Buy-and-bill, explained without the jargon

If your practice administers high-cost antimicrobials or biologics, part of what you run is a distribution business. Understanding it in those terms clarifies decisions that otherwise look like billing details.

The three models

• Buy-and-bill. The practice purchases the drug from a distributor, holds it, administers it, and bills the payer for both drug and administration. The practice carries acquisition cost, inventory risk and payment risk, and in exchange captures whatever spread exists between acquisition and payment.
• White-bagging. A specialty pharmacy dispenses the drug for a specific patient and ships it to your site. You administer it but do not bill for it. No acquisition cost, no spread, and considerably less control over timing and supply.
• Brown-bagging. The drug is dispensed to the patient, who brings it in. This carries handling, storage and chain-of-custody concerns that many practices decline on clinical grounds.

Payers increasingly express preferences here, and those preferences directly determine whether your infusion business has drug revenue at all. This is a contracting issue, not just an operational one.

How Part B drug payment works, in outline

For separately payable drugs administered in a physician office, Medicare Part B payment is broadly based on the average sales price reported by manufacturers, with a statutory add-on and subject to sequestration and other adjustments. CMS publishes ASP-based payment files on a quarterly cycle.

The practical implications matter more than the mechanics:

• Payment moves quarterly, independently of what you paid for your inventory.
• Your acquisition cost depends on your purchasing arrangements, which differ substantially between a solo practice and a large group.
• The spread is therefore practice-specific, drug-specific and time-specific. There is no general answer, and anyone offering you one is selling something.

Why authorisation is a financial control, not a clerical one

In a buy-and-bill model, the sequence is: obtain authorisation, purchase drug, administer, bill. Reversing any two of those steps creates exposure. A course started before authorisation is confirmed — however clinically reasonable — puts the acquisition cost at risk with no recourse if coverage is subsequently denied.

The same logic applies to reauthorisation on extended courses, which is where practices are most often caught: the initial approval covered a defined duration, therapy continued past it, and the extension was never filed.

Three controls worth having

1. A written rule about starting therapy ahead of authorisation, including who may authorise the exception and how the financial risk is recorded.
2. Inventory reconciliation against administered doses, monthly. Discrepancies are either wastage you have not costed or charges you have not captured.
3. Payment verification against contracted rates. Without loaded fee schedules you cannot detect underpayment on drug claims, which is where the largest single-claim errors live.