety of Settings of Care HOPD Physician Office Infusion Centers Retail

reduce payer and patient expenses by shifting where a patient receives a

7 Site of Care Optimization Encourages Use of Lower- Cost Settings for High-Cost Drugs Physician Administered Drugs May Be Administered in a Variety of Settings of Care HOPD Physician Office Infusion Centers Retail Clinics Home Patient shifted to lower cost setting SOC optimization may reduce payer and patient expenses by shifting where a patient receives a physician administered drug to a lower cost setting of care when clinically appropriate. 7

Successful SOC Programs Require Coordination of Stakeholders Across the Medical Neighborhood Q: What is

How is provider preference factored into the program?

patient s clinical need? Provider Patient How is patient preference factored into the program?

How does patient clinical need affect access to specific sites?

How is the payer identifying lower-cost sites?

8 Successful SOC Programs Require Coordination of Stakeholders Across the Medical Neighborhood Q: What is the role of the SPP in this dynamic and how can they serve as conduit between all four stakeholders? How is provider preference factored into the program? Can providers override program restrictions to ensure patients receive care in optimal site based on the patient s clinical need? Provider Patient How is patient preference factored into the program? What is the impact on patient cost-sharing or rewards? How does patient clinical need affect access to specific sites? Which services, drugs or patients are the focus of the program? How is the payer identifying lower-cost sites? Do site referrals account for individual patient clinical needs? Payer Manufacturer How are they facilitating access to products across sites? How are patient assistance services impacting site-ofcare initiatives? A well designed SOC platform will allow for effective coordination across the medical neighborhood to impact both medical service and drug costs 8

9 In 2015, 79% of Payers Use or Plan to Use SOC Strategies Across a Variety of Therapeutic Areas MOVING INFUSIOSN TO THE LOWEST-COST SITE OF CARE REMAINS A HIGH PRIORITY FOR PLANS Q: What factors are causing delays in SOC implementation? % 44% of plans have fully implemented or piloted SOC programs 35% of plans are planning SOC programs Currently Uses Plans to Implement No Plans to Implement Source: EMD Serono Specialty Digest: Managed Care Strategies for Specialty Pharmaceuticals, 12 th Edition,

10 Payers Target a Number of Therapy Categories for Site-of-Service Redirection Q: What factors influence the therapeutic areas of focus for SOC programs? Site of Service Optimization Target Therapeutic Areas 50% 52% 35% 29% 20% 17% 25% 40% 35% 25% 29% 27% 35% 25% Currently Implement Plan to Implement RA: Rheumatoid Arthritis; PS: Psoriasis; CD (IV): Crohn s Disease (Intravenous); MS (IV): Multiple Sclerosis (Intravenous); A1AD: Alpha-1 Antitrypsin Deficiency; RSV: Respiratory Synctial Virus Source: EMD Serono Specialty Digest: Managed Care Strategies for Specialty Pharmaceuticals, 11 th Edition,

11 Payers Continue to Use a Variety of Strategies to Promote Lower-Cost Settings of Care Coverage Restrictions Require administration of certain drugs at lowcost sites through PA PA requirements at higher cost settings of care may push utilization to other lower cost sites Site Normalization Encourage administration of certain drugs at low-cost sites through lower patient cost-sharing Eliminate site-of-care cost differences by aligning payment for the same service at different sites Patient Engagement Educate patients and create rewards for preferred settings Requires patient understating of potential for savings and plan communication Implementation of site-of-care initiatives has the potential to save plans between 12% and 34%, up to $1.7 billion nationally per year. Currently, 44% of payers use at least 1 site-of-care redirection program. Source: spcma, The Management of Specialty Drugs. Available at: EMD Serono Specialty Digest: Managed Care Strategies for Specialty Pharmaceuticals, 12 th Edition,

12 Avalere Health Contacts Rujul Desai Vice President, Avalere Health Ashley Han Associate, Avalere Health 12

SPECIALTY PHARMACY TAMING SPECIALTY DRUG COSTS FOR SELF- INSURED HEALTH PLANS

SPECIALTY PHARMACY TAMING SPECIALTY DRUG COSTS FOR SELF- INSURED HEALTH PLANS Presented by Jody L. Miller 4Front Consulting Group, Inc. March 5, 2015 Presentation Outline Specialty Definition Spend Trends