The Role of Medication Therapy Management (MTM/CMM) in Value-Based Care

Source Overview

This article is compiled from the broader VBC resource document and is intended to stand alone for this topic.

Medication Therapy Management (MTM)

Medication Therapy Management is a service model born out of Medicare Part D but also implemented in other contexts. Under Part D, MTM is a required program for eligible beneficiaries (those with multiple chronic diseases, multiple medications, and high drug costs) to ensure they receive an annual Comprehensive Medication Review (CMR) plus quarterly targeted medication reviews (TMRs)[58]. In practice, MTM involves a pharmacist (or other qualified provider) systematically reviewing all of a patient’s medications (prescription, OTC, supplements), identifying any drug therapy problems (like duplications, unnecessary meds, dosing issues, side effects, adherence barriers), and developing a plan in collaboration with the patient and prescribers to optimize the regimen. Patients receive a medication action plan and a personal medication list as takeaways from a CMR[58]. Beyond Part D, many healthcare organizations have implemented MTM or related Comprehensive Medication Management (CMM) services for their patients to improve medication outcomes.

Alignment with VBC: Medications are one of the most powerful tools to improve health – but when used inappropriately or not at all (non-adherence), they can also drive poor outcomes and wasted spending. MTM directly addresses the quality of medication use, which is a huge component of care quality for chronic disease. By engaging patients in discussions about their meds, identifying and resolving drug therapy problems, and ensuring each medication is actually needed and effective, MTM improves therapeutic outcomes and can prevent adverse events. This aligns with all three legs of the Triple Aim: better outcomes (e.g., controlled blood pressure, fewer asthma attacks), better experience (patients understand their therapy and feel supported), and lower costs (avoiding complications, ER visits, or duplicate therapies). Indeed, a strong MTM program can reduce hospitalizations and total healthcare expenditures, especially in high-risk patients. The Enhanced MTM model by CMMI was predicated on this – that investing more in MTM would pay off in “smarter spending, better care, healthier people”[35]. Early analyses of Enhanced MTM suggested improved adherence and some cost savings; one participating Part D plan reported fewer hospitalizations among patients receiving intensive MTM interventions (per CMS evaluation reports). Moreover, health plans’ Star Ratings heavily weigh medication-related outcomes – e.g., proportion of patients with diabetes, hypertension, cholesterol who are adherent to their meds. Pharmacies performing MTM contribute to improved adherence rates and gap closure in therapy (like suggesting a statin for a diabetic patient if missing). In value-based contracts, these translate to higher quality scores and possibly shared savings.

Pharmacy’s Role: MTM has traditionally been a pharmacist-led service. Community pharmacists across the country provide MTM, often via contracting through MTM vendor platforms (like OutcomesMTM or Mirixa), where they are paid a fee for completing CMRs or interventions for Part D plans. In these cases, a pharmacy might complete a CMR and bill the plan (through the platform) say $60 for the comprehensive review. Beyond Part D, many ACOs or self-insured employers have contracted with pharmacies or pharmacy networks (like CPESN – Community Pharmacy Enhanced Services Network) to deliver MTM or CMM to their patients as part of a strategy to improve outcomes. For instance, CPESN pharmacies provide enhanced services including comprehensive med reviews, adherence coaching, and synchronization, aiming to meet quality measures and lower total cost of care[12][13]. These pharmacies may receive a monthly payment per patient or bonuses for hitting targets (e.g., high adherence rates or reduced readmissions), which is essentially value-based payment for MTM-like services.

In practice, when a pharmacist conducts MTM, they often detect issues that otherwise go unnoticed. Common interventions include: calling a physician to adjust a dose that’s too high or too low, deprescribing a medication that is unnecessary or risky (especially in older adults on many drugs), educating a patient on how to take their meds properly, resolving insurance barriers (like facilitating a switch to a covered alternative), and encouraging adherence through various tools. Each of these can have significant impact. For example, if MTM identifies that a patient hasn’t been taking their blood thinner because of cost, the pharmacist might work to get a formulary alternative or a patient assistance program – potentially preventing a stroke or clot (huge outcome and cost implications). Or the pharmacist might catch a dangerous duplication (two drugs of the same class from different doctors) and get it corrected, preventing an adverse reaction.

