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While the high cost of specialty pharmacy is no surprise in the healthcare industry, infusibles have additional challenges. Here are the challenges that top the list, and what to do about them.
While the high cost of specialty pharmacy is no surprise in the healthcare industry-commonly cited problems include pricey R&D, unscrupulous manufacturers, patents and insufficient competition-infusibles have additional challenges. At the top of the list is broad variation in cost depending on site of administration, for example, a hospital outpatient setting is more expensive than an infusion center or home infusion.
Carlson“Primarily, the challenges of managing infusible medications arise from the fact that they’re often administered in a professional setting rather than being picked up at a pharmacy by the patient,” says Jim Carlson, vice president, clinical pharmacy services for OmedaRx. “That means that billing is often done after the fact, but it also means that pricing and associated fees vary greatly from one location to the other.
“Further complicating matters is the fact that most infusion claims are billed under a patient’s medical insurance plan, whereas traditional PBMs manage only the pharmacy plan,” he says.
Research by Prime Therapeutics, a pharmacy benefits manager, found that it would be appropriate for 20% of members receiving infusible/injectable drugs in a hospital setting to receive these medications in a clinic. The research indicates that for Prime’s clients, transitioning members to a less-expensive setting would result in more than $80 million in annual savings.
KaladaJohn Kalada, senior director, strategic accounts and market access for Xcenda, says that as payers better manage infusibles through established clinical and dosing guidelines that lower reimbursement, physicians are referring patients to hospital outpatient settings to compensate for a decrease in payment.
When payments cover procedures with little-to-no variability, Kalada says physicians receive a comprehensive “management” or “encounter” fee for each infusion and the corresponding procedure-a type of bundled payment. However, plans often mandate that a designated specialty pharmacy that works directly with the health plan on reimbursement provides the medication to the physician. “This arrangement removes financial incentive for a physician to use a specific treatment based on potential revenue from an infused option,” he says.
Renee Rayburg, senior director of clinical consulting for Artemetrx, recommends that payers gain insight into the vast differences in costs for infusibles administered at different sites of care and develop programs to enforce use of the most appropriate locations.
Because the majority of infusibles fall under the medical benefit, data capture presents another barrier to effectively managing these drugs. “The data are not as clean, rich or transmitted electronically as pharmacy data are,” Kalada says.
Carlson says there also is minimal available data about new products and urges payers to invest in rigorous clinical review of new medications that hit the market to determine their comparative value against other treatment options.
“Over the long run, plans that maximize the value of their infusion drug spend by carefully selecting the very best medications for their members will experience a total cost of care that stays below national trends,” Carlson says. “With a sound clinical evaluation methodology, plans can then pursue other cost stewardship initiatives, such as prior authorization and site of care.”
RayburgRayburg points to confusion over different billing codes and reimbursement calculations dependent on site of administration as another barrier to managing infusibles. Physician offices, infusion clinics and home health (agencies or in-home) rely on the Health Care Financing Administration (HCFA) claim form, Medicare’s standard form, and use codes unique to a drug or drug class based on the average sales price. If an infusible is delivered in a hospital outpatient setting, billing is based on a percent of billed charges and relies on revenue and codes unique to infusions only.
“Because the outpatient codes are unique only to infusions, they do not indicate which drug is being used, making codes less precise,” Rayburg says. “There is a lack of understanding data, how to read reports and how to decipher which medications, how many and what dose. This makes it important to have someone who can understand all of the codes and translate them.”
In line with most specialty drugs, infusibles often require prior authorization, which Kalada says is intrinsic to these products. Prior authorization is used extensively to ensure that only patients with a well-documented need are using a specific treatment. If the request meets specific criteria, the plan will approve access and payment.
With certain disease states, Kalada adds, plans sometimes add specialty prescriber restrictions as part of the prior authorization process. This requires that a designated specialist prescribe the therapy. Plans believe that a specialist in a particular disease area may be better versed in the overall use of a specific therapy, as well as treating those patient types.
As part of the prior-authorization process, he says some plans require that patients try non-infused therapeutics and demonstrate that a therapy is not effective before using an infused medication. Clinical guidelines also shape treatments at particular points of care and provide a roadmap for therapeutic utilization.
Carlson says that while traditional prior authorization still plays an important role, other programs such as site-of-care optimization, case management, adherence and billing controls are also necessary to properly manage the cost of treatment over time.
He supports benefit design as a meaningful tool for achieving savings; however, he says that it has been muted by the enormous cost of some of the new specialty medications.
“Generally speaking, patients in need of costly care will certainly max out their benefit every year, which means that the traditional financial reward/incentive/deterrents that plan designs have wielded become somewhat less meaningful,” Carlson says. “However, plans are beginning to model some interesting designs based on lump sum and health savings account benefit frameworks that may hold some promise.”
Artemetrx recommends the use of prior authorization, ensuring patients utilize the most cost-effective site of care from the start, along with step therapy, duration of therapy and quantity limits, as an effective tool for managing utilization of infusibles. Evidence-based criteria ensure the right patient with the right diagnosis gets the right drug at the right dose in the right frequency for the right duration, Rayburg says.
Besides prior authorization, the company offers its payer clients a variety of cost-saving opportunities: 1) not paying for drugs administered in an outpatient setting; 2) requiring infusible drugs to be administered at home or in a provider office; and 3) approving drugs based on sites. Most of these protocols are voluntary, but payers may decide to make them mandatory.
Its Specialty Drug Advisor™ solution provides plan sponsors with advanced analytics, specialty drug expertise and proprietary technology to manage specialty drug spend across both the pharmacy and medical benefits, helping to reduce clinically inappropriate use, manage reimbursement, optimize sites of care and audit vendor performance through data-driven identification and review. It also offers a site of care program that helps payers transition patients to a more cost-effective site.
Mari Edlin is a frequent contributor to Managed Healthcare Executive. She is based in Sonoma, California.