CASP Module 13, Section 2: Outcomes-Based Agreements (OBAs)
MODULE 13: THE BUSINESS OF VALUE: CONTRACTS & REIMBURSEMENT

Section 13.2: Outcomes-Based Agreements (OBAs)

A deep dive into agreements where payment is directly linked to achieving specific, measurable clinical or economic outcomes (e.g., adherence targets, reduced hospitalizations).

SECTION 13.2

Outcomes-Based Agreements (OBAs)

From ‘Pay-for-Activity’ to ‘Pay-for-Results’: Betting on Your Clinical Skills.

13.2.1 The “Why”: Beyond ‘Doing Things’ to ‘Achieving Things’

In the previous section, we walked the spectrum of value-based care. We saw how Pay-for-Performance (P4P) models pay you a bonus for doing the right things (like completing a CMR or hitting an adherence target). We explored how Shared Savings models let you share in the profit if you help reduce the total cost of care. Both are massive steps away from Fee-for-Service. However, both still have a buffer. In P4P, you still get your FFS dispensing fee. In upside-only shared savings, you don’t get penalized if you fail.

Outcomes-Based Agreements (OBAs)—also known as Outcomes-Based Contracts (OBCs) or Pay-for-Results—are the final, purest distillation of value-based care. This model strips away all the buffers. An OBA is a high-stakes agreement where payment is directly and unambiguously tied to achieving a specific, pre-defined clinical or economic outcome for a patient or population.

This is the key distinction.

  • P4P rewards a process metric: “Did you get the patient to 80% adherence?” (This measures activity).
  • Shared Savings rewards a cost metric: “Was the patient’s total medical spend lower than the benchmark?” (This measures efficiency).
  • An OBA rewards a results metric: “Did the patient’s A1c drop by 1%?” or “Was the patient hospitalization-free for 12 months?” (This measures health).

This is the high-wire act of healthcare. It is a model where a provider or manufacturer essentially tells a payer, “Don’t pay us for our time, our effort, or our product. Pay us if, and only if, we deliver the clinical result you and the patient care about.” For a pharmacist, this is the ultimate “put your money where your mouth is” model. It moves your clinical services from a “nice-to-have” counseling session to the central, revenue-generating product. You are no longer selling your time; you are selling a guaranteed result. This is the most challenging, riskiest, and potentially most lucrative model in the VBC landscape.

Pharmacist Analogy: The Personal Trainer’s Four Business Models

Imagine you are a highly-skilled personal trainer. How you get paid completely changes your incentives and your relationship with your client.

Model 1: Fee-for-Service (The Hourly Wage)
The client pays you $100 per hour. You show up, you count reps, you give advice. If the client cancels, you charge a fee. If the client shows up but eats pizza every night and gains weight, you… still get paid $100 per hour. Your payment is 100% tied to your time and activity, not their results.
(This is the FFS dispensing fee.)

Model 2: Pay-for-Performance (The Attendance Bonus)
The client pays you $100/hour. BUT, they add a $1,000 bonus if you can prove the client attended 90% of their scheduled sessions for 6 months. Your incentive is now to ensure attendance. You’ll call them, text them, and do whatever it takes to get them in the door. But if they show up every day and still gain weight? You still get your bonus.
(This is P4P – you’re paid a bonus for an adherence metric, not a clinical result.)

Model 3: Shared Savings (The “Total Wellness” Budget)
The client says, “My ‘total wellness budget’ last year was $20,000 (gym, supplements, physical therapy, food). I’ll give you that $20,000 to manage my health. If you can keep me healthy and achieve my goals for only $17,000, we’ll split the $3,000 savings.” Now you’re motivated to find a cheaper gym, stop useless supplements, and cook at home. You’re managing their total cost of care.
(This is a Shared Savings ACO model.)

