MARCH 26, 2024
The Buy-and-Bill Model: Advantages for Infusion Centers
The Buy-and-Bill Model: Advantages for Infusion Centers
Specialty drugs are a growing segment of the pharmaceutical market, making up over 49% of total prescription drug spending in 2020. These drugs provide vital therapies for people with a variety of conditions and can be administered in multiple locations: hospital settings, physician practices, infusion centers, and patient homes.
As the number of people utilizing specialty drugs continues to increase each year, these centers of care are becoming increasingly important.
This article reviews the buy-and-bill model for infusion centers. Under this model, providers can offer specialty care at great economic value to both payers and patients.
Specialty drugs are a growing segment of the pharmaceutical market, making up over 49% of total prescription drug spending in 2020. These drugs provide vital therapies for people with a variety of conditions and can be administered in multiple locations: hospital settings, physician practices, infusion centers, and patient homes.
As the number of people utilizing specialty drugs continues to increase each year, these centers of care are becoming increasingly important.
This article reviews the buy-and-bill model for infusion centers. Under this model, providers can offer specialty care at great economic value to both payers and patients.
Alternatives to Buy-and-Bill: Partnering with a Specialty Pharmacy
Alternatives to Buy-and-Bill: Partnering with a Specialty Pharmacy
Infusion centers have two main options for procuring medications for patients. One involves the use of a specialty pharmacy to compound and deliver medications (also called white bagging). The other is a buy-and-bill model, requiring providers to procure, store, and administer specialty medications at their location.
Under the white bagging model, infusion centers are reimbursed for administering the therapy and specialty pharmacies are reimbursed for the cost of the medication and delivery.
This model can be especially advantageous for oncology therapies where dosages may change rapidly. A specialty pharmacy is far better equipped to provide medications required for follow-up treatments without delays.
Infusion centers have two main options for procuring medications for patients. One involves the use of a specialty pharmacy to compound and deliver medications (also called white bagging). The other is a buy-and-bill model, requiring providers to procure, store, and administer specialty medications at their location.
Under the white bagging model, infusion centers are reimbursed for administering the therapy and specialty pharmacies are reimbursed for the cost of the medication and delivery.
This model can be especially advantageous for oncology therapies where dosages may change rapidly. A specialty pharmacy is far better equipped to provide medications required for follow-up treatments without delays.
For oncology products reimbursed by a commercial payer, 27% of therapies administered in an office setting were delivered through a specialty pharmacy.
For oncology products reimbursed by a commercial payer, 27% of therapies administered in an office setting were delivered through a specialty pharmacy.
There are additional considerations for providers administering specialty drugs via a pharmacy.
There are additional considerations for providers administering specialty drugs via a pharmacy.
Patient satisfaction - Medication or dosage changes could cause delays that impact patient satisfaction with the provider. This is especially true if the change originated from a payer policy that is unlikely to be clearly understood by a patient.
Waste - Due to the specificity of specialty drugs being compounded to an individual’s specific needs, any excess must be discarded.
Reimbursement - Many providers have reported that reimbursement from payers does not adequately cover the additional overhead associated with specialty drugs.
Patient satisfaction - Medication or dosage changes could cause delays that impact patient satisfaction with the provider. This is especially true if the change originated from a payer policy that is unlikely to be clearly understood by a patient.
Waste - Due to the specificity of specialty drugs being compounded to an individual’s specific needs, any excess must be discarded.
Reimbursement - Many providers have reported that reimbursement from payers does not adequately cover the additional overhead associated with specialty drugs.
How infusion centers can gain more control through the buy-and-bill model
How infusion centers can gain more control through the buy-and-bill model
For infusion centers, buy-and-bill involves procuring drugs that will be administered on-site by medical professionals. This model doesn’t require a specialty pharmacy to compound and/or deliver medications. By taking on the logistical and administrative burden of storing and administering these medications, infusion centers capture reimbursement for both the cost of drugs and administration, plus a markup that covers the cost of storage and handling.
How reimbursement occurs may vary depending on specific payer contracts, however, it is usually covered under a payer’s medical benefit as a provider-administered drug. Rates of reimbursement vary widely, but drug price is most commonly 106% of the average sales price (ASP).
ASP presents a few challenges for infusion center operators to overcome. Firstly, it can vary during the year and does not reflect the true cost of a drug to the provider. It is the responsibility of the provider to ensure their contract with payers covers the drug cost plus the administrative burden of storing and handling drugs.
In most instances, the reimbursement rate for administering drugs in an infusion center is somewhere around $120.
For infusion centers, buy-and-bill involves procuring drugs that will be administered on-site by medical professionals. This model doesn’t require a specialty pharmacy to compound and/or deliver medications. By taking on the logistical and administrative burden of storing and administering these medications, infusion centers capture reimbursement for both the cost of drugs and administration, plus a markup that covers the cost of storage and handling.
How reimbursement occurs may vary depending on specific payer contracts, however, it is usually covered under a payer’s medical benefit as a provider-administered drug. Rates of reimbursement vary widely, but drug price is most commonly 106% of the average sales price (ASP).
ASP presents a few challenges for infusion center operators to overcome. Firstly, it can vary during the year and does not reflect the true cost of a drug to the provider. It is the responsibility of the provider to ensure their contract with payers covers the drug cost plus the administrative burden of storing and handling drugs.
In most instances, the reimbursement rate for administering drugs in an infusion center is somewhere around $120.
