Let's blow up the buy-and-bill drug model: How it works and what it costs employers

By Rob LaHayne
Chief Commercial Officer, Leap

Twice a year, a member with multiple sclerosis (MS) sits down for an Ocrevus infusion. The drug is the same each time, and so is the dose. What changes is the bill. In a hospital outpatient department, a single 600mg Ocrevus encounter is typically billed at about $89,000. Through Leap, the same encounter comes to about $41,000.

The reason for the $48,000 gap in cost is the markup, and the model that produces that markup is called buy and bill. 

A couple of years ago, I argued that it was time to blow up buy and bill. The case has only gotten stronger since. Healthcare costs per employee are expected to rise over 8% in 2027 (the highest in 20 years), and specialty medicine is one of the main reasons. 

Each specialty therapy, such as infusion or injection drugs, will be billed somehow. Right now too many are billed through a model that rewards the provider for charging more. 

The drug isn't the problem. The markup is. 

So what is buy and bill? And why is this system not working for employers and employees?

How does buy and bill work?

Buy and bill is the model in which a healthcare provider: 

• Purchases a specialty drug.
• Administers it to a patient.
• Bills the patient's health plan for the drug and the care on the medical benefit, 

Oftentimes, buy-and-bill claims are billed as one claim that includes the drug, the administration, and the provider's margin, all folded into one allowed amount.

That margin is where the cost comes from. Under buy and bill, providers can mark up specialty drugs by as much as 400%. The employer paying the claim sees the total, but can't see:

• How much of it was the drug.
• How much was the nursing visit.
• How much the markup was. 

Buy-and-bill drugs: Which therapies are affected?

Buy and bill applies to provider-administered drugs, meaning infusions and injectables that a clinician gives to the patient rather than prescriptions a patient fills at a pharmacy. These are some of the most expensive therapies in commercial healthcare, and a short list of them drives an outsized share of spend. 

Some of the biggest drivers of specialty medicine spend are Keytruda (oncology), Ocrevus (MS), Entyvio (Chron’s disease and ulcerative colitis), Opdivo (oncology), and Darzalex Faspro (oncology). 

Specialty drugs now account for more than half of U.S. drug spending, driven by 2% or less of overall prescription volume.

Why 2 common cost containment efforts fall short

• Site-of-care programs steer members away from hospitals and toward lower-cost settings. Moving from a hospital to an independent infusion center might reduce the markup. But a 25% or 50% or 75% markup of a drug cost is still a markup. Moving care home doesn't guarantee savings either, since some home infusion providers can bill close to hospital rates. 
• Narrow access restrictions can limit certain J-codes to a small set of approved channels, often controlled by the pharmacy benefit manager (PBM). Under these arrangements, the drug has to be shipped to an infusion site that agrees to administer it, and many providers won't accept drugs shipped in from outside pharmacies. The member may then end up driving across town to the one clinic that will, or stops treatment. These programs may control cost, but they push the burden onto the people who need the therapy.

What specialty infusion looks like without the markup

Leap is the only transparent specialty infusion benefit solution for employers. Instead of one bundled claim with the margin hidden inside, every Leap encounter is billed in three separate, itemized parts:

• The drug, billed at true acquisition cost. No markups!
• Care coordination, billed as a flat, transparent fee.
• Clinical administration, billed as its own line.

A benefits leader looking at a Leap claim can see exactly what was paid for the drug, the coordination, and the nursing visit. 

Leap bills through the same medical-benefit claims process your health plan already uses, as an in-network provider under our own NPI. Members keep the same plan, ID card, and prescriber.

Each patient is also paired with a dedicated Leap Care Guide, who:

• Works with the member's prescriber, specialty pharmacy, and nurse.
• Handles prior authorization and scheduling.
• Follows up after every infusion. 

Patients can receive care at home or at a nearby infusion center, depending on what's clinically appropriate and what the patient prefers.

What can plan sponsors do today?

A good first step for plan sponsors and their brokers or consultants is to double-click into their J-Codes and Q-Codes to better understand their specialty drug spend. After that, they can: 

• Make site of service for infusion therapies (and other specialty meds) a part of the medical necessity review process.
• Contract directly with patient-centric providers that are fee based and provide pass-through pricing on expensive specialty medications.
• Offer more convenient home infusion provider options to your employees.

These steps can help contain rising costs while also improving the patient experience, which can go hand in hand.  

Would you like a transparent view of how much you could save with Leap? Request an impact analysis now with your own data.

About the author

Rob LaHayne is the Co-Founder & Chief Commercial Officer at Leap, where he leads the company’s commercial strategy and go-to-market execution. He oversees sales, partnerships, and growth initiatives, working closely with benefits leaders and ecosystem partners to expand access to Leap’s specialty infusion solutions.

Before co-founding Leap, Rob was the CEO of TouchCare, a care navigation solution for employers. Rob has 20 years of experience in employer healthcare; working with companies of all sizes on benefits plan design, strategy, and technology solutions.