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Avalere Survey: Over Half of Health Plans Use Outcomes-Based Contracts

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In September 2021, Avalere conducted an online survey of 51 US-based health plans and pharmacy benefit managers (PBMs), representing roughly 59 million covered lives. The survey indicates that 56% of payers have executed an outcomes-based contract (OBC) as of September 2021.

Avalere has conducted this survey for 5 consecutive years. Its purpose is to understand current payer and PBM perceptions of and experiences with OBCs.

In response to pressures to reduce costs and improve outcomes, healthcare stakeholders are presented with an imperative to transition toward models that incentivize value over volume. Innovative approaches to paying for prescription drugs are of increasing interest among payers and providers. Notably, there is a growing interest in linking reimbursement to outcomes-based measures for novel therapies given the anticipated volume of novel therapies expected to enter the market over the next few years. The FDA anticipates that there may be up to 20 new transformative therapies approved per year by 2025. OBCs are 1 of the many types of value-based contracts that are being considered as financial solutions for high-cost novel treatments and other types of products. OBCs typically include an agreement between health plans and drug or device manufacturers that ties product reimbursement to specific clinical, quality, or utilization outcomes. Although innovative contracting approaches, such as OBCs, aim to align cost with value, successful implementation and adjudication of an OBC or other type of value-based contract requires significant investment into infrastructure that can support outcomes tracking and coordination among entities involved. Therefore, while some payers may have successful experiences with OBCs, some payers may face significant administrative burden and have limited success in controlling costs.

In 2021, 12% of payers reported having more than 10 OBCs currently in place, double the number of payers with 10+ OBCs in 2020. Interestingly, 6% of payers have 5–10 OBCs in place, indicating a 13 percentage point decrease from 2020. Implementation of OBCs requires significant investment into infrastructure such as data capabilities; new partnerships with various stakeholders, usually including an adjudicator; and staff training, among other considerations. Therefore, the reverse trends across the 5–10 and 10+ categories may be an indication that some plans that have had successful experiences with OBCs are reaching efficiency and scalability and are willing to engage in more OBCs. However, further research is needed to verify the underlying causes behind these opposing trends.

Figure 1. Number of OBCs Currently in Place
Figure 1. Number of OBCs Currently in Place

* Percentage of payers represents both health plan and PBM survey respondents. Numbers do not total 100% as some organizations do not have OBCs in place.

“The significant increase in payers who have more than 10 OBCs in place is showing us that some payers are successfully executing these agreements,” said Sarah Butler, Head of Client Solutions, Marketing, and Operations at Avalere. “At the same time, however, the decline in payers that have tried 1 OBC indicates fewer new entrants in this space.”

Respondents who indicated they were currently using OBCs were asked to identify in which therapeutic areas they were utilizing these contracts. Respondents could select as many therapeutic areas as was relevant. Priority therapeutic areas vary from 2020 to 2021. Cardiovascular (79%), endocrine (68%), and respiratory (54%) were the top therapeutic areas of interest in 2021. Notably, payers focusing on Oncology OBCs showed a significant decrease (44%).

Figure 2. Therapeutic Areas of OBCs
Figure 2. Therapeutic Areas of OBCs

Avalere’s survey also examined the perceived challenges with OBCs, considerations for developing an OBC for a new/existing product, expected timelines for achieving cost savings or other outcomes of interest, usage of ancillary services, methods used to measure value, and financial incentives used to execute OBCs.

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Avalere Health is an Inovalon company, a leading provider of cloud-based platforms empowering data-driven healthcare. We believe in the power of data, informing actionable insights, delivering meaningful impact, and driving stronger patient outcomes and business economics.


Avalere conducted a 50-question survey of health plans and PBMs in the UA. The survey was conducted between September 27, 2021, and October 8, 2021, using an online platform for collecting responses. Avalere designed the survey to better gauge and measure current awareness, use, experience, and attitudes toward outcomes-based contracting. Respondents were recruited from a comprehensive panel of health plan and PBM representatives and then screened to determine eligibility to participate, requiring that they be a decision-maker or influencer in their organization. The panel’s overall size and distribution by plan membership, type, and geo-distribution reflect the health plan landscape at large, representing national and regional plans, integrated health systems, and PBMs. A total of 51 qualified payers participated in the survey. Avalere weighted responses based on midpoints of preidentified ranges. Respondents selected from the following ranges to quantify the number of lives covered under their associated plan: fewer than 10,000, 10,000–100,000, 100,000–500,000, 500,000–1,000,000, and more than 1,000,000.

The research featured in this Insight comes from Avalere Federal Policy 360™.

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