OBJECTIVES:

Outcome-based agreements (OBAs) have the potential to align incentives of payers and providers of therapeutics around patient and population health. Many barriers prevent their routine implementation, including translation of clinical outcomes into financial parameters for reimbursement. Assessing variable type, weighting, volatility, and impact on payment of different outcomes within an OBA could help address this challenge. We aimed to estimate the impact of different contract designs within an experimental, retrospective OBA.

METHODS:

We simulated volume of payments and volatility profiles of three OBA scenarios with different outcomes combinations. We modelled OBA payments for a metastatic breast cancer sample of 92 patients over 3 years between 2018 and 2020 using linked datasets in Wales. We measured three outcomes: 1 year survival, intolerance to treatment, and days disrupted by care. We calculated the percentage of payment of each outcome within the overall contract and relative to agreed benchmarks informed by literature and existing health economic models. A Monte Carlo model estimated the volatility of payments by bootstrapping the population. We varied specific elements of contract design, including number and combination of outcomes, benchmarks, and caps.

RESULTS:

Including all outcomes in the OBA resulted in a narrower range of median payments between years compared to less outcomes. Median proportion of payment varied between 65-95%. Volatility increased with fewer outcomes included in the OBA and was highest with only one binary outcome, 1-year survival (27-100%). The difference in payment percentage between the 25th and 75th percentile was 0-61pp for 1-year survival and 15-30pp for all outcomes. Contract design elements, including benchmarks and caps, varied the volatility of the payments materially.

CONCLUSIONS:

The composition of outcomes and design of an OBA have material impact on the volatility of payments. Simulation modelling can reduce financial uncertainties and better inform stakeholders considering parameters of an OBA.