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February 12, 2016

Because of costly new drug therapies, demographic changes, government regulations and expanded screening efforts, payers now face a variety of highly complex decisions around how to best manage the growing number of individuals infected with the Hepatitis C virus (HCV). This paper intends to explore all of these issues and present an entirely new approach for improving outcomes and reducing costs related to caring for this high-risk population segment.

Industry trends and regulatory shifts create challenges for payers
The most widely-publicized trend impacting HCV management is no doubt the cost of new interferon-free drug regimens. A prescription medicine used to treat chronic HCV in conjunction with other antiviral medications, developed by a leading research-based pharmaceutical company and approved in late 2013, is priced around $84,000 for a 12-week course of treatment. Another leading prescription medicine, also manufactured by the same company, costs about $94,500 for the same duration of treatment. As a result of these new specialty drugs, a recent Drug Trend Report shows that the U.S. will spend 1,800% more on Hepatitis C medications in 2016 than it did in 2013.1 These costs may only rise over time as consumer awareness of new HCV drugs increases thanks to significant investment in advertising and marketing from pharmaceutical manufacturers.

These costs are a burden faced by not only private health plans but also government programs, and by extension, taxpayers. That’s because of the more than 3 million Americans living with Hepatitis C, over 750,000 of these individuals receive state-funded healthcare through Medicaid or the prison system.1 Based on the current pricing that drug manufacturers offer to these public programs, it is projected that states would spend more than $55 billion if they provided the latest therapies to all of these patients—an unsustainable sum given today’s financial climate and budgetary constraints on state and local governments.1

Medicare has also faced serious financial challenges, paying out $9 billion in 2015 for HCV drugs2 in the coming months and years. According to the Center for Disease Control (CDC), HCV infection is most prevalent among individuals born between 1945 and 1965. As such, another million Americans infected with the virus will age into Medicare by 2024.3 At the same time, the prevalence of HCV in this population stands to increase as more diagnoses result from increased screening efforts recommended by the CDC. HCV testing recommendations now include one-time HCV testing for all individuals born between 1945 and 1965.

In addition, both private payers and the government stand to face a tidal wave of HCV-related costs thanks to the passage of the Affordable Care Act. That’s because the availability of government exchanges (and subsidies) mean that a greater number of uninsured people have secured coverage for the first time. And with the elimination of pre-existing condition requirements, individuals with chronic conditions like HCV can seek coverage for short-term treatment, and subsequently drop out of the risk pool. This is especially troubling since new HCV treatment programs require just a few weeks of drug therapy, and as a result, payers may face large spikes in claims costs without recouping their expenses from this adverse selection. 4 This adverse selection is unavoidable and will require a complete rethinking of current strategies for pharmacy utilization management. Traditional tactics such as prior authorizations, denials as well as unit cost management are not enough to stem the tide of rising costs that will result from this issue alone.

New drugs aren’t a “cure-all” for this difficult-to-manage population
However, even if it were financially feasible to administer new interferon-free regimens to all individuals with HCV, our nation’s battle with the disease would still be far from over. That’s because cure rates promised by drug manufacturers don’t represent the real world of HCV management, especially with regard to medication adherence. These tightly controlled studies don’t utilize a true cross-section of HCV populations since patients with comorbidities, mental health and substance abuse issues are typically excluded. These are the populations that traditionally suffer from low medication adherence rates. Therefore, even if these individuals have access to a powerful drug treatment, they are less likely to take it regularly and as prescribed. In fact, a recent study released by a major pharmacy retailer shows that adherence rates outside of clinical trials fall far short of the figures promoted by manufacturers.5 This lack of medication adherence quite often translates into lower cure rates overall.

To understand why this population is particularly challenging with regard to medication and treatment adherence, as well as lifestyle risks that lead to increased liver damage, consider the following:5

  • 25-30% of individuals with HCV are also infected with HIV6
  • 29% of prisoners have HCV6
  • 19% of all severely mentally ill individuals have been diagnosed with HCV6
  • Injection drug use accounts for most of the incident infections with HCV in the United States and other developed countries7
  • Studies show that HCV-infected patients reported almost double the number of comorbidities compared to uninfected controls.8
  • An estimated one-third of patients with chronic HCV infection have cirrhosis attributable to heavy alcohol consumption9

Given all of these factors, which lead to treatment complexity and potentially lower adherence rates, a treatment approach based only on drug therapy is not a cure-all for this growing epidemic, even if it were possible. Instead, these issues must be holistically and effectively treated through a personalized, patient-centered approach that combines proven best practices in population health and medical management.

