The pros and cons of the “buy and bill” model of pharmaceutical distribution: What’s appropriate for your practice?

This method is new for many cardiology practices, but as value-based care models become more prevalent and building revenue becomes increasingly important, it’s a good time to consider buy and bill.¹

What is buy and bill?

Buy and bill is a process for acquiring specialty drugs that providers administer onsite in the practice. Rather than relying on a specialty pharmacy or other collaborator, the healthcare provider purchases, stores and then administers the product to a patient.

After administering the drug to the patient, the provider submits a claim for reimbursement to the patient’s insurance company or another third-party payer. Basically, the provider buys the drug and then bills for it after the patient has received it.

When using the buy and bill process, the healthcare provider manages interactions with the drug from beginning to end, including:²

• Ordering and purchasing
• Managing in-house inventory of drugs
• Storing the drug appropriately
• Prescribing and administering the drug to a patient
• Billing the third-party payer for the drug, its administration and any related professional services

Benefits of the buy and bill method

Clinical practices that opt for buy and bill can take advantage of a number of benefits, and supply chain control is chief among them, says Barbara Giacomelli, Pharm.D., vice president of advisory solutions at McKesson Pharmaceutical Solutions & Services.

“This method allows you to maintain the integrity of the drug and ensure that its pedigree is secure,” she says. “You also have control of the administration of the drug.”

Not only can physicians trust the drug’s integrity when their office controls it from purchase to administration, but they may also earn higher reimbursements. When providers buy and bill, they can bill payers for the drugs.

But when a specialty pharmacy stores and dispenses the drugs, its pharmacy benefits rather than medical benefits that cover them. As a result, the providers lose the opportunity for potential revenue through reimbursement.

“As reimbursement rates decline and overhead costs increase, many are looking for revenue,” says Valerie Russo, managing pharmacist consultant at McKesson Pharmaceutical Solutions & Services.

Buy and bill provides an opportunity to potentially increase revenue while ensuring proper treatment of patients by controlling the supply chain.

Comparing buy and bill to the alternatives

An alternative to buy and bill is bagging. Bagging removes the financial burden from the provider because the specialty pharmacy or third-party payer must purchase the drug before it arrives in the provider’s office.

However, these methods also remove providers’ opportunity to get reimbursed for the purchase of the drugs. Instead, providers can only file a claim to get reimbursed for the administering of the drug.

White-bagging is an alternative to the buy and bill method in which a specialty pharmacy sends a patient’s prescribed medication directly to the provider. When it arrives, the provider is responsible for storing the medication until it administers that medication to the patient.³ In addition, when an outside pharmacy isn’t able to deliver the drugs on time, a patient may miss a scheduled medication.

Although providers may find they can trust that the drug provided through white-bagging is authentic, they are responsible for storage.

“The problem is that you’re required to keep a separate inventory and a separate refrigerator for white-bagged products,” Russo says. “That drug can only be administered to that patient; it’s fraudulent to administer it to any other patient.”

Another option is the brown-bagging model, in which the patient acquires the drug and is responsible for storing and transporting it to the physician’s office to be administered.

“With brown-bagging, you don’t know how the drug was stored in the meantime, and you can’t authenticate its integrity,” Russo says. “There are so many variables and liability issues.”

Brown-bagging is risky because it can affect not only the safety of the product, but the health of the patient.

When considering whether to buy and bill specialty drugs or use an alternative method, you need to consider how your patients are insured and what their reimbursement rates are, Giacomelli says.

“Think about whether it will be worth your while to buy the drug and bill for it based on the third-party payers that cover most of your patients,” Giacomelli says. “If not, buy and bill may not be a feasible strategy. In that case, consider outsourcing.”

However, in many cases, buy and bill can prove a powerful solution that allows provider practices to both control the pharmaceutical product’s integrity and bill for higher reimbursements.

How to get started with buy and bill

Opting to buy and bill specialty drugs for your patients can serve as an important first step toward increasing practice revenues, simplifying the process of care coordination and making sure you have control over the pharmaceutical supply chain and that your patients get the medication they need.

Transitioning to this method of acquiring specialty drugs is likely to require a few changes among your practice’s staff and operations.

To get started with the buy and bill method, focus on the following priorities:

• Scheduling: Your practice is going to need at least one staff member who is tracking inventory, volume and lead time for specialty pharmaceuticals and patients who need them
• Insurance approvals: You’ll also need a staff member who can focus on getting approvals for the specialty treatments from insurance companies
• Clinicians: Make sure you have enough licensed clinicians who can administer the specialty drugs in a manner that stays on track with patient needs

If your practice administers specialty drugs to patients, you may find it’s time to consider the buy and bill method in order to better control patient outcomes and boost reimbursements.