Provider-administered drugs include biologics, injectables, IVIG, immunoglobulins, and as well as other products. They are drugs that cannot be self-administered by the patient or a caregiver. They are typically infused or injected by a healthcare provider in a physician’s office, clinic, infusion center, or hospital. The number and price of specialty drugs have increased over the last few years and the price of a specialty drug can range between thousands to tens of thousands of dollars per regimen. The medications are covered by a patient’s medical benefit separately by both Medicare Part B and commercial health plans. Payers spend the largest share on oncology drugs and related products. Physician offices and hospital outpatient clinics are the primary sites of administration for separately paid, provider-administered drugs. Usually, these drugs are provided by hospitals or physicians’ offices who purchase the drugs directly from the wholesaler and bill the health insurance for the drug as well as the administration cost. This process is called buy-and-bill.
Buy-and-bill is a process where physician offices receive medications for in-office administration. Providers order the medication (the “buy” part) and receive reimbursements from third-party payers (the “bill” part). This process is commonly used for outpatient drugs administered by providers, with the cost of the drugs typically reimbursed by Medicare Part B. In this system, providers take on roles similar to a pharmacy, managing drug inventory, collecting copayments or coinsurance, prescribing therapy, and administering the medication. The buy-and-bill method offers complete control over the drug’s life cycle, making it a favorable choice for medical practices that need to administer specialty drugs. It involves managing interactions with the drug from ordering and purchasing to storage, administration, and billing the third-party payer for the drug, its administration, and related services.
In this blog post, we will dig deeper into the benefits and advantages of buy-and-bill versus the challenges that come with it. We will also cover the best practices and recommendations for the buy-and-bill method.
Benefits of Buy and Bill
The buy-and-bill model offers several advantages for providers, providing them with greater control over inventory management, drug selection, and patient care. Here are some key benefits to consider:
- Control over supply chain: Clinics utilizing the buy-and-bill method have the advantage of maintaining control over their supply chain. They can ensure the availability of necessary medications, reducing the risk of treatment interruptions for their patients.
- Product integrity: By managing all aspects of drug administration, including procurement and storage, providers can maintain the integrity of the product. This ensures that medications are stored properly and meet quality standards, optimizing their effectiveness for patients.
- Pricing control: Buy-and-bill empowers practices with more control over medicine prices. Providers can negotiate directly with wholesalers and distributors, potentially securing better pricing arrangements and reducing costs compared to alternative methods.
- Higher revenues and profit margins: When utilizing buy-and-bill, physicians bill payers directly for the drugs, leading to higher reimbursement rates and potentially increased profit margins. This can contribute to the financial sustainability of medical practices.
In addition to the above advantages, buy-and-bill offers other benefits that enhance efficiency and patient care. For instance, the labeling of medications can be better when using the buy-and-bill model. Externally delivered drugs often lack manufacturer’s labeling because they are formulated at the pharmacy. With buy-and-bill, physicians can ensure that medications are appropriately labeled, providing vital information for patients and healthcare professionals.
Moreover, buy-and-bill allows for more flexibility in dosing adjustments. Physicians can make necessary modifications to the dosage without experiencing delays or interruptions caused by administrative tasks. This flexibility enables personalized treatment plans tailored to the specific needs of each patient, enhancing the overall quality of care provided.
By leveraging the buy-and-bill method, medical practices can streamline their operations, maintain control over the drug’s life cycle, optimize pricing, and improve patient outcomes. However, it is essential for providers to stay informed about reimbursement policies and regulatory changes to navigate the evolving landscape successfully. With careful implementation and adherence to best practices, the buy-and-bill model can be a valuable approach for medical practices seeking to enhance their medication management processes and deliver optimal care to their patients.
Challenges of Buy and Bill
The buy-and-bill model, where physicians purchase medications for in-office administration and bill payers for both the product and administration, presents several challenges for physicians. Here are some key challenges to consider:
- Impediments to therapy speed and adherence: When patients obtain medications at a pharmacy instead of in-office, it can slow down the initiation of therapy and potentially reduce patient adherence, which may lead to out-of-pocket costs.
- Financial risk and prior authorization: The buy-and-bill model introduces heightened financial risk for physicians, as they must invest in costly medications upfront. Additionally, navigating the prior authorization process for specialty drugs can be complex and time-consuming.
- Competition and stakeholder engagement: The high profitability of specialty drugs attracts various stakeholders in the healthcare system, intensifying competition for independent or physician-owned practices. They must compete against hospitals, hospital-owned clinics, and other provider types to retain patients.
