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Managed Markets: Payers’ Perspectives on Transforming Care Delivery

June 2013, Vol 3, No 4

Hollywood, FL—At the Third Annual Conference of the Association for Value-Based Cancer Care, James Lang, PharmD, Vice President of Pharmacy Services at BlueCross BlueShield of Michigan (BCBSM), shared his company’s approach to new managed market challenges.

Dr Lang noted that for each step across the managed market landscape, BCBSM built a “rigorous, intricate infrastructure.” The company has had incentive programs in place for more than a decade, having rolled out its first Collaborative Quality Initiative in 1997.

In 2004, based on the chronic care model, BCBS implemented its Physician Group Incentive Program (PGIP). The program rewards physicians for improved performance and efficiency and offers shared savings. “For providers, participation in the PGIP can mean 10% to 20% of the E&M [evaluation and management] code. It’s a substantial part of their reimbursement,” Dr Lang noted.

This was followed by the patient-centered medical home (PCMH) program, a model of “primary care transformation.” The newest component of this is the PCMH “neighborhood concept,” which links to other specialties beyond oncology and includes medical management as a requirement.

The company’s PCMH is the largest medical home in the country, encompassing 3000 physicians and impacting 2 million members. Most recently, under an organized system-of-care model, BCBSM added its accountable care organizations, which currently total 38. Hospital incentive contracts are now “bringing hospitals along on this same journey,” Dr Lang said.

Three years ago, provider-delivered care management was implemented, and it now encompasses 400 practices, which are largely primary care. It is an extension of the Michigan Primary Care Transformation program, which is a collaborative effort with Medicare. Physicians receive trained nurse managers and can identify patients within their practices who warrant greater attention from these “embedded care managers.”

Physician organizations report a positive impact on clinical indicators, but “it’s been a bit of a struggle, as practices do have to reengineer themselves,” Dr Lang acknowledged. Oncology practices will be added in 2014.

Channel Management
The escalating cost of drugs led BCBSM to rethink the delivery of pharmacy services. Over the past 5 years, drugs administered under the medical benefit have been shifting from physicians’ offices to more costly outpatient facilities.

In 2008, the aggregate spending on drugs in the medical benefit (ie, outpatient setting) was $150 million; by 2012, this spending approached $300 million—a 20% rate of growth. Drug spending under the specialty pharmacy benefit rose from $250 million to $350 million, an 8% increase. By contrast, under the physician buy-and-bill model, drug spending increased only 1.5%, remaining essentially stable at around $325 million. “This trend caused me to reorganize how we deliver our services in pharmacy,” Dr Lang said. The result was a cross-functional “channel management” form of distribution.

Specialty Drug Management
Dr Lang outlined BCBSM’s approach to managing specialty pharmacy. Among the techniques it implements are prior authorization, formulary tiers, off-label limitations, preferred specialty pharmacy, physician specialty treatment dashboard and data set, oncology pathways, pipeline monitoring, and more.

In 2014, the company will also start implementing National Drug Code level pricing and National Drug Code level quantity required, ambulatory infusion benefits, channel efficiency reporting to physicians, global per-member per-month targets (which are currently in place), and specific specialty drug per-member per-month targets. “We will have the ability to split J code professional claims. We will know what drug is being prescribed,” he said.

The challenges with specialty drug management will remain the obstacles of state and federal mandates, difficult provider contracts, the potential for fraud, problems with manufacturer copay cards, and physician buy-and-bill issues, Dr Lang added.

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