Evidence and Outcomes: Ample evidence supports MTM’s value. In one program (the Asheville Project, an early pharmacist care project for diabetes in the 2000s), pharmacist consultations led to improved A1c levels and ROI in healthcare savings. More recently, the Pharm2Pharm study (mentioned earlier under TCM) also effectively was an MTM program bridging hospital to community, which yielded a 36% drop in med-related admissions[30]. Another study in a Medicare Advantage plan setting found that members who received a comprehensive medication review had significantly lower probability of hospitalization in the following year compared to similar members who declined the service. Additionally, Part D plans that achieve high CMR completion rates and adherence metrics often see better health outcomes in their populations (as reflected in Star Ratings and internal data). From a patient perspective, MTM can increase their understanding and confidence in managing their medications, improving adherence and satisfaction.

Pharmacies have an incentive to excel in MTM not only for the direct service fees but because health plans are steering patients to “high-performing” pharmacies. Some payer-pharmacy agreements use performance-based reimbursement where pharmacies get a bonus or better reimbursement rates if their patients hit adherence or gap closure targets. This effectively makes MTM and related interventions a means for pharmacies to financially benefit under value-based arrangements. In summary, MTM is a cornerstone pharmacy service in value-based care – it ensures medications (one of the biggest drivers of health outcomes) are used optimally, leading to safer, more effective, and more cost-effective care[35].

U.S. Policy and Regulatory Frameworks Supporting VBC

Over the past decade, U.S. health policy has aggressively pushed toward value-based models, creating frameworks and incentives that encourage all healthcare providers – including pharmacies – to engage in VBC. Key developments include:

• Medicare and CMMI Initiatives: The Affordable Care Act (2010) established the Center for Medicare & Medicaid Innovation (CMMI) to test new payment and delivery models. Through CMMI, Medicare has piloted numerous VBC models (“Innovation Center models”) aimed at improving care coordination and outcomes[8]. For example, Accountable Care Organizations (ACOs) in Medicare Shared Savings Programs and CMMI demonstrations hold groups of providers accountable for the cost and quality of care for a population. Providers in ACOs share in savings if they meet quality and cost targets. Pharmacists often participate in ACO care teams to help manage medications, close care gaps, and improve metrics like medication adherence or readmission rates[9]. CMMI has also tested primary care models such as the Comprehensive Primary Care Plus (CPC+) and Primary Care First, which provided care management payments to primary care practices. In these models, practices were required or encouraged to integrate comprehensive medication management. Notably, primary care clinics in CPC+ Track 2 had to provide comprehensive medication management (CMM) for high-risk patients (e.g. those recently discharged or in chronic care management)[10]. Many practices hired pharmacists or collaborated with pharmacies to fulfill this requirement[11]. This illustrates how CMMI models explicitly recognize pharmacy services as a component of advanced primary care.

• CMS Value-Based Programs: The Centers for Medicare & Medicaid Services (CMS) has implemented several value-based purchasing programs. While some target hospitals (e.g. Hospital Readmissions Reduction Program, Hospital Value-Based Purchasing), others affect ambulatory care and indirectly involve pharmacies. For instance, Medicare Advantage (Part C) and Part D Star Ratings include quality measures tied to medication adherence and MTM/Comprehensive Medication Review (CMR) completion, and Medicare Advantage includes preventive care measures such as adult immunization status[53][54]. Health plans have a strong incentive to improve these metrics to achieve high star ratings. Consequently, many plans partner with pharmacies on adherence programs, MTM, and immunization drives, even offering performance bonuses to pharmacies that help improve medication-related quality measures[12][13]. Another example is MACRA’s Quality Payment Program (QPP) for Medicare Part B providers, which introduced Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). Under MIPS, clinicians are measured on quality and improvement activities – some of which involve medication management (e.g. controlling diabetes or performing medication reconciliation post-discharge). Clinicians in APMs like ACOs or advanced primary care homes are exempt from MIPS but take on outcome-based accountability. In both cases, providers have financial incentives to collaborate with pharmacists to achieve medication-related quality goals (such as optimal chronic disease control and closing preventive care gaps). In short, Medicare’s shift to value means physicians, hospitals, and plans are increasingly motivated to utilize pharmacy services to succeed in these programs[14][15].

