As Aetna expands the reach of white-bagging policies to an increasing number of drugs among a growing diaspora of third-party pharmacies, providers have two options:
- Comply, knowing the revenue stream will die
- Engage in focused advocacy to eliminate the white-bag procurement model
White-bagging policies like Aetna’s present a number of issues for providers including decreased net revenue, increased cost associated with storing and preparing white-bag drugs, as well as increased statutory and regulatory compliance risk.
Aetna’s Specialty Pharmacy White-Bagging Explained
Aetna was among the deluge of payors to implement specialty pharmacy policies that eliminate a provider’s ability to purchase specialty drugs and be reimbursed by Aetna consistent with contractual terms inclusive of carveouts for high-cost pharmaceuticals. Aetna’s policies instead create a system of white-bag procurement where a provider must coordinate with a third-party pharmacy contracted with Aetna to deliver a prescribed drug directly to the provider.
Aetna’s white-bag policies unilaterally and materially impact payor contracts and strike a hard blow to the buy-and-bill model for a litany of high-cost, highly utilized clinician-administered drugs.
As a result of Aetna’s white-bag policies, providers must:
- Incur the administrative and financial burden of acquiring, inventorying and housing white-bagged drugs
- Navigate complications and conflicting recommendations between in-house pharmacists who work directly with the treating physicians and those of the specialty pharmacies who have no direct involvement in patient treatment or care planning
- Pivot operations and standard processes in response to:
- Logistical burdens related to patient-specific clinical circumstances (e.g., lab values, symptoms, side-effects)
- Differences between drugs prescribed and the actual formulary drug dispensed
- Compatibility issues between drugs shipped to a provider and administration equipment
- The need to ensure open and continuous communication to patients regarding actual or potential treatment delays
Additionally, white-bagging can create issues for a health system pharmacy as it orders, labels, and manages drugs consistent with storage/refrigeration capacity. White-bagged drugs received under Aetna’s policy require:
- An individual label for a specific patient and can only be used for that specific patient
- Disposal of any remaining drugs in a manner consistent with numerous state and federal regulations
- Separate storage from the buy-and-bill batch-purchased drugs which may create storage capacity issues as well as tracking and management issues, and may necessitate the purchase of additional costly refrigeration equipment and allocation of a compliant space to house the equipment and prepare the white-bagged drug
Aetna’s Policy Means More Administrative Burden and Less Reimbursement For Providers
Unlike other major payors, Aetna’s policy unilaterally alters reimbursement terms and net revenue projections for providers while providing no mechanism for even site-neutral considerations.
Other payors such as Blue Cross and Blue Shield of Massachusetts (BCBSMA) have provided site-neutral options through:
- Allowing qualified facilities to join the specialty pharmacy network “for the purpose of coverage only for drugs requiring white bagging,” which would then be reimbursed not at the rate under the four corners of the provider contract, but rather at the third-party specialty pharmacy rate
- Permitting providers that do not have pharmacies, or have pharmacies that do not meet BCBSMA’s criteria to join the specialty pharmacy network, to purchase the drugs that are subject to white-bagging policy, bill for those drugs, and obtain reimbursement at the third-party specialty pharmacy rate.1
Conversely, Aetna’s policy requires providers to navigate over 30 specialty pharmacies for receipt of clinician-administered drugs as well as distinct formulary guidelines based on what type of Aetna plan a member/patient is covered under. Providers must shoulder all the additional work for lesser reimbursement, often obligating providers to expend human capital to comply with Aetna’s white-bagging policy where many providers are still working under lean staffing models as the nation remains under a federal public health emergency due to COVID-19.2
The Financial Impact on Providers and Patients
As specialty drug utilization continues to rise, so does the prevalence of white-bag policies. Specialty drugs now account for more than half of pharmacy spend, compared to 15%–20% a decade ago.3
A 2019 study of 127 million patients covered under 40 different major payors including Aetna identified that 11% of oncology-related drugs at physician-affiliated clinics and 28% at hospital outpatient departments were sourced through white-bagging, resulting in related revenue loss. For non-oncology products, that number jumps to 43% for physician-affiliated clinics and 31% for hospital outpatient departments.4
This loss of revenue stemming from white-bagging was further exacerbated by the decrease in buy-and-bill utilization as a result of COVID-19. During the pandemic, “utilization of key autoimmune, oncology, and osteoporosis drugs was respectively 44%, 50% and 53% below comparable levels in 2019,” a figure that is only now slowly rebounding to pre-pandemic levels.5
In addition to dramatically impacting provider revenue, a study by the Commonwealth of Massachusetts revealed that white-bagging led to higher cost-sharing for patients than the traditional buy-and-bill model.6
Aetna’s Policy Stacking Exacerbates the Problem
In the second half of 2020, Aetna added highly utilized clinician-administered drugs used for maintenance therapy such as Opdivo, Keytruda, Yervoy, Bavencio, Libtayo, and Tencentriq to its white-bagging requirements in addition to attaching them to Aetna’s Site of Care Management policy.
