A biologic can reach your patient in two common ways. The practice can buy it, store it, administer it and bill for it, or a specialty pharmacy can dispense it under the patient’s plan. Neither is right for every drug. The decision is worth making one medication, and often one payer, at a time.
Two channels
In buy and bill, the practice purchases the drug, usually through a specialty distributor, keeps it in the office, administers it and bills the patient’s medical benefit: the drug’s HCPCS code, the J-code, with the right number of units, plus the administration code. The practice is paid for the drug and the service, and carries the cost of the drug until that payment arrives.
With a specialty pharmacy, the pharmacy buys and dispenses the drug and bills the plan, usually under the pharmacy benefit. The drug is shipped to the practice for a named patient, often called white bagging, or to the patient’s home when it can be self-administered. The practice bills for the visit and the administration, but not the drug.
Start with the plan
Before weighing margins, find out what the patient’s plan allows. Some plans cover a biologic only under the pharmacy benefit. Some require certain drugs to come from a designated specialty pharmacy. Others cover in-office administration under the medical benefit, with a prior authorization. Several asthma and allergy biologics now come in prefilled pens or syringes that patients can use at home once that’s appropriate, and payers often steer those to the pharmacy benefit.
A benefit check answers this patient by patient: which benefit covers the drug, whether a prior authorization is required, what the patient will owe, and whether the plan requires a particular channel.
The questions, drug by drug
- What do we pay, and what are we paid?
- Compare your acquisition cost per unit with what each major payer reimburses. Medicare Part B generally pays based on the drug’s average sales price plus an add-on; commercial contracts vary. Prompt-pay discounts and manufacturer rebates belong in the math.
- How fast does the money come back?
- Your distributor expects payment on its terms; payers pay on theirs. A high-cost drug with a slow payer ties up cash, and more of it as patient volume grows.
- How likely is a denial?
- In buy and bill, a denied claim means the practice has already paid for the drug. Current authorizations, clean benefit checks and correct units matter more here than anywhere else.
- Can we store and track it?
- Most biologics need refrigeration with temperature logs, lot tracking and attention to expiration dates. Count the staff time, too.
- What will the patient pay?
- Coinsurance under the medical benefit can differ sharply from a pharmacy copay. Manufacturer copay programs can help commercially insured patients; patients on Medicare or other government coverage can’t use them.
- What does the patient prefer?
- Some patients want the injection in the office, with observation. Others would rather self-inject at home once their physician agrees.
When each channel fits
Buy and bill tends to fit when the drug is given in the office, your main payers reimburse above your cost, and enough patients are on it to keep inventory moving. Specialty pharmacy tends to fit when the plan requires it, the drug is self-administered, the margin is thin or negative, or the medical benefit would leave a patient with a large bill.
Most practices end up using both. The useful habit is to decide on purpose, for each drug and each major payer, and to revisit the decision when a contract, a reimbursement rate or a payer policy changes.
Where Medico fits
For practices that use Biologics Management, Medico’s team runs benefit checks, prior authorizations and buy and bill. Pooled manufacturer rebates are paid on the biologics a practice buys and administers, and members can model a biologic’s cost and reimbursement before stocking it with the buy and bill calculator in their portal.