• CMMI Enhanced MTM Model: A milestone specific to pharmacy was the Part D Enhanced Medication Therapy Management (MTM) model (2017–2021). This CMMI pilot gave participating Medicare drug plans additional payment incentives and regulatory flexibility to innovate their MTM programs[16][17]. Plans could stratify and target patients more creatively and offer more intensive MTM interventions than the standard Part D MTM requirements. They received a $ per-member-per-month payment to fund MTM services and could earn a performance payment based on outcomes[18]. The goal was to align incentives so that stand-alone drug plans (which normally only bear pharmacy costs) would invest in MTM that could reduce overall medical expenditures[19][20]. Several major insurers participated, leveraging networks of community pharmacists to provide personalized MTM and care coordination[21][22]. Early results indicated that more beneficiaries received medication reviews and that interventions were better tailored to risk level[23]. While the full five-year evaluation is complex, the Enhanced MTM model demonstrated the potential for MTM to improve therapeutic outcomes and reduce costs by optimizing medication use[16]. This model signaled to the industry that Medicare is willing to reward pharmacies for value delivered (in this case, avoided downstream costs due to better medication management).

• Regulatory Enablers for Pharmacy in VBC: Policymakers have also addressed legal barriers to pharmacist participation in value-based arrangements. In 2020, HHS’s Office of Inspector General proposed regulations around new safe harbors to the federal Anti-Kickback Statute for value-based payment arrangements. A key question was whether pharmacies could be included as “value-based enterprise (VBE) participants” eligible for these safe harbors. NACDS (National Association of Chain Drug Stores) strongly advocated that excluding pharmacies would be a mistake, given pharmacies’ critical role in care coordination and medication management[24][15]. Ultimately, the final rule did allow pharmacies as VBE participants, which means pharmacies can legally enter into gainsharing, shared savings, or care coordination arrangements with hospitals and physician groups without violating anti-kickback laws (as long as certain conditions are met). This change removed a major legal impediment, enabling pharmacies to formally contract in innovative value-based payment models (for example, a pharmacy could receive bonus payments from an ACO for hitting medication adherence targets or reducing hospitalizations in a shared patient population). At the state level, many states have expanded pharmacist scope of practice and provider status, allowing pharmacists to bill for clinical services (especially under Medicaid or commercial plans). For instance, some states reimburse pharmacists for comprehensive medication management or chronic care services, and nearly all states now allow pharmacist immunization authority for adults (and many for adolescents). During the COVID-19 pandemic, the federal PREP Act authorized pharmacists to provide and be reimbursed for a broader range of services (COVID testing, vaccinations for ages 3+, etc.), underscoring the value of pharmacy-based care in public health. All these regulatory changes are enablers that integrate pharmacies into the VBC ecosystem by recognizing and paying for their contributions beyond dispensing.

Table 1: Key Policies and Programs Enabling Value-Based Care and Pharmacy Integration

Table 1: Summary of major policies and programs that support value-based care in the U.S., including those that explicitly incorporate or enable pharmacy services. These frameworks have collectively moved the system toward one where pharmacies are expected and incentivized to deliver more clinical care (medication management, coordination, prevention) in alignment with value-based goals.

Economic and Clinical Incentives for Pharmacies and Providers under VBC

Value-based care introduces new incentive structures that differ from the traditional pharmacy business model. Under fee-for-service, pharmacy revenue has largely come from dispensing (product reimbursement plus a dispensing fee) and some fixed clinical fees (like MTM or immunization fees). VBC, however, opens the door to outcome-based payments and shared savings – fundamentally connecting the pharmacy’s financial rewards to the results they help achieve.

