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Rheumatology Practice Management August 2016 Vol 4 No 4 - Specialty Pharmacy
Jay Salliotte
Managing Director
Advanced Rheumatology
Lansing, MI

If you mention the words “specialty pharmacy provider” (SPP) to a medical practice administrator, you will likely hear a lot of grumbling—and for good reason. Because of the relatively high cost of the biologic therapies our providers prescribe, specialty pharmacies are a tool insurance companies have flocked to for minimizing expenses. SPPs are sometimes forced—or strongly recommended—as a source for acquiring drugs for office-administered treatments.

Because commercial payers already tightly control treatment options, healthcare professionals understandably bristle at the thought of the payer further prying into the doctor–patient relationship; however, is there a silver lining in some cases? It is true that, at times, SPPs have service delivery issues that affect patients and office staff in significant ways. In addition, having an SPP as “another cook in the kitchen” can definitely complicate the process of treating a patient. However, there are certain scenar­ios in which your practice can benefit from having a specialty pharmacy provide drugs for office-administered therapies. Let us explore some positive scenarios and best practices for using SPPs, without losing sight of the downsides.

Implementing Infusions and Injections with a Specialty Pharmacy

The medical practice I co-own with our lead physician opened in 2011; initially, we did not have a center for office-administered medications, but realized within a few months that we needed one, and quickly. As you likely know, opening a new medical practice is an investment, and it can take several months to realize a return. Therefore, we sought to add infusion therapy in a cost-sensitive manner. A big part of our strategy was using SPPs as much as possible to keep the risk for unreimbursed drug costs off of our balance sheet. In many ways, this was a win–win situation, because while the patient received the treatment our physician thought was most appropriate, the financial risk hanging over our heads was more manageable.

During the past few years, we have seen the launch of quite a few exciting biologics, and even more are in the pipeline. Many times, our providers are waiting for new treatment options for their patients whose diseases are progressing. However, as we know too well, the first year for a new medication can be fraught with problems, especially with regard to billing. We are usually required to bill with temporary J codes, and can experience longer wait periods for payments while payers are manually pricing and editing their billing systems. That interim time, when there is so much uncertainty about the administration of a new drug, is a great opportunity for considering the use of an SPP. It provides the patient access to the latest treatment, and your practice only bears the risk of administering the drug; this is a win–win situation.

There are other benefits of using SPPs: on occasion, the specialty pharmacy can ship a drug order along with supplies (eg, saline bags), and because we are still seeing a supply shortage of saline bags, we will take free saline whenever we can get it. We also occasionally experience drug shortages, and many specialty pharmacies have a very large inventory and distribution network: during a shortage they sometimes have access to drugs that a small practice does not.

Administrative Burdens and Reimbursement Concerns

Our practice has also experienced undue administrative burdens related to infusion claims from certain payers for select drugs. In one case, we received a request for documentation of medical necessity for every claim, including a specific drug, even though we had an approved prior authorization transmitted with the claim for that drug. After some investigation and talking with the payer, we learned that this administrative burden would be removed if we sourced the drug from the contracted specialty pharmacy. Although I do not agree with this tactic on ethical grounds, our practice found that obtaining the drug through the specialty pharmacy contracted with that payer made our lives a lot easier, and so we acquiesced.

Another scenario we may likely face is the proposed Centers for Medicare & Medicaid Services (CMS) payment model for Medicare Part B drugs, a model that could drastically reduce physician payments for drugs administered in the office. The payment cuts may put some practices at a reimbursement rate below the acquisition cost of the drug. Although there are no specialty pharmacies contracted to bill CMS on behalf of Medicare beneficiaries, there are some cases where specialty pharmacies are still an option; namely, patients who are Medicare-eligible, but who also have coverage under a commercial plan because of spousal (or their own) employment. Some Medicare Advantage plans also work with specialty pharmacies.

Disadvantages to Using a Specialty Pharmacy

There are also real downsides to using a specialty pharmacy that must be considered when analyzing what is right for your practice. First and foremost, if a patient stops using a treatment permanently for any reason, the remaining drugs cannot be returned to the pharmacy or allocated to another patient—the drug belongs to that patient, and that patient only. Typically, the most advisable option is to get the patient’s permission to dispose of the drug, destroy it according to your state regulations, and document the event. These moments are sad, because we understand the value of the drug being destroyed.

We sometimes experience a bit of “he said, she said” when it comes to refereeing a problem between a patient and the specialty pharmacy. Our most common problem when a specialty pharmacy is involved is when the patient is required to take some sort of action, and the whole process is being held up. Sometimes, this involves simply giving the specialty pharmacy verbal permission to ship the next dose of the drug to the practice; other times the patient owes money and the specialty pharmacy will not ship the drug without receiving payment.

Another common struggle for medical practices using a specialty pharmacy is with service delivery. Technically, the only role of specialty pharmacies is to provide medication for the patient to be administered in the office; they are not required to help the patient sign up for and use rebate programs provided by the drug manufacturers. If a patient is having trouble paying a large balance, they may not go the extra mile to help the patient, which your office would do. In addition, your office may still be required to get all prior authorizations for the SPP.

Some SPPs are notorious for having long telephone wait times for those trying to reach a representative, whereas others do not train their representatives well, which causes chaos and confusion. I once had an SPP ship a refrigerated biologic drug without any ice packs, which resulted in thousands of the pharmacy’s dollars going down the drain. These service delivery problems do not necessarily happen with every SPP, but they are common.

As you weigh the cost versus benefit of using a specialty pharmacy for your practice, you may find that the advantages outweigh the disadvantages.

Best Practices

Several best practices will enhance your experience with a specialty pharmacy. Most notably, you should communicate often and clearly the patient’s role in the specialty pharmacy process. Set expectations for patients: tell them they will hear from the SPP, and that they must call back, or their infusion appointment could end up in jeopardy. A cooperative patient is key to a smooth SPP experience. In addition, having the flexibility to choose whether to use a specialty pharmacy on a case-by-case basis can be very valuable. Sourcing medications from a specialty pharmacy is not an all-or-nothing proposition.

Likewise, having the flexibility to choose different SPPs can sometimes be valuable—let them compete for your business. If you are placing a significant number of orders with an SPP, ask for a single point of contact who has a direct phone line—this level of service can make all the difference in getting what you need.

Finally, even though it involves extra work, it is better for your practice to help the patient manage his or her participation in the drug manufacturer’s rebate programs. This will help mitigate any unexpected problems and keep the patient’s treatment on track. Although we may cringe when we hear the words “specialty pharmacy,” there can be a right time and place for SPPs. As you consider where SPPs may fit into your practice, I encourage you to keep an open mind.

As I look back over 5 years of working with various SPPs, I realize that they are a valuable tool that helped me build a very busy, full-time infusion center. Despite initially sourcing a lot from a specialty pharmacy, I still built a significant buy-and-bill program into my practice, in which SPPs now account for roughly 25% of the infusions and injections provided in my practice. The road to this point was much easier, because SPPs helped me along the way.

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Last modified: September 15, 2016
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