12 October 2016 - In 2015, the U.S. Department of Health and Human Services announced a goal of linking at least 50% of Medicare spending to value-based payment models such as accountable care organizations.

Health care providers are now scrambling to reorganize in a way that delivers value while preserving or enhancing commercial success. Although it’s not yet clear how providers will respond to value-based payment models, an examination of pharmaceutical industry practices can provide insights into problems that may arise — and practices to avoid.

Value-based plan design — a term that describes payers’ efforts to align consumer cost sharing with the value generated by a service or drug — may sound like a new development in health care, but it’s old news for prescription drugs. For years, insurers and pharmacy benefits managers have steered consumers toward generic and other high-value drugs by categorizing drugs into “tiers” and requiring lower copayments for preferred drugs. By 2000, roughly three quarters of consumers enrolled in employer-sponsored health plans had prescription plans with two or more drug tiers. Today, a similar proportion have plans with at least three tiers. Tiering not only encourages consumers to use high-value drugs, it also gives insurers leverage during price negotiations with manufacturers.

Read New England Journal of Medicine article