Let's Blow-Up Buy & Bill
The "buy-and-bill" model has long been a staple in the healthcare industry, particularly for specialty medications and infusion therapies. Under this system, healthcare providers purchase medications upfront, administer them to patients, and then bill insurance companies for reimbursement. While this model has its advantages, it also presents significant cost-related challenges that can impacts plan sponsors.
Financial Strain On Providers
One of the primary issues with the buy-and-bill model is the financial burden it places on providers. That is a whole separate issue that contributes to larger problems within our healthcare system. Purchasing expensive specialty medications requires substantial upfront capital. This can strain the cash flow of smaller practices and clinics, making it difficult for them to maintain financial stability. Additionally, the reimbursement process can be lengthy and complex, further exacerbating cash flow issues as providers wait for payment from insurance companies. But we’re not here to examine this problem, we’re more interested in how this impacts patients and plan-sponsors.
Increased Costs. Worse Experience. Lower Adherence.
The buy-and-bill model can also lead to higher costs for patients. When providers face financial risks and uncertainties, they may increase the prices of services to offset potential losses. This can result in higher out-of-pocket expenses for patients, especially for those with high-deductible health plans or inadequate insurance coverage. In some cases, patients may even forgo necessary treatments due to the prohibitive costs, leading to adverse health outcomes.
Further, provider reliance on buy-and-bill drugs for revenue means patients often get pigeon-holed into a less convenient and arguably less safe place for care. Many buy-and-bill drugs - infusions and injectables specifically - are perfectly safe for home administration. There is no doubt that the home is a more convenient place of care for just about anyone. Better convenience equals improved adherence. What’s more? The risk of co-infection that comes with going to a healthcare facility for immunocompromised patients also factors into patient safety. But health systems reliant on buy-and-bill are incentivized to keep patients in more expensive settings for their care causing a price disparity for plan-sponsors to pay that can vary by tens of thousands of dollars per treatment.
Digging even deeper, buy-and-bill contributes to market inefficiencies, as it does not always incentivize cost-effective purchasing. Providers may prioritize stocking medications based on reimbursement rates rather than clinical need, potentially leading to overuse of more expensive options. This can inflate overall healthcare costs and place additional financial burdens on the healthcare system.
What Can Plan-Sponsors Do?
Leap Health has identified that among the top 25 most common infusion drugs, there is approximately $4-5 million dollars of unnecessary cost caused by buy-and-bill for every 10,000 employees. So the first step for plan-sponsors and their broker/consultants is to double-click into their specialty drug spend and further understand their cost avoidance opportunity. Once identified, here are a few more steps to take:
These approaches can reduce the financial burden on providers and improve patient access to affordable medications. For instance, companies like Leap Health are pioneering at-home infusion services, which not only lower the cost of specialty drugs but also enhance the patient experience by bringing care directly to their homes.
Conclusion
While the buy-and-bill model has been a traditional approach in healthcare, its cost problems are becoming increasingly apparent. Financial strain on providers, reimbursement uncertainty, higher patient costs, and higher plan-sponsor costs highlight the need for innovative solutions. By embracing alternative models and leveraging advancements in healthcare delivery, the industry can move towards more sustainable and patient-centric approaches to medication management.