This policy stacking negatively impacts providers by eliminating the revenue of these and other high-cost drugs entirely from outpatient departments’ revenue streams for even administration reimbursement.
Patients are negatively impacted as they are required to receive infusions outside of a hospital environment, like at an independent Aetna-contracted infusion center or at home, despite negative drug reactions being as high as 25% of the patient population for some of the aforementioned drugs.
So how does this policy stacking benefit Aetna? Aetna indicated that the administration of these drugs in an outpatient department under the buy-and-bill model made it liable for reimbursement in excess of $20,000 per infusion,7 whereas linking these drugs with these two policies may results in more than 50% savings to the company.8
This boon for Aetna leaves providers, who depend on both steerage and corollary revenue for outpatient infusion therapy, with the potential to limit revenue to that of the drug administration reimbursement or nothing at all, depending on whether a drug also has been attached to the Site of Care policy.
Under the Aetna specialty pharmacy policies obligating white-bagging, the only parties that benefit are Aetna, its parent companies and related-entities encompassing a large number of contracted specialty pharmacies.
More Than Just a Financial Issue – Legal and Regulatory Concerns
Reports from the Commonwealth of Massachusetts have outlined safety concerns, including:
- Drug incompatibility with in-house equipment
- Lack of provider control over specific formulation of the drug prescribed versus the formulation of the drug received, which can impact patient drug side effects
- Lack of provider leverage with specialty pharmacies resulting in distribution and safety issues
- Potential inability to streamline drugs with in-house pharmacy systems that provide safety controls and inventory management9
These concerns with white-bagging policies like those created by Aetna are well illustrated in the dozens of lawsuits, including numerous class actions regarding contaminated pharmaceuticals. Although a provider has no control over the pharmacy a white-bagged drug may have been received from, the ordering and/or administering provider remains legally responsible for any drug injected or infused.10
One example was the 2012 incident where Massachusetts-based New England Compounding Center dispensed contaminated steroids for injection (preservative-free methylprednisolone acetate) from its facility, which the Centers for Disease Control referred to as a “fungal zoo,” resulting in nearly 800 patients being harmed from fungal meningitis infection with 64 of those patients dying.11
Additionally, providers must consider the statutory and regulatory conflicts Aetna’s white-bagging policies pose at both the state and federal levels to ensure health system compliance with their independent legal obligations. A sampling of such conflict considerations is delineated below:
CMS Conditions of Participation12
|42 CFR § 482.25 Condition of Participation-Pharmaceutical Services:|
“hospital must have pharmaceutical services that meet the needs of the patients. The institution must have a pharmacy directed by a registered pharmacist or a drug storage area under competent supervision”Interpretive Guidelines § 482.25: “Pharmaceutical services encompass the functions of procuring, storing, compounding, repackaging, and dispensing all medications, biologicals, chemicals and medication-related devices within the hospital. They also include providing medication-related information to care professionals within the hospital, as well as direct provision of medication-related care.”42 CFR §482.25 (b) Standard: Delivery of Services:
“In order to provide patient safety, drugs and biologicals must be controlled and distributed in accordance with applicable standards of practice, consistent with Federal and State law.”