For pharmacies, the economic incentives in VBC can include:

• Performance-Based Bonuses: Many payer-pharmacy contracts now feature bonuses tied to quality metrics. For example, a Medicare Part D plan might pay quarterly bonuses to pharmacies that exceed a certain threshold on adherence metrics (proportion of days covered for diabetes, hypertension, cholesterol drugs) or that have high CMR completion rates. This turns quality into revenue. A high-performing pharmacy in a preferred network can earn significantly more in bonus payments, which incentivizes investment in patient follow-up, adherence packaging, refill synchronization, and other adherence programs. Community Pharmacy Enhanced Services Networks (like CPESN) explicitly negotiate such value-based contracts – if the network as a whole improves outcomes, participating pharmacies share in the savings or earn pay-for-performance payments[50][51].

• Shared Savings Arrangements: In some advanced cases, pharmacies may join an Accountable Care Organization or collaborative network as a formal partner and partake in shared savings. This means if the overall healthcare spending for a defined patient group comes in under a target while quality metrics are met, the pharmacy gets a portion of the savings (just as physicians or hospitals would). While still emerging, there are pilot examples – such as independent pharmacy networks that contract with self-insured employers for chronic disease management and get paid a percentage of any reduction in total healthcare costs achieved. This model is attractive for pharmacies because it rewards clinical excellence and efficiency: the better they manage the patients (keeping them healthy and out of the hospital), the more they earn.

• New Service Revenue Streams: Value-based programs often come with new billable services (as discussed earlier: CCM, TCM, RPM, RTM codes). While pharmacists might not bill all of these directly (due to provider status limitations), entrepreneurial pharmacies are finding ways to participate. For instance, some pharmacies have essentially created mini “clinics” with nurse practitioners or collaborative practice physicians so that they can bill Medicare for CCM or RPM and have the pharmacy staff deliver the service. In other cases, pharmacies contract with provider groups to supply these services for a fee. The net effect is that pharmacies can diversify their revenue beyond dispensing – getting paid for care management, monitoring, and consulting. This is crucial in an era where dispensing fees and margins are tight; VBC provides an avenue for pharmacies to leverage their clinical skills for payment.

• Avoiding Penalties / Securing Preferred Status: On the provider side, physicians and hospitals face penalties for poor performance (readmission penalties, MIPS negative adjustments, etc.) and are eager to avoid those by improving quality. Pharmacies that can help providers avoid these penalties (e.g., by reducing readmissions through TCM or helping achieve high MIPS scores via medication-related measures) become very valuable partners. A primary care group in MIPS might contract with a pharmacy to do annual wellness visits or medication reviews because it improves their MIPS quality points – the cost of paying the pharmacy is less than the benefit of a better Medicare reimbursement adjustment. Similarly, hospitals might fund a meds-to-beds or transition-of-care pharmacy program because it prevents readmissions, thereby avoiding Medicare penalties that far exceed the program cost. In these scenarios, the pharmacy’s incentive is an indirect but important one: strong performance secures them a role and funding from partners. Pharmacies demonstrating value may gain preferred referrals, inclusion in narrow networks, and payer promotions (steering patients to that pharmacy), which in turn boosts their business.

Clinically, the incentives align as well:

• Improved Patient Outcomes: For providers of all kinds, better outcomes are of course a primary professional goal. VBC’s focus on outcomes means pharmacists finally have a system that recognizes and rewards their impact on outcomes. Many pharmacists find professional satisfaction in seeing tangible improvements – e.g., seeing a patient’s A1c drop or knowing they helped prevent a hospitalization. In value-based arrangements, these clinical wins are also financial wins. This alignment can increase pharmacist morale and engagement, as their efforts in patient care are validated by both patient feedback and the value-based metrics.

• Collaborative Practice Incentives: VBC encourages a team-based approach. Providers have incentive to delegate and use the top of each team member’s license. This means more collaborative practice agreements and referrals to pharmacists for medication management. Physicians, under time pressure, are happy to have pharmacists take on complex med management if it helps achieve quality targets. In some cases, physicians may even share incentive payments with pharmacists – for instance, a physician group might award bonuses to clinical staff (including pharmacists) based on quality scores or savings achieved. So pharmacists could directly get a piece of the incentive pie through their employer. Even if not direct, pharmacists benefit from elevated status on the care team and potentially more negotiating power for higher salaries or support when they are clearly contributing to the practice’s VBC success.