Model 4: Outcomes-Based Agreement (The “Results-or-Nothing” Contract)
You make a bold offer. “Pay me $0 for my time. No hourly fees. In 6 months, if you have not lost 30 pounds and your blood pressure is not in the normal range, you owe me nothing. If, and only if, you hit those two targets, you will pay me a $10,000 success fee.”
(This is an OBA.)

Under this model, you are 100% at risk. You could work for 6 months and make $0. But you are also 100% aligned with the client. You are now motivated to do everything: CMM, adherence coaching, diet planning, sleep hygiene. You are betting your entire paycheck on your ability to deliver a specific, measurable, clinical result. This is the OBA mindset.

13.2.2 The Two Families of OBAs: Pharma-Led vs. Provider-Led

It is crucial to understand that “Outcomes-Based Agreements” is a broad term that describes two fundamentally different types of contracts that a pharmacist will encounter. Your role, risk, and responsibilities are completely different in each.

1. Pharma-Led (Product-Based) OBAs

Who are the players? The contract is between a Drug Manufacturer (e.g., Novartis, Merck) and a Payer (e.g., Cigna, Aetna, or a PBM like Express Scripts).

What is the agreement? The Manufacturer says, “Our new drug, NewDrug-A, is expensive ($70,000/year), but we claim it reduces hospitalizations by 50% compared to the old drug. We will sign an OBA with you. You (the Payer) will put our drug on your formulary. If, after 24 months, the claims data for your patient population shows that NewDrug-A did not reduce hospitalizations by at least 40%, we (the Manufacturer) will provide you with a massive, additional rebate to cover the difference. If it *does* meet the target, you pay the full price.”

What is the Pharmacist’s Role?
You are not a *party* to this contract, but you are the critical enforcement arm. The Payer (Cigna) has just signed a contract that puts *their* rebates at risk based on patient outcomes. Who does Cigna rely on to manage patients, ensure adherence, and prevent hospitalizations? You.

The Payer will now pay your specialty pharmacy, ACO pharmacy, or health-system pharmacy (through P4P or other service fees) to:

  • Identify all patients on NewDrug-A.
  • Enroll them in a high-touch clinical management program.
  • Manage adherence, side effects, and comorbidities with brutal efficiency.
  • Track and report the data (adherence, hospitalizations) back to the Payer.
Your clinical services are the *insurance policy* the Payer buys to make sure they win their OBA bet with the Manufacturer.

2. Provider-Led (Service-Based) OBAs

Who are the players? The contract is between a Provider (e.g., your Advanced Pharmacy Practice, an ACO, or a clinic) and a Payer (e.g., a Self-Insured Employer, a regional health plan).

What is the agreement? The Provider (your pharmacy) says, “We have a clinical pharmacist-led diabetes management program. We have identified 100 of your employees (the Payer) with an A1c > 9%. You (the Payer) will pay us a $1,000 success fee for each patient that we can get to an A1c < 8% within 6 months. For any patient we fail to get to goal, you pay us $0."

What is the Pharmacist’s Role?
You are the owner of the risk and the reward. You are not the enforcement arm; you are the one placing the bet. You are betting that your clinical skills (CMM, patient education, provider collaboration, adherence management) are effective enough to hit the outcome target. Your revenue is no longer based on dispensing fees or hourly rates; it is based 100% on your ability to produce a specific, measurable, clinical result.

13.2.3 The Anatomy of an OBA: A Contract Masterclass

An Outcomes-Based Agreement is far more complex than a simple FFS dispensing contract. It is a detailed legal and clinical document that must be architected with forensic precision. If any one of these components is wrong, vague, or unfair, the entire agreement will fail, and you will likely do a lot of work for no pay.

As an advanced pharmacist, you must be at the table helping to *design* this contract. Here are the non-negotiable building blocks.

Masterclass Table: The 8 Building Blocks of an OBA Contract
Contract Component Key Question Pharmacist’s Masterclass “How-To” Guide
1. Patient Cohort Definition Who, exactly, is included in this agreement?

