Accountable Care Organization

The Accountable Care Organization: Powerful Sales Incentives Will Shift Prescribing Behavior

An Accountable Care Organization (ACO) is a group of providers willing and capable of accepting accountability for the total cost and quality of care for a defined population. The goal of the ACO is to deliver coordinated and efficient care. ACOs that achieve quality and cost targets (determined by Medicare) will receive a financial bonus based on selected “Risk Sharing Model”, and under some approaches, those that fail will be subject to a financial penalty.

Pharmaceutical Manufacturers will need to carefully track the evolution of ACOs, recognizing how Governmental policies and pressures are impacting prescribing habits and ultimately product utilization. It is anticipated that powerful sales incentives will shift prescribing behavior, increasing utilization of some Rx therapies while reducing others.

Part D

The ACO model provides incentives to increase utilization of drugs covered under Medicare Part D. ACOs realize shared savings from a reduction in healthcare cost for Medicare patients, but the cost calculation excludes Medicare Part D expenditures. If use of a Part D drug helps reduce other healthcare costs in any way (e.g., fewer office visits or hospital admissions), the ACO will benefit.

Part A & B

Incentives exist to reduce utilization of drugs covered under Medicare Part A & B as they are included in the cost calculation for Medicare shared savings. Therefore, ACOs will only want to utilize these medications when there is a clear benefit, and then they will likely select the least costly treatment option. Part A & B drugs will be an obvious target for cost savings – reducing spend on these drugs will help achieve savings without reducing the fee for service income of ACO providers

Preventative Care/Therapy – role of Pharmaceuticals

Any Rx treatments that can prevent or delay expensive procedures, high cost hospital admissions, etc., will be in high demand. Given the market competition existing in the numerous therapeutic areas, quality and efficacy will factor significantly in the selection of products. Manufacturers would benefit from a review of their product value propositions, focusing messages and highlighting product attributes that address the changing needs of prescribers involved in ACOs.

Axtria Inc. – Ingenious Solutions

Axtria Inc. is an advanced analytics organization with significant experience in this area. Using analytical and consulting services, Axtria is positioned to assist Pharma companies assess and manage the impact of ACOs and other market changes the industry is encountering. To learn more get in touch with us at connect@axtria.com 

Tags: Managed MarketsIQ, Medicare, Targeting, Pharma Analytics, ACO, Accountable Care Organizations, ACO Analytics

Mike Diggin

Mike is an experienced leader in the Pharmaceutical industry with extensive background and expertise in streamlining operations, developing insightful analytics and building strategies for new and existing markets. He has over 25 years of experience in the Industry, a majority of which focuses on leadership roles in Managed Markets and Commercial Operations. Mike holds an MBA from the Lubin School of Business, Pace University with a concentration in Management Information Systems. He holds a Bachelors in Business Administration from Siena College in Albany N.Y.