Call & Response

Cost vs. Value

In this series from Stellus Rx, we’re addressing some of the common refrains, misinformation and misconceptions we hear regularly in the value-based care and employer benefits markets. The goal: Shape the way our stakeholders perceive the value of medications, with transparency and open dialogue.

Today, we’re starting with the cost vs. value in medication adherence performance.

 

What we’ve heard …

I have a large population of attributed MA lives. How do I justify spending a fixed PMPM fee for, say, 12,000 lives? That’s several hundreds of thousands of dollars annually. How do I realize return on that investment?

 

 

What we’d like to share …

First, we invite any prospective partner to connect with us and together, we can build a value analysis that’s tailored to your individual contracts and populations.

Our adherence solution exists because we see value that extends well beyond Star measures. Measures matter, but they matter because of their cascading impact on overall health. When patients don’t take their medications, their chronic conditions become more fragile … they have more acute medical events that result in higher cost of care. That’s what we guard against. There’s a patient health component that’s foundational to all our adherence work—Star ratings simply become our common scoreboard for tracking success.

For demonstration purposes and to show the clear financial return connected to that Star ratings success, let’s look at the value Stellus Rx creates in a representative MA contract with a shared savings structure.

  • Provider groups that participate in MA contracts with shared savings structures receive a percent of surplus dollars—which are the remaining premium dollars after medical expenses and administrative expenses are subtracted. Many times, the amount (or rate) of sharing is determined by overall Star performance, which could be based on the total number of measures in which 5-Star performance is achieved.
  • In these contracts, one clear way to boost overall Star ratings is to achieve 5-Star performance in adherence measures. Or, put another way … if you’re not achieving 5-Star performance in adherence measures, you’re not optimizing your revenue opportunity.

 

 

The charts below provide a representative illustration of impact.

Reminder: The Star thresholds and percent of surplus will differ in each MA contract …

How are surplus dollars calculated?

 

 

How are surplus dollars earned?

 

 

Even a relatively high-performing organization could move from 4.5 overall Stars today to 4.75 overall Stars by maximizing adherence performance. In our representative model, that translates to a gain of $10 PMPM.

Pulling the math forward for an attributed population of 12,000 … that equates to an additional $1,440,000 per year in revenue.

So then the questions become:

  • How much are you willing to invest to capture an additional $1.44 million in annual revenue?
  • What ROI ratio would make the investment worthwhile … 2:1? 3:1?

Stellus Rx regularly helps clients elevate the quality of care they provide via improved medication adherence support, while returning value at a 3:1 ratio … and often at 4:1, 5:1 or even higher over a period of multiple years.

 

 

Try our Shared Savings Calculator

See the potential revenue gain for your population, based on the plan conditions above. And then ask yourself: How much would I be willing to invest in a proven solution—with performance guarantees—to capture that additional revenue?


 

Key Takeaways:

As long as medication adherence measures are factored into overall Star scores, underperformance can cost you hundreds of thousands of dollars or more

Selecting a proven partner to boost performance should be evaluated as an investment, not an expense

As with any investment, ROI ratio can serve as a crucial evaluation criteria for solution viability

 

But wait … why can’t medical groups take on this work themselves and generate similar results? In the next part of our Call & Response series, we explore direct vs. indirect costs connected to adherence performance and why many medical groups have opted for a partnership model, in which the partner absorbs all the indirect costs while remaining fully accountable for outcomes.