Pharmaceutical decision-making amid expanding payment policies

In the drug market, payors historically have dictated which medications they will cover. But these demands have expanded dramatically in recent years, mandating where and how healthcare facilities can administer drugs and triggering undesirable ripple effects, such as safety concerns, treatment delays and higher costs for both facilities and patients.

Rules surrounding aspects such as prior authorization, white- and brown-bagging, and site of care are increasingly infringing on pharmaceutical decision-making in perplexing and exasperating ways. HealthTrust is pushing back against such policies while helping member facilities navigate this minefield.

Jason Braithwaite
Jason Braithwaite, PharmD, MS, BCPS

“It’s becoming extremely frustrating for healthcare providers. They’ve always had to deal with the formulary of a payor, but now it is also being mandated as to where they can actually administer the medication,” says Jason Braithwaite, PharmD, MS, BCPS, AVP of Clinical Pharmacy Services at HealthTrust. “It creates more narrow networks and continually more hoops to jump through.”

Brian Moran, PharmD, MBA

“Economic pressures—along with an explosion in costs in the outpatient arena in specialty drugs, infusions and novel biopharmaceutical products—are the primary drivers of these shifting payor dynamics,” says Brian Moran, PharmD, MBA, VP of Pharmacy Services at HealthTrust. “On the acute care side of the business, providers previously experienced formulary decisions being based on outright costs,” Moran adds. “But on the outpatient side, payors are becoming increasingly more aggressive with their policies, particularly over the last four years.”

Layers of complexity

What aspects do these onerous payor policies include? Experts consistently point to drug administration methods such as white- and brown-bagging and site-of-care requirements, as well as pre-authorization rules that pervade all of these.

White-bagging is when a prescription drug is dispensed by a third-party specialty pharmacy and shipped to the provider to administer. This method, which applies more often to injectable versus oral drugs, is generally paid under pharmacy benefits instead of medical benefits and almost always places providers and facilities at a disadvantage.

“White-bagging takes away any opportunity for a provider to make their own determination of what the best drug is for a patient to receive,” Braithwaite says. “You also take on the risk of administering that drug, as well as the prep time. You’re making only the administration fee—not any other revenue from the drug-purchasing side.”

Moran called mandatory white-bagging the most difficult payor policy being thrust on pharmaceutical providers. “You either have to adhere to the way they want it done, or you can bill, and they’ll deny you,” he explains.

Brown-bagging is closely linked. It’s when a prescription medicine is ordered by a provider but shipped to the patient who must bring it to their next appointment to be administered in a clinical setting. Subsequently, when a patient has custody of the drug, safety can be jeopardized.

Site-of-care requirements are just that: regulations dictating where treatments may be administered. Often, payors won’t cover drug infusions unless they’re done at smaller outpatient clinics, which typically cost less. “Site of care is just another layer of complexity, and a lot of providers don’t even know they’re excluded,” Braithwaite says. “Some policies allow them to administer the first dose, and after that, they’re not covered. These are not $50 medications; they’re often thousands of dollars, and providers end up fighting with the payor or potentially eating the cost.”

Adding staff & pushing back

Jon Lakamp, PharmD, BCPS

At Mercy Hospital in Chesterfield, Missouri, Chief Pharmacy Officer Jon Lakamp, PharmD, BCPS, feels site-of-care rules have posed many safety challenges. Smaller off-site facilities often don’t have the full breadth of equipment or staff necessary in the event of an extreme patient medication reaction. However, even prior authorization rules on specific medications—which are often not a bad thing—are becoming more aggressive as novel drugs with huge price tags are developed.

To cope with the increasing number of policy changes, Mercy has added about three dozen positions in recent years to handle benefit verifications. “This team helps manage the process so our providers can focus on caring for the patient while others concentrate on jumping through hoops,” Lakamp says. “We’re setting up complex teams to do this, and, at times, it puts time constraints on how quickly we can initiate therapies.”

Scott Milner, PharmD, MBA

Scott Milner, PharmD, MBA, Senior Director of Pharmacy, Business Development Purchasing/340b and Infusion Services at St. Luke’s Health System in Boise, Idaho, says his system had to write off about

$3 million in medications in 2017 due to white-bagging requirements. “Medications were not shipped on time, so a patient showed up for a scheduled infusion, and their medication was not there,” he recalls. “We would then dispense something off our shelf, and when the patient’s medication arrived, we couldn’t use it.”

As a result, St. Luke’s fought back, telling payors white- and brown-bagging were not in its business model. Because the nonprofit health system is large—with eight non-oncology and nine oncology infusion centers, as well as 170-plus clinics—its push-back efforts were largely successful, Milner says.

“A couple of years ago, we were writing off about 20% of our infusions; now we’re writing off about 3%,” he adds.

HealthTrust provides clarity

St. Luke’s Health System also boosted HealthTrust’s efforts to help members navigate these ever-shifting payor dynamics by presenting its infusion model at last year’s HealthTrust University virtual conference. Most members, Braithwaite notes, “still haven’t figured out how to manage this complex market.”

To provide clarity, HealthTrust has created payor resources that include links to websites and a tool that analyzes the percentage of payors that would pay for certain drugs. “We’re also standing up a Payor Collaborative Group focused on our pharmacists and providers to get together and talk about best practices for managing and navigating the market,” Braithwaite adds. “From that, we expect to get additional best practices to share with the broader membership.”

HealthTrust’s guidance has greatly benefited Mercy, Lakamp notes. “As we decide which pharmaceuticals we’re using, making clinical decisions along with contracting and financial decisions, HealthTrust has done a great job focusing on tools to help members manage those decisions.”

For more information about how HealthTrust can help your organization navigate payor policies, email Jason Braithwaite at

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