What is Buy-and-Bill?
Buy-and-bill is a distribution and payment model in healthcare, particularly common in the U.S. for drugs and medical devices, where healthcare providers (such as physicians or hospitals) purchase drugs or medical devices directly from suppliers or manufacturers, then bill patients or insurers for those products when they are administered to the patient.
This model applies to medications and therapies covered under the medical benefit, rather than the pharmacy benefit. Most physician offices and clinics prefer to maintain an on-site inventory of provider-administered drugs.
How the Buy-and-Bill Model Works
- Purchase: The healthcare provider buys the product (such as a medication, infusion, or device) from the manufacturer or distributor, typically at a wholesale price.
- Administration: The healthcare provider then administers the drug or device to the patient, usually in an outpatient or clinical setting, such as a doctor’s office, outpatient clinic, or hospital.
- Billing: After administering the product, the healthcare provider bills the patient or their insurance for the cost of the drug/device, along with the associated medical services (e.g., administration fees, consultation fees).
- Reimbursement: The provider receives reimbursement for the product and the service provided from either the patient’s insurance, Medicare, or Medicaid. The reimbursement is typically based on a percentage of the Average Wholesale Price (AWP) or a negotiated rate.
Advantages of Buy-and-Bill
- Flexibility for Providers: Healthcare providers can offer specialized treatments that may not be available through the retail pharmacy model.
- Patient Access: Patients can access complex or high-cost treatments directly from their healthcare provider without needing to go through multiple distribution channels.
- Clinical Integration: The model allows treatments to be integrated into the patient’s care plan, facilitating close monitoring and coordination of care.
Challenges of Buy-and-Bill
- Financial Risk: Providers face the risk of delayed reimbursement or non-payment if the insurance claim is denied or if patients are underinsured.
- Cash Flow Pressure: Providers must manage the financial burden of purchasing drugs upfront, which can strain their operating capital, especially with high-cost therapies.
- Complex Reimbursement Process: Insurance companies may have complex reimbursement processes or strict requirements for billing, which can be burdensome for providers.
- Regulatory and Compliance Issues: Providers must ensure that the billing process is compliant with healthcare regulations, such as ensuring the pricing is within acceptable ranges.
The Buy-and-Bill model is commonly used in specialty care settings, where high-cost treatments are administered directly by healthcare providers. It allows providers to offer cutting-edge treatments, but it also requires careful financial and operational management to handle the upfront costs and reimbursement processes effectively.
