Recent Study on Managed Markets: Understand Payer Groups’ Needs to Secure Reimbursement
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Recent Study on Managed Markets: Understand Payer Groups’ Needs to Secure Reimbursement

Before US managed markets teams approach payers, they need to understand the different payer groups. All groups — Medicare and Medicaid, insurance companies, specialty pharmacies, hospitals, etc. — share the same fundamental function: to sift through the many treatment options for their clients and decide which ones to approve. However, each payer group must factor in different considerations.

For example, Medicaid has tight budgets and must approve drugs frugally, and Medicare is also going to see a strain on the system as the baby boomer population increasingly turns to it. Despite these pressures, Medicaid and Medicare policies often set the precedent for other payer groups. Therefore, pharma companies need to carefully approach these “reference” payers in order to make the reception of their products among other, commercial payers smoother.

It is no surprise, then, that almost all companies target federal and state Medicare and Medicaid groups at a higher rate than many other payer organizations, as found in our recent study on managed markets. Among all surveyed companies, which included Top 20, medium, and small drug developers as well as medical device makers, 96 percent of companies target commercial managed care organizations. Close behind commercial managed care organizations are Medicare and Medicaid programs: 93% of companies target state Medicare/Medicaid and 93 percent target federal Medicare/Medicaid payers within the United States. Other groups such as hospitals, specialty pharmacies and long-term care providers are targeted at a lower rate (50 percent, 61 percent and 43 percent, respectively).

We heard from several survey participants that many private payers with Medicare plans will actually base their criteria for approval upon those required for Medicare plans. Indeed, one director interviewed described Medicare as being “the 800-pound gorilla in the payer world. What Medicare does a lot of, commercial payers tend to follow, and so with us calling on Medicare, it is helpful for our account managers to understand that extremely well.”

Because so many other private payers rely on public payers’ decisions, closely following the requirements for Medicare and Medicaid can help determine the reimbursement of products with private payers. However, meeting these demands was ranked the most difficult aspect of managed markets groups’ role. In fact, many payers intentionally do not publish their exact criteria for pharmaceutical product reimbursement, because they would then be obligated to approve everything that meets the criteria, when in fact other factors — such as funding or price — may prohibit it.

One executive even went so far as to say that meeting payer demands “isn’t so much difficult as it is impossible.” This is largely because of prices: payers want cheaper prices, but companies need to maintain profitability. It is a delicate balance not to be addressed late in product development. Understanding these different payer needs — and being able to adapt accordingly — allows managed markets teams to best present their products in a favorable light, thereby increasing the likelihood of securing reimbursement.

Adam Bianchi
Senior Director of Research and Client Relationships

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