A population health based perspective on managing HCV
Given the industry’s current focus on improving outcomes, better managing costs and increasing patient satisfaction (aka the “triple aim” of healthcare reform), it’s no surprise that population health initiatives are part of most payers’ long term strategic plans. Most initiatives are focused on segmenting populations by risk factors, and then drilling down to the practice and patient level to develop patient engagement strategies, care management and care coordination strategies.

Physicians are typically empowered (and often incentivized in the case of value-based care) to actively collaborate as a cohesive clinical team to implement these strategies at the point of care. Community outreach can also complement these efforts by connecting patients with resources for mental health assistance, transportation to healthcare appointments and social support. To integrate and enable these efforts, many population health management models are built on a foundation of information technology—whether that includes predictive analytics, clinical decision support platforms and / or health information exchange.

Projecting these key components to HCV management, it’s easy to see how they could ideally solve many of the challenges payers and providers face in improving care for this population segment.

  • New technologies, including clinical decision support platforms, are critical given the complexity of treating and effectively managing HCV patients with comorbidities, mental health issues and adherence challenges. Advanced analytics can also be used to determine which patients are the best candidates for drug therapy, and which would benefit from other means of support and intervention in the pre-treatment stage. This data could include insights about disease progression, level of engagement / activation as well as lifestyle and medical risk factors.
  • Active collaboration among care team members can drive better care coordination and allow healthcare providers to work at the top of their license. For example, specialists can focus on providing diagnosis and treatment guidelines, while care managers and primary care providers offer ongoing support and day-to-day outreach.
  • And finally, patient engagement as well as community integration are especially helpful in dealing with the psychosocial issues faced by many individuals with HCV. This could include engaging patients with educational and medication adherence resources, or connecting individuals with mental health and substance abuse issues to support groups and counselors in their local community.

While it’s likely too early to determine the total impact of these approaches, there have been studies that indicate the promising results of population health strategies in terms of costs savings and patient health.

One such study of a Medicaid focused population health program concluded: “The decline in rate of cost increase concurrent with the implementation of this population health management program for Medicaid enrollees suggests a target of opportunity for other states seeking to reduce Medicaid expenditures. Our study findings also highlight the feasibility of addressing multiple risks and comorbidities in a whole-person approach for individuals with such clinically and socially complex health care needs.” 10

Integrating key elements of a medical management-based approach
While the first stage of an ideal approach for management of HCV starts at the population health level, it certainly does not end there. Best practices from medical management programs must also be integrated into a health plan’s overall model. However, it will be exceedingly important to keep physicians in the loop on these efforts, given that there is no “one-size-fits-all” care management approach for HCV. This is because there are a variety of nuances related to the effective treatment of HCV — including genotype, disease progression, comorbidities and other risk factors — that drive an optimal approach.

Of equal importance is that liver disease and HCV must be managed holistically. While HCV causes liver disease, the liver damage created by this condition can lead to cirrhosis, fibrosis, liver cancer or even the need for a liver transplant. According to one HCV expert, “It’s important to realize that it’s not HCV which causes death, it is the cirrhosis which HCV causes.” At the same time, fatty liver disease and non-alcoholic steatohepatitis (NASH) also impact large segments of patient populations and must be addressed as part of a total liver disease strategy. As such, HCV and liver disease must be addressed in tandem in order to improve outcomes in individuals impacted by these conditions.

Using advanced technology to leverage best practices from both approaches
However, new technology is the key “missing piece” of the puzzle needed in order to cost-effectively implement best practices from population health and medical management for HCV. This technology can not only drive effective analysis of risk factors and a better understanding of patient needs, it can also promote greater consistency and quality across care practices. And it can do so without an extensive investment in time, resources and personnel at the health plan level. Consider the following hypothetical example of one model that has emerged in the HCV space:

 A widely-recognized software-based solution for treating HCV uses FDA-cleared, state-of-the-art technology and evidence-based clinical pathways to give providers a blueprint for the most cost-effective, appropriate and impactful interventions. This solution also engages and empowers individuals with Hepatitis C to help them maintain adherence and take an active role in their health and lifestyle decisions. The web-based platform streamlines and optimizes care processes based on the latest clinical research as well as insight about each patient’s health risks, disease progression and level of activation. It also drives greater collaboration and coordination by seamlessly connecting physicians, specialty pharmacies, care managers and other healthcare professionals. As a result, this innovative solution can help payers and at-risk provider organizations maximize their investments in care management and treatment for individuals with HCV — including the use of the latest high-cost specialty medications.

