Beyond the Prescription: How Pharmacy Drives Success in Alternative Payment Models
Alternative Payment Models (APMs) are reshaping healthcare, shifting away from the legacy fee-for-service model to value-based care that rewards quality, experience, and cost-effectiveness over quantity. Early initiatives such as the Medicare Shared Savings Program (MSSP) paved the way, and in 2023, 28.5% of U.S. healthcare payments were tied to downside risk APMs. Medicare Advantage leads adoption at 56.9%, followed by Medicaid (34.5%), Traditional Medicare (33.7%), and commercial insurers (25.8%).
Health systems are adapting to APMs by enhancing care coordination, investing in value-based infrastructure, redesigning care teams, emphasizing population health management, engaging patients, managing financial risk, strengthening post-acute care partnerships, reducing readmissions, and expanding telehealth.
| Line of Business | Categories 1 & 2 | Category 3A | Category 3B | Category 4 | Total APMs (Categories 3 & 4) |
|---|---|---|---|---|---|
| All Lines of Business | 54.8% | 14.2% | 14.3% | 16.7% | 31.0% |
| Commercial | 60.8% | 13.4% | 8.2% | 17.6% | 25.8% |
| Medicare Advantage | 34.0% | 9.0% | 43.0% | 13.9% | 56.9% |
| Traditional Medicare | 58.0% | 8.3% | 21.8% | 11.9% | 33.7% |
| Medicaid | 56.3% | 9.2% | 11.9% | 22.6% | 34.5% |
Categories 1 & 2: Fee-for-service models with limited or no link to quality or value. These include pay-for-performance and value-based purchasing programs.
Category 3A: Shared savings models where providers share cost savings achieved by delivering care below predefined benchmarks, without taking on financial risk for losses.
Category 3B: Shared savings models with downside risk, where providers share cost savings but are also accountable for financial losses if benchmarks are not met.
Category 4: Population-based payment models, including global and condition-specific capitation, where providers assume responsibility for managing care within a fixed payment structure.
However, health systems often overlook or underutilize a critical resource: pharmacists. Including pharmacists in a health system’s APM strategy can improve chronic disease management, reduce hospitalizations, enhance medication adherence, and increase physician capacity —all while lowering overall healthcare costs. As health systems strive to succeed in APMs, pharmacists offer a proven, scalable solution to achieve quality metrics and financial goals.
Evidence of Pharmacist Impact
Chronic Disease Management
According to the Centers for Disease Control and Prevention (CDC), 90% of the nation’s $4.5 trillion in annual healthcare expenditures are for people with chronic diseases, including mental health conditions. Pharmacists have consistently proven the ability to add value in managing chronic diseases such as hypertension, diabetes, hyperlipidemia, and asthma. Collaborative pharmacist-physician models for hypertension management achieve a 30% increase in blood pressure control compared to traditional care. Chronic disease programs such as the Asheville Project demonstrated sustained reductions in HbA1c, LDL cholesterol, and blood pressure, improving long-term outcomes and reducing healthcare costs. Pharmacists’ impact extends to population health efforts. In statewide programs like Hawaii’s medication management initiative, pharmacists reduced preventable medication-related hospitalizations by 30%, contributing to better health outcomes for vulnerable populations. Health systems increasingly rely on pharmacists as integral members of care teams managing chronic diseases.
Cost Savings and ROI
Medication Therapy Management (MTM) programs led by pharmacists consistently deliver significant cost savings. Research shows that MTM programs yield a median return on investment (ROI) of 7.5:1, driven by reductions in hospitalizations, emergency department visits, and medication-related complications. Furthermore, pharmacist-led adherence programs for chronic conditions have reduced overall healthcare expenditures by 16%-30%. By stopping unnecessary medications, starting necessary medications, and preventing and managing adverse events, pharmacists reduce direct costs and improve resource utilization across care settings. Beyond direct savings, pharmacists contribute to indirect cost reductions by enhancing productivity within interdisciplinary teams. Collaborative practice models enable pharmacists to manage routine care, allowing physicians to focus on more complex cases and improving access to care while maintaining high-quality outcomes.
Transitions of Care
Pharmacists are instrumental in improving care transitions, which are high-risk periods for adverse events and hospital readmissions. Involving pharmacists in medication reconciliation, access, and education during and after hospital discharge can significantly reduce readmission rates.
Pharmacists can identify and resolve medication-related problems during transitions of care, ensuring that patients leave the hospital with accurate, optimized medication regimens, reducing the likelihood of adverse events, and increasing a patient’s ability to adhere to the new regimen. One statewide program, which integrated pharmacists across the care continuum, achieved sustained reductions in preventable hospitalizations.
Expanding Physician Capacity
Collaborative practice models can be a part of the strategy to address physician workforce shortages and extend capacity by freeing physicians to focus on diagnosing patients and developing comprehensive treatment plans, ultimately leading to a more efficient and effective care team.
Medication Adherence and Safety
Medication adherence is a crucial factor influencing chronic disease management and a central competency focus of pharmacist training. Nonadherence costs the healthcare system over $300 billion annually, contributing to preventable complications and hospitalizations. Implementing pharmacist-led programs has proven to enhance adherence rates by an impressive 15%-20%. Furthermore, pharmacists improve medication safety by performing comprehensive medication reviews and reconciling therapies. Pharmacist-led medication reviews can decrease medication errors by 30%-40%.
Integration into ACOs and PCMHs
Pharmacist deployment in Accountable Care Organizations (ACOs) and Patient-Centered Medical Homes (PCMHs) can improve quality scores, cost containment, and population health initiatives. ACOs that include pharmacists in care teams report higher performance on medication adherence, chronic disease management, and preventive care metrics. In PCMHs, pharmacists are vital in optimizing therapy, providing patient education, and ensuring alignment with value-based care goals.
Actionable Strategies for Leveraging Pharmacists in APMs
- Adopt Collaborative Practice Models: Deploy pharmacists under physician supervision to manage chronic conditions and ensure appropriate medication use.
- Integrate Pharmacists into Care Teams: Assign pharmacists to primary care clinics, ACOs, and PCMHs to enhance care coordination and improve performance on APM metrics.
- Implement Medication Therapy Management Programs: Launch MTM initiatives to address medication-related issues and improve care quality.
- Partner with Payers: Collaborate with payers to align pharmacist services with value-based payment incentives, ensuring program sustainability and scalability.
As health systems face mounting pressure to meet the demands of APMs, pharmacists present a compelling, evidence-based solution. Their expertise in managing chronic diseases, optimizing medication regimens, and supporting care transitions makes them a critical component of any value-based care strategy. By integrating pharmacists into care teams, health systems can unlock measurable improvements in clinical outcomes and financial performance. The time to act is now—leverage the untapped potential of pharmacists to secure success in value-based care.
Call to Action
- Evaluate Pharmacist Integration: Assess the current role of pharmacists within your organization and identify opportunities to help succeed with APMs.
- Advocate for Payer Support: Work with payers to ensure pharmacist services are adequately reimbursed and integrated into value-based care contracts.
Looking for more information or assistance for your organization? Reach out to Visante today!
Subject Matter Experts: Dale Drizd, Joe Cesarz & Angie Amado