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White-bagging and Specialty Pharmacy Mandates

Many rheumatology practices currently use the “buy and bill” method of acquisition for provider administered drugs. Under this model a practice will purchase, store, prepare, and administer certain provider administered drugs. The practice will then bill the payer for the cost of the drug and its administration.

A recently emerging trend among payers seeks to replace the buy and bill system with a “white bagging” acquisition system. In essence this transfers the process from the medical side of insurance to the pharmacy side. This policy mandates that physicians receive the medication from a specialty pharmacy, which will be shipped to their office for administration. Under this model practices are forced to accept medications that are not controlled by the practice and wholesaler’s drug supply chain security and quality-control measures, which guarantee safety of administration. The Coalition of State Rheumatology Organizations (CSRO) is opposed to mandatory use of the white-bagging acquisition system by payers for their members.

White Bagging Reduces Patient Safety and Increases Practice Liability

CSRO has serious concerns with product integrity for drugs prepared outside of rheumatologists’ offices. Under the white bagging model practices do not have control over the handling, preparation, and storage conditions of the drug prior to its administration. Improper handling on the part of a specialty pharmacy can have serious consequences for patients, and white bagging removes practices’ ability to prevent adverse events through internal oversight. Patients are going to face delays in treatment and unnecessary hardships, as compared to the practice sourcing products from its own inventory for in-office administration. While practices’ responsibility for much of the pre-administration handling is removed under the white bagging model, their liability is not. Practices may still be held liable for adverse events that occur because of circumstances they no longer control under a white bagging model.

White Bagging Mandates Increase Drug Waste

White bagging would significantly increase instances of drug waste, which complicates the acquisition system’s ability to achieve savings. Under the new policy, drugs will be assigned to a specific patient prior to administration by the specialty pharmacy, whereas under buy and bill drugs do not have to be assigned until administration. Providers cannot administer a drug assigned to one patient to a different patient, whereas they may do so with drugs acquired through “buy and bill.”

For example, if a dosing change is required or the therapy is discontinued or interrupted for any reason, the drug would end up as waste. It is not uncommon for pre-administration evaluation to necessitate dosing changes, which the white bagging model offers no ability to resolve without drug waste or inability of the patient to get the needed dose of medication. This would certainly result in unnecessary drug waste and increased expenditures for the patient in terms of money and health.

Additionally, the present “buy and bill” system offers providers flexibility that would prevent patients from suffering major inconveniences should delays or other mistakes occur on the part of the specialty pharmacy or their delivery system. Delays can result from a variety of factors, including failed delivery, incorrect medications being delivered, medications shipped to the wrong address, prior authorization issues, and out of stock medications. Not only would the drug be wasted, but the patient, practice, and payer’s time is also wasted with potential harm to the patient due to their inability to get the needed medication.

Finally, there is the possibility that patients may need to pay for the medication before it is shipped by the specialty pharmacy, which can interrupt critical treatment if patients cannot afford to pay for the therapy up front.

White Bagging Mandates Will Hamper Patients Access

CSRO believes that the likely outcome of a white bagging model will be increased costs and decreased patient access to needed medication. The margins for practices engaged in buy and bill are thin. But these thin margins are what allows physicians to keep their infusion suites open. Moving to a white bagging model would threaten the viability of providing infusions in non-hospital outpatient settings.

Reimbursement for administration of the drug alone does not sufficiently cover the overhead costs associated with infusing patients in private practices. Under a white bagging model, inventory control costs will go up and practices will still bear the costs of intake and storage, equipment, staff, facilities, spoilage insurance, and other overhead without compensation.

The new policy would also increase administrative complexity and burden in an uncompensated manner. Medications will require additional cataloguing, billing complexity will increase, and additional prior authorizations may be required due to the decoupling of administration and pharmacy for specialty drugs. The net result of these changes is likely to be a lack of viability for non-hospital outpatient infusions. This will result in the patient losing access altogether, and will have the unintended consequence of shifting patients to more expensive sites of care for infusion services, such as hospital outpatient departments. It may also be the case that hospital outpatient departments will not accept infusions done through the white bagging model, which would leave patients without recourse.

An even worse scenario would be that patients may be asked by insurance companies to change doctors. This would be the final blow to a patient which a chronic disease that has established a relationship with their physician disrupting the trust and confidence that has built up between them.

Overall this policy ignores many of the issues that are important to optimal patient care, ranging from patient access and missed doses, interruptions to critical treatment, worsening disease states, increasing risks of medication errors, adverse events, and interference with the patient physician relationship.

Because of these and many other liability issues, CSRO opposes use of the white bagging model by payers.