Benefits of the Buy-and-Bill Model for Infusion Centers
Benefits of the Buy-and-Bill Model for Infusion Centers
Procurement Flexibility – Providers control how and where specialty drugs are purchased. With a managed formulary approach, there is more cost control and impact on care quality.
Patient satisfaction – As the site of service, infusion centers can ensure a positive patient experience.
Turnaround on therapy changes can be minimized since the stock is in-house.
Turnaround on therapy changes can be minimized since the stock is in-house.
Additional logistical ease for patients.
No need for them to wait for a delivery or pick up medications and then travel to a location for their therapy.
Reimbursement – Infusion centers can capture more reimbursement. Post-purchase rebate revenue and beneficial payer agreements allow buy-and-bill infusion centers to effectively cover their operational costs.
Procurement Flexibility – Providers control how and where specialty drugs are purchased. With a managed formulary approach, there is more cost control and impact on care quality.
Patient satisfaction – As the site of service, infusion centers can ensure a positive patient experience.
Turnaround on therapy changes can be minimized since the stock is in-house.
Turnaround on therapy changes can be minimized since the stock is in-house.
Additional logistical ease for patients.
No need for them to wait for a delivery or pick up medications and then travel to a location for their therapy.
Reimbursement – Infusion centers can capture more reimbursement. Post-purchase rebate revenue and beneficial payer agreements allow buy-and-bill infusion centers to effectively cover their operational costs.
Economic leverage and procurement options for infusion centers
Economic leverage and procurement options for infusion centers
Infusion centers that use the economic leverage of a group purchasing organization (GPO) are able to get specialty drugs at a lower cost than buying them independently. GPOs often receive rebates for high-cost drugs or those new-to-market. It so happens that infusion centers almost entirely administer specialty drugs.
Drugs that infusion centers procure must be carefully reviewed. Aetna, for example, only covers a specific set of drugs to be administered in a non-hospital or home care setting. Reviewing payer formularies, drug utilization, and preparing for prior authorizations is vital work for infusion centers to ensure proper reimbursement.
Vista provides technology that significantly simplifies these processes.
Our purpose-built technology helps infusion centers:
Capture and manage claims data with ease
Ensure they are billing the correct payer
Speed up prior authorization workflows
Improve transparency into plan details
Increase reimbursement and reduce expenses
Infusion centers that use the economic leverage of a group purchasing organization (GPO) are able to get specialty drugs at a lower cost than buying them independently. GPOs often receive rebates for high-cost drugs or those new-to-market. It so happens that infusion centers almost entirely administer specialty drugs.
Drugs that infusion centers procure must be carefully reviewed. Aetna, for example, only covers a specific set of drugs to be administered in a non-hospital or home care setting. Reviewing payer formularies, drug utilization, and preparing for prior authorizations is vital work for infusion centers to ensure proper reimbursement.
Vista provides technology that significantly simplifies these processes.
Our purpose-built technology helps infusion centers:
Capture and manage claims data with ease
Ensure they are billing the correct payer
Speed up prior authorization workflows
Improve transparency into plan details
Increase reimbursement and reduce expenses
Learn More
The Inflation Reduction Act’s Potential Impact on Infusion Centers
The Inflation Reduction Act’s Potential Impact on Infusion Centers
Under the Inflation Reduction Act (IRA), Medicare will reimburse drugs subject to negotiation from 106% of ASP to 106% of the negotiated maximum fair price (MFP). Under a buy-and-bill model, this will lower margins for providers, except for 340B entities and hospitals.
That said, payers will likely prefer infusion centers. The same therapies administered at hospital-based outpatient departments often demand rates that are double those of infusion centers.
Under the Inflation Reduction Act (IRA), Medicare will reimburse drugs subject to negotiation from 106% of ASP to 106% of the negotiated maximum fair price (MFP). Under a buy-and-bill model, this will lower margins for providers, except for 340B entities and hospitals.
That said, payers will likely prefer infusion centers. The same therapies administered at hospital-based outpatient departments often demand rates that are double those of infusion centers.
Commercial payers saved 23% on medical benefit drug spend using site-of-service programs.
Commercial payers saved 23% on medical benefit drug spend using site-of-service programs.
Conclusion
Conclusion
Despite potential impacts from the IRA, the buy-and-bill model remains an inherently attractive and cost-effective model for operators of infusion centers, their patients, and payers. Providers are better able to control operations, potentially capture a greater share of reimbursements, and deliver specialty drug treatments in a convenient setting.
Despite potential impacts from the IRA, the buy-and-bill model remains an inherently attractive and cost-effective model for operators of infusion centers, their patients, and payers. Providers are better able to control operations, potentially capture a greater share of reimbursements, and deliver specialty drug treatments in a convenient setting.
Founded in 2018, VistaRx (Vista) provides comprehensive pharmacy data capture and management solutions for a variety of entities in the pharmacy value chain. We utilize custom-coded technology, strategies, and partnerships to help our clients improve operations and reduce dependence on third-party vendors.
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SUPPORT@VISTARX.COM
(385) 355-4882
2290 E 4500 S, STE 130
HOLLADAY, UT 84117
COPYRIGHT VISTARX 2024
Sign Up for Vista Insights and Updates
SUPPORT@VISTARX.COM
(385) 355-4882
2290 E 4500 S, STE 130
HOLLADAY, UT 84117
COPYRIGHT VISTARX 2024
Sign Up for Vista Insights and Updates
SUPPORT@VISTARX.COM
(385) 355-4882
2290 E 4500 S, STE 130
HOLLADAY, UT 84117
COPYRIGHT VISTARX 2024
