You don't know what you're buying today with specialty infusion therapy. That’s how the model was built.

A member on Remicade needs an infusion every six to eight weeks. Her employer sees one number on the claim: roughly $6,000 per encounter. What that number doesn't show is how much of it specifically is for the price of the drug and how much is the provider's markup. Instead, the drug and the markup are one bundled line, and there's no way to take it apart from the outside.

That's not a data gap. For a lot of providers, it's the business model.

At a time when employer healthcare costs are rising at historic levels, this lack of transparency matters. That’s particularly true when we’re talking about specialty infusion therapy and other high-acuity needs, since 1-2% of a health plan’s members drive up to 15% of medical spend. 

In the second of a three-part series on what's actually driving specialty infusion costs, I want to answer a question most employers can't: “What are you actually paying for?”

Note: You can read the first post in the series about site-of-care changes here.

The bill is built to be unreadable

Hospital outpatient departments and provider clinics:

• Buy infusion drugs at acquisition cost.
• Mark them up by as much as 400%.
• Submit a single bundled claim under a J code or Q code (the billing codes commercial payers use for drugs administered in a clinical setting). 

The prices for these drugs can vary greatly and providers can charge different prices for the same drug. Location and competition (or lack thereof) between providers in a specific market can also influence how high drugs are marked up within an employer’s billing. 

The employer often sees one allowed amount. Or multiple amounts for the same drug. But what they often don't see specifically is the drug cost, the administration fee, or the provider's margin in separate line items, which makes it nearly impossible to diagnose what’s driving rising costs. 

Leap's research of its own customers identified 60% or more markups of specialty infusion drugs before choosing Leap.

The patterns behind the lack of transparency

What’s creating the lack of transparency in specialty infusion therapy? Bundled claims instead of itemized claims is one factor, but there are others.

• 340B pricing gaps. A hospital enrolled in the 340B program can acquire certain drugs at a steep discount while billing payers at standard commercial rates. The gap between what the hospital paid and what it billed has nothing to do with the drug itself, and nothing on the claim discloses it. 
• Claim complexity. Sometimes, an incorrect value is submitted for the number of HCPCS units (like the number of vials or just one vial). Additionally, multiple claim lines for the same therapy on the same day can make it difficult to determine if the claim contains duplicates or multiple identical infusions. Even a layer of clinical review can not always determine what likely happened. Basic aggregation techniques can also incorrectly group costs to adjunctive treatments blurring the insight for what high-cost drug was actually delivered. 
• Percentage-of-charge contracts. A provider that’s paid a percentage of the amount it bills has a direct financial incentive to mark up a drug’s cost. Nothing about that incentive changes based on where the infusion happens or which drug is involved.
• Drug package sizes. Determining what a drug should cost also requires understanding what doses or package sizes are available on the market. For drugs with weight-based or body surface area (BSA), a patient’s dose may lead to drug waste that needs to be accounted for from a unit cost perspective.  

Layer in a rebate flow between manufacturer, specialty pharmacy, and provider that lacks transparency, and it becomes hard for anyone outside the transaction to say with confidence what any single dollar was actually for or what a fair market value is.

Three pricing values every solution should provide you

When evaluating solutions to help your organization contain rising health costs and cut specialty infusion spend, prioritize solutions with costs that are: 

• Value-based. Instead of a flat fee regardless of the service provided or the drugs acquired, choose a solution that you pay based on impact. 
• Predictable. Specialty drug costs can fluctuate from dose to dose based on the provider. But when there are no markups, the cost of each drug should fluctuate less. 
• Transparent. The rate card for all charges should be easily auditable, and it should be clear what the costs were for the drug itself and the servicing of the drug. Leap restructures their claims into three separate items: the drug at true acquisition cost, care coordination on a flat fee, and clinical administration. 

A benefits leader looking at a Leap claim can see exactly what she's paying for the drug, what she's paying for coordination, and what she's paying for the nursing visit, the same way she'd expect a repair bill to separate parts from labor.

That structure is what turns a bundled $6,000 Remicade claim into something an employer can actually audit.

The four questions that expose the gap

Benefits leaders and their consultants can ask a short list of questions of any current infusion program, whether it's Leap or something else already in place:

• What is the actual acquisition cost of this drug, and how does that compare to what's being billed?
• Is this claim itemized, or is it one bundled number?
• Is the savings figure validated against a paid claim, or projected from an assumption?
• Would this claim survive being broken into parts and reviewed line by line?

A program that can only answer the first question with a shrug is depending on the bill staying unreadable. That's not a coincidence. It's the whole model, and it's worth treating it that way in any renewal conversation rather than assuming any lack of price transparency is incidental.

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