Proper stocking, management, and billing are crucial for successful implementation of the buy-and-bill model. Providers must ensure accurate inventory management to minimize waste and liability related to drug administration. Meticulous attention to detail is required to track medication usage, expiration dates, and storage conditions.
Moreover, the shift from oral medications to specialty and value-based care can result in revenue loss for prescribers. As the focus shifts towards more specialized therapies, physicians may experience reduced revenue streams from traditional oral medications. This transition necessitates strategic planning and adaptation for medical practices to maintain financial viability.
The buy-and-bill process also brings challenges in the realm of reimbursement. Patients are typically required to pay a 20% co-pay for Part B drugs, which can create financial burdens for them. Part B drug expenditures have consistently outpaced other Medicare costs, with a small number of highly expensive drugs constituting a significant portion of Part B’s expenses. The reimbursement formula mandated by Congress, which calculates the average sales price of the drug plus a 6% handling fee, can incentivize physicians to opt for more costly therapies. This dynamic may also encourage manufacturers to set higher prices to attract physician prescribers, contributing to the complexities and criticisms associated with the buy-and-bill process.
Addressing these challenges requires a comprehensive understanding of the buy-and-bill model, careful financial management, and proactive engagement with payers and manufacturers. Physicians and medical practices must navigate the regulatory landscape, adapt to evolving reimbursement policies, and explore strategies to optimize patient care while managing the financial implications of the buy-and-bill approach.
Best Practices and Recommendations
There are several strategies and best practices that can significantly improve the efficiency of the buy-and-bill process for healthcare providers and patients. To optimize buy-and-bill operations, healthcare providers can implement the following best practices:
- Effective inventory management: Implement robust inventory management and tracking systems to ensure accurate stock levels, minimize waste, and prevent drug shortages.
- Group purchasing organizations and specialty distributors: Collaborate with group purchasing organizations and specialty distributors to access competitive pricing, negotiate favorable contracts, and secure timely delivery of limited distribution drugs.
- Field reimbursement services and prior authorization support: Utilize field reimbursement services and prior authorization support to streamline billing and reimbursement processes, reducing administrative burdens and ensuring timely payments.
For payers, the following recommendations can help refine buy-and-bill policies and programs:
- Clear reimbursement criteria and guidelines: Develop clear and consistent reimbursement criteria and guidelines specifically tailored for specialty drugs. This clarity will assist providers in understanding reimbursement requirements and facilitate accurate claims submission. Establishing a codified standard for reimbursement is something many reimbursement professionals seek. The Prior Authorization Certified Specialist (PACS) program offered by the Accreditation Council for Medical Affairs (ACMA) helps prior authorization, field reimbursement and market access professionals stay up to date with the latest in prior authorization. PACS is accredited by the International Accreditors for Continuing Education & Training under the American National Standards Institute.
- Collaborative relationships with providers and manufacturers: Foster collaborative and transparent relationships with providers and manufacturers. This collaborative approach can help address challenges, enhance communication, and promote mutual understanding of pricing, reimbursement, and treatment goals.
- Value-based payment models and quality measures: Explore the implementation of value-based payment models and quality measures specific to specialty drugs. These models and measures can incentivize high-quality care, cost-effective treatments, and improved patient outcomes.
Furthermore, there have been proposals for changes to Medicare aimed at enhancing the competitiveness and regulatory control of the buy-and-bill process. These proposed changes seek to address concerns related to pricing, reimbursement, and the overall efficiency of the system. It is important for stakeholders to actively engage in discussions and advocate for policies that promote transparency, affordability, and equitable access to specialty drugs.
By adopting these best practices and recommendations, healthcare providers, payers, and stakeholders can work collaboratively to optimize the buy-and-bill process. Strategic implementation and ongoing evaluation of these practices can contribute to the efficient management of specialty drugs, improved patient care, and the sustainability of the healthcare system as a whole.
In conclusion, the buy-and-bill process plays a crucial role in the administration of specialty drugs by healthcare providers, involving the ordering, purchasing, management of in-house inventory, prescribing, administering, and billing of medications. This method offers benefits such as greater control over inventory, drug selection, and patient care, leading to higher revenues and profit margins. However, it is not without challenges, including increased financial risk, competition, and the burden of inventory management. To optimize buy-and-bill operations, providers are encouraged to implement effective inventory management systems, leverage group purchasing organizations, and utilize reimbursement services. Payers, on the other hand, can enhance their policies by establishing clear reimbursement criteria, fostering transparent relationships, and implementing value-based payment models. The buy-and-bill process, while integral to patient care, requires continuous evaluation and potential regulatory adjustments to ensure competitiveness and efficiency in the evolving landscape of healthcare.
Author: Kiana Dixson, PharmD
Co-Author: Bayan Mizyed, PharmD