|Provider pharmaceutical services do not procure the medications for injection/infusion under the white-bag model. White-bagged medication are not controlled and distributed in accordance with applicable federal laws/standards.|
Additional Federal Considerations13
|Drug Supply Chain Security Act – P.L. 113-54“Each transaction in which dispenser transfers ownership of a product shall provide subsequent owner directly dispense white-bagged Security Act with Transaction Information”“Dispensers are not required to provide…tracing information…if dispensed to a patient or if it is a sale by a dispenser to another dispenser to fulfill “a specific patient need” “Wholesale distribution…means the distribution of a drug to a person other than a consumer or patient, or receipt of a drug by a person other than the consumer or patient…”||Payor-designated pharmacies do not directly dispense white-bagged medications to the patient nor sell them to a pharmacy. Payor-designated specialty pharmacies engaged in wholesale distribution by providing white-bagged medications to health-system pharmacies or physician offices instead of patients, bypasses DSCSA requirements.|
Massachusetts Pharmacy Regulations
|247 CMR 09.01(4): “Unless otherwise permitted by law, a pharmacist shall not redispense any medication which has been previously dispensed.”||Under Massachusetts pharmacy law white-bagging would be the “redispensing” of medication which is prohibited under state law.|
Fighting Back: Provider Power Through Policy
Power of Provider-Created Policy
Providers may work strategically to eliminate the practice of white-bagging through the wholesale ban of white-bagged drugs, and in essence, circumvention of Aetna’s policy. Alternatively, providers may elect to engage with Aetna, or health plan sponsors, and assert that the system does not accept drugs procured outside of its own supply chain and pharmacy safety protocols, thus, patients must receive treatment with drugs supplied through the provider organization’s own pharmacy or, alternatively, the provider would work with patients to find alternative treatment arrangements.
Advocacy, Association, Adamance: Provider Engagement to Effect Change
In recent months, providers have seen an onslaught of payor policies which similarly stand to harm hospitals, physicians, and patients where payor policies are published and then quickly suspended or retracted due to strong advocacy.
Providers should transparently, actively, and collaboratively engage with advocacy groups and associations such as state and national hospital and pharmacy associations to add their voice to this issue. The goal is to eliminate this procurement requirement under all relevant payor policies, as this practice stands to substantially harm not only expected revenues for providers but patient outcomes as well.
To date, the Commonwealth of Massachusetts has published a list of policy considerations geared toward drug safety and patient protection for prevention of drug adulteration and assurance of adequate supply chain for white-bagged drugs. Providers within Massachusetts should engage with the Commonwealth of Massachusetts Health Policy Commission and demand they not merely make tacit requests, but take a firm stance much as the state of Louisiana recently did when it barred white-bag policies within the state and affirmatively required plans to pay providers consistent with their contract provisions under the traditional buy-and-bill model.14 Louisiana’s willingness to pass such legislation underscores the importance of provider advocacy to raise awareness in other legislatures.
Providers must work to eliminate harmful payor policies through advocacy-driven provider or state policy. Without providers, white-bagging will continue to diminish provider reimbursement, increase administrative cost for health systems and patients, and jeopardize the safety of vulnerable patient populations.
|Samantha Timpone |
Director of Legal Revenue Recovery
Ensemble Health Partners
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1Commonwealth of Massachusetts Health Policy Commission, Review of Third-Party Specialty Pharmacy Use for Clinician-Administered Drugs: Report to the Massachusetts Legislature, Section 130 of Chapter 47 of the Acts of 2017, July 2019, available at, https://cdn.ymaws.com/www.mashp.org/resource/resmgr/files/White_bagging_Brown_bagging.pdf (June 15, 2021). Note: This model does overcome some of the legal and regulatory hurdles discussed later under the section titled Legal and Regulatory Considerations.