This must be brutally specific using data-driven triggers.
Bad: “Patients with diabetes.”
Good: “Patients with a diagnosis of Type 2 Diabetes (ICD-10 E11.xx), who are $\ge$ 18 years old, and who have at least one A1c lab value > 9.0% in the last 90 days.”
Your Role: You must ensure the cohort is precisely defined so you aren’t held responsible for patients you can’t help (e.g., Type 1 diabetes, gestational diabetes).
2. Patient Attribution How is a patient “assigned” to you?

The payer must provide you with a list of attributed members. What if a patient on your list sees a different doctor or pharmacist?
The Rule: The contract must have clear “attribution logic.” For example, “Patients will be attributed to the pharmacy that performs the initial CMM visit and will remain attributed for the 12-month performance period.”
3. The Intervention What clinical service are you promising to deliver?

The contract must define your scope of work.
Example: “The pharmacy provider will perform one (1) initial Comprehensive Medication Management (CMM) visit, followed by three (3) targeted follow-up visits (one per quarter) via telehealth or in-person. All interventions and recommendations will be documented and shared with the patient’s primary care provider.”
4. The Baseline Metric Where are we starting from?

You cannot show improvement if you don’t know the starting line.
Example: “The baseline A1c for each patient will be the most recent lab value on file in the 90 days prior to the CMM visit.”
Your Role: You *must* have the payer/provider agree on this baseline *before* the intervention starts.

5. The Outcome Metric & Target What does “success” look like?

This is the heart of the OBA. We will do a deep dive next.
Clinical Example: “Success for a patient is defined as an A1c reduction of $\ge$ 1.0% from baseline, measured at 6 months post-index CMM visit.”
Economic Example: “Success for the cohort is defined as a $\ge$ 15% reduction in all-cause hospital admissions in the 12-month performance period, compared to the 12-month pre-intervention baseline period.”
6. The Payment Term How, when, and how much do we get paid?

This must be explicit.
Example: “For each attributed patient who successfully achieves the clinical outcome target (A1c reduction $\ge$ 1.0%), the Payer will remit a one-time success fee of $750 to the pharmacy provider. No payment will be made for patients who do not achieve the target.”
7. Data Source & Reconciliation What is the “source of truth” for the data?

This is where most OBAs fail.
Your Role: You must solve this *before* signing.
Pharmacy Data: “Pharmacy will provide adherence (PDC) data from its dispensing system.”
Medical/Lab Data: “Payer will provide a monthly feed of all medical and lab claims for the attributed cohort.” OR “Provider partner (ACO) will grant pharmacy read-only access to the EMR to retrieve lab values.”
Reconciliation: The contract must state, “A joint reconciliation will occur quarterly to validate data and calculate payments.”
8. Exclusions (“Carve-Outs”) Which patients can be fairly excluded from the results?

You must protect yourself from risk you cannot control.
Example Exclusions: “Patients shall be excluded from the final outcomes calculation if they:
1. Disenroll from the health plan.
2. Expire during the performance period.
3. Are diagnosed with a new condition that contraindicates the intervention (e.g., new-onset cancer diagnosis).”

13.2.4 Masterclass: Choosing the Right Outcome Metric

The single most important negotiation in an OBA is the metric. Your choice of metric will determine whether you are set up for success or for failure. The metric must be a perfect balance of Clinically Meaningful (it actually matters to the patient’s health) and Operationally Feasible (you can actually measure it).

All metrics fall into three categories. As an advanced pharmacist, you must understand the pros and cons of each.

The Metric Pyramid: From Process to Economics

Level 3: Economic Metrics (The “Holy Grail”)

Definition: Metrics that measure the total financial impact of your intervention. This is what the payer’s CFO cares about most.

