Evolving Payor Strategies to Control Spending on Specialty Medications


The challenges that ‘white bagging’ poses for patients and providers are gaining attention as more health plans mandate these policies. ‘White bagging’ disrupts traditional ‘buy-and-bill’ practices for provider-administered drugs, creating patient safety concerns, operational problems, and financial challenges for covered entities.

Impact of ‘White Bagging’ Policies on Covered Entities

In the traditional ‘buy-and-bill’ model, covered entities maintain control of the drug and its integrity from end-to-end, managing purchasing, storage, and medication administration. With ‘white bagging’ policies however, covered entities are required to receive the drug from an outside specialty pharmacy designated by the patient’s health plan – often, that same pharmacy is also owned by the health plan. This external process inhibits covered entities from ensuring both the quality and integrity of the medication to be administered, and it can cause delays in therapy when drugs are not received on time. The pharmacy management challenges ‘white bagging’ creates are significant, requiring people and resources to address.

Payor-mandated ‘white bagging’ policies also change how payments for provider-administered drugs are processed, creating compliance and financial challenges for covered entities. With ‘buy and bill’ practices, health plans reimburse covered entities for the drug and its administration. With ‘white bagging’ however, health plans reimburse the outside specialty pharmacy for the drug and only pay the covered entity for administration, introducing additional complexity and compliance risk into the process. Additionally, with white bagging the drug is typically reimbursed under the pharmacy benefit instead of the medical benefit, giving health plans the ability to leverage prior authorizations and other policies to control spending.

Health Plan Perspective

Why are health plans implementing these policies? Health plans see ‘white bagging’ as an effective strategy to manage cost while maintaining quality of care – a priority to their customers, plan sponsors. ‘White bagging’ also fits with health plans’ broader site of care initiatives, which aim to ensure care is provided in appropriate and cost-effective setting. 

Four Strategies Covered Entities Can Leverage

Some hospital and health system leaders are actively implementing strategies to enable their organizations to collaborate with health plans around these policies. These strategies focus on building in-house specialty pharmacies, establishing home health and infusion capabilities, demonstrating the value of integrated pharmacy services with data, and negotiating medical and pharmacy benefits holistically. Many have successfully engaged with local and regional payors as a result of these strategies, and while engaging national payors remains a challenge today, these strategies ensure covered entities have the capabilities and infrastructure required to do so.

Learn more about these four strategies and deepen your understanding of health plans’ evolving policies by downloading Trellis Rx’s new resource, “Executive Insight: Evolving Payor Strategies to Control Spending on Specialty Medications.”

Jerry Buller, DPh, MMHC, is the Chief Pharmacy Officer at Trellis Rx. He can be reached at jbuller@trellisrx.com.

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