Medtronic Diabetes is putting its money where its mouth is, telling insurers that its first-generation closed loop technology is so good that the company is willing to pay for any emergency room visits that occur while someone is using these newest devices.

The pump-CGM company has captured headlines recently with this bold move that signals what we'll likely see more of as we head into the universe of "value-based" care and insurance -- where proven outcomes will dictate the coverage and reimbursement we see from payers and product manufacturers.

The whole notion of VBID (value-based insurance design) is still in its infancy and we're all trying to pinpoint the Pros and Cons. At least one expert describes it as bridging the gap between "Star Wars Innovation" and "Flinstone's Delivery" in healthcare, by shifting the emphasis to how products and services actually impact real-world outcomes of patients.

Simply put, if they aren't showing improved outcomes among customers, they won't be covered as much or at all compared to competing devices/medications that demonstrate those results. Just how that value is defined remains the big question mark in all of this.

In the diabetes sphere, Medtronic is boldly going where no others have yet gone, signing an outcomes-based contract with Aetna recently, and now betting heavily that its new D-Devices will win the outcomes game.

 

Minimed 670G Outcomes Guarantee

In mid-June following the big ADA conference, Medtronic launched a performance guarantee program for payers and employers specific to the Minimed 670G Hybrid Closed Loop system. With this program, MedT will provide a flat-fee reimbursement of up to $25,000 per device over the course of four years to cover any diabetes-related inpatient hospitalizations or ER admissions for US-based patients who are using this technology in-network. This money doesn't go directly to the patient, mind you, but to the payer or employer providing coverage for the 670G and health insurance -- to use as they see fit (whether that's reducing the out-of-pocket expenses for the person with diabetes or providing rebates, etc).

As hospitalizations for people with diabetes are a huge factor in raising healthcare costs across the board, especially for those on Multiple Daily Injections (MDI), this is aimed at lowering those costs. Medtronic has data showing that its earlier, pre-670G device that only shuts off insulin automatically when a low threshold is crossed, reduced hospitalizations by 27% over the course of a year. So that makes MedT even more confident that its 670G will likely be even more impactful, given its ability to predict hypos and shut off insulin in advance, as well as auto-adjust basal rates to a target of 120 mg/dL.

“We’re excited about it, and we think it’s the right direction,” says Suzanne Winter, VP of the Americas at Medtronic Diabetes.

After Medtronic struck a controversial deal with United Healthcare in mid-2016 to exclusively cover their pumps, the pair spent the next year or so gathering and analyzing clinical and economic outcomes data for those on the Minimed 530G and 630G devices. That also increased the company's market share with UHC.

Winter says the big challenge has always been proving to payers that an up-front investment in a D-Device will do more than just help PWDs prevent complications and be healthier in the long-run, but also that it will keep patients in the short-term, resulting in immediate cost-savings for the insurer. 

"It’s risky," she says. "But with data that we have, we're liking what we see enough to put this performance guarantee together for payer partners and employers."

The $25K per device reimbursement amount is based on the average cost for hospitalizations of a diabetes-related or diabetes complication-specific code, Winter says. She says while Medtronic can't dictate how payers or employers interact with 670G users in this guarantee program, the hope is that they'd pass on the cost savings to the patient if a hospitalization does occur.

"We're trying to demonstrate that (pump) therapy is better for the patient, in outcomes and quality of life. That's what we want to demonstrate, that this technology is better at that and should be covered," she says.

At the beginning of August, Medtronic had not announced any specific insurers or payers that will be implementing this guarantee program; Winter tells us they have discussions underway and the partners will be announced as soon as contracts are signed.

"Our goal and vision at Medtronic Diabetes is to move from just a fee-for-service world and delivering devices with a promise, to tying ourselves to an outcome," Winter says. "We'd expect the rest of the industry to rise to that level as well."

Of course, you can't overlook the fact that right now Medtronic is the ONLY company able to offer an FDA-approved, commercially-available device like the 670G. Others will likley follow soon, such as Tandem's new Basal-IQ system and their Bolus-IQ in 2019, so it will be interesting to see how these value-based contracts evolve once there are competing devices on the market that can generate comparative outcomes data.

 

Healthcare Crossroads: Space Age Innovation vs. Stone Age Delivery

Some worry that while tying treatment and tech coverage to actual outcomes seems like a noble concept, it may have may put unintended or unnecessary pressure on healthcare providers who are already pressed for time.

At the big ADA conference in June 2018, Dr. A. Mark Fendrick, director of the Value Based Insurance Design Center at University of Michigan, was one of several presenters who touched on the topic of value-based insurance design. In his presentation, he lamented that we currently have "Star Wars" innovations that can truly help people, but only if they have access and can afford these products. Meanwhile, those treatments and tech have been hindered by a "Flinstone's" delivery model that's outdated and must change so that people can get what they need to manage their health.

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Source: Value Based Insurance Design Center at U-M

"We didn't go to the medical school to save people money, but that's the world we live in now," he said, referring to the fact that without VBID, healthcare providers have to be highly aware of costs, and only recommend treatments their patients can afford. 

In a new study published earlier this summer, Fendrick and fellow researchers examined nearly two dozen other clinical studies that explored targeting costs via VBID. They found it led to improved adherence to "high-value drug classes" in diabetes, as patients' out-of-pocket costs were lowered. "We are moving away from volume-driven care, to a value-based system that's based on clinical value, not the price of a medication or device," he noted.

Medicare Advantage and Tri-Care plans have already started exploring VBID in a handful of states in the US, there's legislation to expand it nationwide, and Fendrick thinks that's where we need to go on the legislative front to make VBID more mainstream.

Of course this all hinges on exactly which outcomes measures will be used to assess "value" when it comes to D-devices and medications that we need. But no doubt, VBID is the wave the future, and a good start to moving #BeyondA1C in our community. A good thing.