Examples:

  • Reduction in all-cause hospitalizations.
  • Reduction in disease-specific ER visits (e.g., for COPD or asthma).
  • Reduction in Total Cost of Care (TCOC) for the population.
  • Reduction in total pharmacy spend (for pharma-led OBAs).

Pros:
  • Highest financial relevance to the payer.
  • Payment is tied directly to ROI.
  • Allows for the largest “success fee” payments.
Cons:
  • Attribution Nightmare: Incredibly difficult to prove *your* intervention caused the savings.
  • Time Lag: Takes 12-24 months for claims to mature to get a final answer.
  • External Factors: A flu epidemic, a hospital closure, or a new physician in town can all skew the results, and you have no control over it.

Level 2: Clinical Metrics (The “Sweet Spot”)

Definition: Metrics that measure a direct change in a patient’s health status. This is the core of your clinical practice.

Examples:

  • Continuous: Average reduction in A1c (e.g., -1.5%).
  • Binary: % of patients reaching a goal (e.g., % of patients with BP < 140/90).
  • Negative: % of patients with *no* severe asthma exacerbations.
  • Patient-Reported: Improvement in a quality-of-life score (e.g., a 10-point jump on a depression (PHQ-9) or pain score).

Pros:
  • Highly Attributable: It’s much easier to prove your CMM and adherence coaching directly led to a 1% A1c drop.
  • Clinically Meaningful: This is what doctors and patients care about.
  • Faster Feedback: You can measure an A1c change in 3-6 months, not 12-24.
Cons:
  • THE DATA PROBLEM: This is the #1 barrier. This data (labs, BP) lives in the EMR or with the patient. It is *not* in your pharmacy dispensing system. The OBA *must* solve this data-sharing problem, or it’s impossible.

Level 1: Process Metrics (P4P in Disguise)

Definition: Metrics that measure whether an activity was performed. This is not a true OBA, but many contracts are written this way.

Examples:

  • Medication Adherence (PDC $\ge$ 80%).
  • CMR Completion Rate.
  • % of patients with a documented post-discharge med rec.

Pros:
  • Easy to Measure: You can get this data directly from your pharmacy claims or your MTM platform.
  • Low risk and high operational control.
Cons:
  • Not True Value: It measures activity, not health. A patient can be 100% adherent and still have an A1c of 12%.
  • Lower Payouts: Because the risk is lower and the metric is “weaker,” the success fees are much smaller.
Tutorial: Designing a SMART Metric for an OBA

When you are at the table designing the contract, your metric *must* be SMART. Let’s build one for a pharmacy-led diabetes program.

  • S – Specific: What, exactly, are we measuring?
    Bad: “Improve diabetes.”
    Good: “A reduction in Hemoglobin A1c.”
  • M – Measurable: How will we quantify it?
    Bad: “Make A1c better.”
    Good: “A binary outcome defined as any patient with a baseline A1c > 9.0% who achieves an A1c < 8.0%."
  • A – Achievable: Is this target realistic?
    Bad: “Get 100% of patients to an A1c < 7.0%." (Too high, not all patients can get there.)
    Good: “Achieve the outcome in at least 30% of the attributed cohort.” (This is a realistic target for a high-risk population.)
  • R – Relevant: Does this metric matter to the payer and patient?
    Bad: “Increase number of test strips dispensed.” (This is a cost, not an outcome.)
    Good: “Reducing A1c from >9% to <8% is directly tied to a reduction in future microvascular complications and medical costs."
  • T – Time-bound: When will we measure the final result?
    Bad: “When the patient’s A1c gets better.”
    Good: “The follow-up A1c will be measured 180 days (+/- 30 days) after the initial CMM visit.”

The Final SMART Metric: “Success is defined as a patient with a baseline A1c > 9.0% achieving an A1c < 8.0% when measured 180 days (+/- 30 days) post-intervention. The pharmacy will be paid a success fee for each patient who meets this target."