2Aetna, Aetna Specialty Pharmacy Medicine and Support Services, April 2019, available at, http://www.aetna.com/dse/cms/codeAssets/pdf/Aetna_Specialty_Pharmacy.pdf (last visited June 15, 2021); Aetna, Formularies & Pharmacy Clinical Policy Bulletins : Guides for Prescription Drug Coverage, (2021), available at, https://www.aetna.com/health-care-professionals/clinical-policy-bulletins/pharmacy-clinical-policy-bulletins.html (last visited June 15, 2021).
3Modern Healthcare Executive, Specialty Exceeds Traditional in Drug Spend, (June 7, 2021), available at, https://www.managedhealthcareexecutive.com/view/specialty-exceeds-traditional-in-drug-spend (last visited June 15, 2021).
4Drug Channels, Specialty Pharmacy Keeps Disrupting Buy-and-Bill—and COVID-19 Will Accelerate It, adapted from data in 2020–21 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors, (September 23, 2020), available at, https://www.drugchannels.net/2020/09/specialty-pharmacy-keeps-disrupting-buy.html (last visited June 15, 2021).
6Massachusetts Health Policy Commission, Meeting of the Market Oversight and Transparency Committee, (Feb. 27, 2019), available at, https://www.mass.gov/doc/presentation-moat-committee-meeting-22719/download (last visited June 15, 2021).
7Aetna, Select Oncology Medications are Being Added to the Site of Care Management Program, available at, https://www.aetna.com/health-care-professionals/newsletters-news/office-link-updates-june-2020/pharmacy-updates-june-2020/oncology-medications-added-to-the-site-of-care-management-program.html (last visited June 15, 2021).
9Id. Note: While Beth Israel Deaconess Medical Center (BIDMC) was cited as providing testimony against brown-bagging, the report does not cover BIDMC is regards to white-bagging. However, it does cite that for the above listed safety considerations in addition to additional testimony, it does not permit white-bagging under any circumstances as it subverts its pharmacy system which includes state-of-the-art safety features.
10Martha M. Rumore Pharm.D., Esq. and Jesse C. Dresser, Esq., Emerging Trends in Payor-Mandated White Bagging, (Jan. 6, 2021), available at, https://www.frierlevitt.com/articles/emerging-trends-in-payor-mandated-white-bagging/ (last visited June 15, 2021).
11Food and Drug Administration Office of Criminal Investigations, New England Compounding Center Pharmacist Sentenced for Role in Nationwide Fungal Meningitis Outbreak, (Jan. 31, 2018), available at, https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/press-releases/january-31-2018-new-england-compounding-center-pharmacist-sentenced-role-nationwide-fungal (last visited June 15, 2021).
12California Pharmacy Board, White Bagging / Challenges: Patient Safety and Drug Integrity, (Feb. 18, 2021), available at, https://pharmacy.ca.gov/meetings/agendas/2021/dr_shanes_presentation.pdf (last visited June 15, 2021).
13Id.; see also Massachusetts Society of Health-System Pharmacists, Drug Supply Chain Security Act Compliance (DSCSA: “Track and Trace”), (July 1, 2015), available at, https://cdn.ymaws.com/mashp.site-ym.com/resource/resmgr/Resources/DSCSA_v1_Policy_Template.pdf (last visited June 15, 2021).
14 Becker’s Payer Issues, Louisiana Bans Insurers from Controversial ‘White Bagging’ Practice, June Becker’s Payer Issues, Louisiana Bans Insurers from Controversial ‘White Bagging’ Practice, (June 7, 2021), available at, https://www.beckershospitalreview.com/payer-issues/louisiana-bans-insurers-from-controversial-white-bagging-practice.html (last visited June 15, 2021).
These materials are for general informational purposes only. These materials do not, and are not intended to, constitute legal or compliance advice, and you should not act or refrain from acting based on any information provided in these materials. Please consult with your own legal counsel or compliance professional regards specific legal or compliance questions you have.