One of the most impactful aspects of this solution is the use of pre-defined clinical pathways. These pathways have been shown to improve outcomes and patient satisfaction when used in managing individuals with complex conditions, such as cancer, but have never before been applied to HCV.11 Clinical pathways take into account evidence-based clinical practices but also incorporate each patient’s unique medical and lifestyle risk factors. They can also be developed in collaboration with the health plan’s own medical management team. By incorporating these pathways into an online portal, the solution allows payers to effectively create customized “Centers of Excellence” for HCV management where informed data-driven decision making is the norm.

The solution also helps care providers — including primary care physicians — keep track of patients “in the white space” between office visits, a critical component of today’s value-based care initiatives. Patients themselves received additional support through engagement and educational resources, as well as peer support forums, all provided in an easy-to-use patient portal. Information about patient activation / engagement from the patient portal is also used to inform clinical practices and decision making.

The benefits of this type of technology-enabled approach could be broad and far reaching. They include:

  • Pinpointing risk factors and level of engagement for each individual, which leads to a more patient-centered approach
  • Improving consistency, effectiveness of care through clinical pathways
  • Connecting an entire care team through the sharing of patient data, thereby improving coordination of care
  • Easing the burden on providers by incorporating prior authorization as well as other clinical and financial requirements from the payers, allowing physicians to treat more patients
  • Educating and engaging patients as well as caregivers / family members, leading to better self-management behaviors
  • Addressing liver disease and HCV separately but holistically in each individual
  • Keeping patients healthier, longer, delaying drug therapy when appropriate (and helping mitigate adverse selection risk)
  • Identifying individuals who are strong candidates for pre-treatment support versus drug therapy
  • Helping payers plan for financial and resource allocations as population segments begin to require more intensive treatment, and ensuring the right treatment is provided at the right time and creating more predictable medical costs and trends
  • Improving return on investment when pharmacological intervention is warranted through greater medication adherence and ultimately, higher cure rates

To understand how such a model supports both population health and medical management best practices, it helps to examine its potential impact at the practice level. Specialists skilled in the management of HCV today are tasked with a wide variety of clinical and administrative challenges. They are clearly expected to properly diagnose and manage each patient’s distinct medical needs, but lifestyle factors also play a large role in health outcomes. This aspect of care is something that many providers do not have the time or resources to address. They may have patients actively abusing alcohol and causing greater liver damage, others that are not taking their medication on time and still others that do not maintain their regularly-scheduled office visits due to lack of transportation. Simply giving these physicians the ability to prescribe the latest drug therapies does nothing to address all of the psychosocial issues, comorbidities and lifestyle challenges their patients face on a daily basis.

Instead, payers need to work closely with these providers and provide a careful balance of physician-directed care while maintaining greater consistency across all practices. Payers must also “fill in the gaps” for all of the issues that impact patient health but that providers may not have the ability to manage effectively. In return, payers will have access to valuable data that helps stratify population risk, identify which patients are the best candidates for drug therapy today and determine who should receive additional care and support to improve adherence and reduce lifestyle risks before this treatment. As a result, health plans will be able to optimize their investments in the latest drugs — complementing powerful, existing care practices to improve liver health alongside breakthrough medicine — that eradicate the Hepatitis C virus.

Learn More
For more information on Alvarez & Marsal’s Healthcare Practice, visit

The Author
Ron Vance is a Managing Director with A&M focusing on revenue generation, product development, operational improvements, provider contracting, mergers and acquisitions, and the development of strategic business alliances in the health insurance industry. Mr. Vance counsels clients on revenue growth and expense management issues and on risk assumption and transfer strategies.

To continue the dialogue about how payers are addressing today’s HCV management challenges by combining best practices in population health and medical management alongside advanced technology, please contact Ronald Vance.