13.2.5 Risks vs. Rewards: The OBA High-Wire Act

Outcomes-Based Agreements represent the pinnacle of pharmacist-driven value, but they also carry the most significant and complex risks. You are, quite literally, betting your paycheck on your clinical skills and your ability to manage external factors. This model is not for the faint of heart, and it requires a mature, data-driven practice to execute successfully.

Before signing any OBA, you must conduct a thorough risk/reward analysis. This is the ultimate “eyes wide open” moment.

The Rewards (Upside)
  • Highest Financial Upside Per Intervention: The potential payment for a single “success” (e.g., $1,000 for one patient) can be 10x-20x higher than any FFS dispensing fee or P4P bonus. This model allows you to capture a true portion of the value you create.
  • Ultimate Professional Validation: An OBA is the market’s final validation of your clinical skills. It’s an inarguable, contractual statement that your CMM services produce a measurable, valuable health outcome that a payer is willing to pay for.
  • Purest Value Alignment: This is the only model where you, the patient, and the payer all want the exact same thing: a specific, positive health result. There are no misaligned incentives.
  • Strong Patient Partnership: When you can tell a patient, “My organization only succeeds if *you* succeed in getting your A1c down,” it transforms your relationship from a transaction to a true partnership.
  • Competitive Differentiator: A pharmacy that can confidently and successfully execute OBAs is operating at a level few can match. It makes you an invaluable, “sticky” partner for health plans and employers.
The Risks (Downside)
  • The $0 Revenue Risk: This is the #1 risk. You can invest 12 months of intensive, high-touch pharmacist labor into a cohort of 100 patients, and if you fail to hit the precise metric, your revenue for all that work is $0. You have to “eat” the cost of your own pharmacist’s salary.
  • The Data & Interoperability Nightmare: This is the most common operational failure. You sign a contract to lower A1c, and then realize you have no reliable, timely, or affordable way to *get* the A1c lab data from the dozens of different EMRs your patients’ doctors use.
  • The Attribution & External Factor Risk: You do 6 months of brilliant CMM, but the patient’s A1c doesn’t budge. Why? The patient lost their job and can’t afford healthy food (Social Determinant of Health), or their doctor is simultaneously tapering their insulin, or the patient is simply non-compliant. You are held financially accountable for factors far outside your control.
  • Perverse Incentives (“Cherry-Picking”): This model can inadvertently incentivize “bad” behavior. A provider might be tempted to only enroll the “easiest” patients (the “walking well” with an A1c of 9.1% who just need a small tweak) and “avoid” the most complex, non-adherent, or high-need patients (who need the most help but are least likely to hit the target). This undermines the very purpose of VBC.

13.2.6 Conclusion: Your New Mandate as a Clinical Risk-Taker

Outcomes-Based Agreements are the purest, and therefore most dangerous, form of value-based care. They represent a fundamental shift in your professional identity—from a dispenser of products to a manager of risk and a guarantor of results. You are no longer just *recommending* a change; you are *contracting* for one. You are placing a financial bet on your own clinical skills.

These agreements are not for every pharmacy or every disease state. They are best suited for high-cost, high-complexity scenarios where the potential value creation (from a new specialty drug or a pharmacist-led intervention) is massive and measurable. Think Hepatitis C, high-cost biologics, or large populations of uncontrolled diabetics.

To even *consider* an OBA, your pharmacy must have three capabilities locked down:

  1. Clinical Confidence: A proven, standardized clinical workflow that you know, with data, can produce the desired result.
  2. Data Infrastructure: A rock-solid, automated way to get the data you need (labs, hospital alerts) to manage your patients and *prove* your outcomes.
  3. Financial Acumen: The ability to read, negotiate, and model the financial risk of the contract, including protections like “carve-outs” and stop-loss.

The next sections of this module will focus on building those exact capabilities. We will move from the “what” (the models) to the “how” (the data and the implementation). Because in this new world, being a great clinician is only half the battle. You must also be a great data analyst and a great business partner.