• Patient Retention and Loyalty: A perhaps less obvious incentive – pharmacies providing high-quality clinical services often engender greater patient loyalty and attract new patients. In the competitive pharmacy market, being known as the pharmacy that will call you and help manage your health (versus one that just counts pills) can distinguish a business. Under VBC, payers and provider networks may actively steer patients to pharmacies with such services (some ACOs create lists of “preferred pharmacies” that align with their care philosophy). This can increase a pharmacy’s prescription volume in the long run. So even though VBC focuses on quality, there’s a halo effect where pharmacies that embrace it may also see growth in their traditional revenue streams due to a stronger reputation and relationships.

For providers (physicians/health systems), the incentive to involve pharmacies is clear: pharmacists can amplify performance. A physician participating in a value-based contract might realize that without good med management, they won’t hit their diabetes control or readmission goals. By engaging a pharmacist, they effectively add a specialist who can dedicate time to those issues that the physician cannot. The physician then sees better metrics and qualifies for bonuses or avoids penalties. Also, with pharmacists handling medication-related tasks, physicians can operate at their highest skill level (seeing more complex cases, doing procedures, etc.), which can indirectly help their productivity and revenue.

From a payer perspective (insurers, Medicare, employers), the economic incentive is straightforward: if pharmacies help reduce expensive events (hospitalizations, surgeries) or improve chronic disease trends, the payer saves money. That’s why we see experimentation with paying pharmacies for outcomes – it’s cheaper to pay a pharmacy $100 to manage a patient’s hypertension than to pay $20,000 for a stroke that could result from unmanaged hypertension. Payers are increasingly data-driven; as evidence mounts for pharmacy interventions saving costs, payers are writing those incentives into contracts. For instance, some Medicaid programs give plans extra credit (or require) that they integrate pharmacists in care management for certain high-need groups, acknowledging the value.

In essence, value-based care creates a scenario where "what is good for the patient is also good for business." Pharmacies improving adherence and patient health aren’t just doing goodwill – under VBC, those translate to measurable value that someone (a payer, a provider group) is willing to pay for. It’s a positive feedback loop: better outcomes lead to rewards, which support the pharmacy to continue providing high-quality care.

Quick Implementation Checklist

• Define the target patient cohort and success metrics
• Define workflow and documentation (who does what, when)
• Confirm billing or contracting pathway (PMPM, shared savings, fee-for-service, performance bonus)
• Set up data flow and reporting cadence
• Run a small pilot, measure, then scale

References

Sources:
- AMA – “What is value-based care? Key elements” (2024) – Definition of high-value care and Triple/Quintuple Aim[1].
- CMS – “Value-Based Care” – Explanation of VBC focusing on quality, performance, patient experience[2].
- CMS – “Chronic Care Management At-a-Glance” – Outcomes data showing CCM reduced hospitalizations \~5% and improved adherence[26].
- CMS CMMI – “Enhanced MTM Model” – Description of Part D Enhanced MTM incentives to improve MTM and outcomes[16][17].
- CMS – Star Ratings Technical Notes – Star Ratings measures for Medicare Advantage and Part D (including adherence and preventive care measures)[53].
- American Journal of Health-System Pharmacy (2024) – Study on pharmacist-integrated transitional care, showing major readmission reductions with pharmacist intervention[29].
- J Am Geriatr Soc (2017) – Pharm2Pharm study – 36% drop in med-related hospitalizations and 2.6:1 ROI with pharmacist transitional care[30][31].
- NACDS – Comments to HHS (2020) – Arguing inclusion of pharmacies in value-based enterprises due to their critical care coordination role[15].
- CPESN USA – Payer Solutions – Detailing pharmacy contributions to quality measures (adherence, BP, A1c, readmission avoidance) in ACOs and plans[9].
- CMS MTM evidence base – Summary of published MTM outcomes and utilization/cost impacts across programs[55].
- Place-of-vaccination analysis (commercially insured adults) – Data showing rising share of adult flu vaccines given in pharmacies (\~46% in 2020–21)[40].

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