White and Brown Bagging – State Resources

Some health insurance companies no longer permit healthcare providers to acquire and store a variety of drugs needed to treat their patients. Instead, the health insurers are demanding that providers accept drugs purchased and handled by their owned or affiliated pharmacies to use in patient care. In some cases, the providers are barred entirely from administering drug therapies to their critically ill patients and instead must direct their patients to seek care at unknown specialty pharmacies owned or affiliated by the health plan. This is known as “white bagging” and “brown bagging” in their health plan products:

  • White Bagging. The practice of disallowing a provider from procuring and managing the handling of a drug used in patient care. Instead, a third-party specialty pharmacy dispenses the drug and sends it to a hospital or physician office on a one-off basis.
  • Brown Bagging. Similar to white bagging, the provider is not permitted to procure and manage the handling of the drug used in patient care. However, in this instance, the third-party specialty pharmacy dispenses the drug directly to a patient who then brings the drug to the hospital or a physician’s office for administration.

Traditionally, the acquisition of and payment for drugs administered in a hospital setting is managed using the “buy and bill” model, which requires a provider to purchase, store and administer drugs, after which payers reimburse providers for both the cost of the drug and the administration of the drug. Health insurers are upending the traditional system to benefit their profit margins. This policy change poses significant risks to quality of care as providers have inadequate control in ensuring patient access to high quality drugs, as well as the appropriate storage and handling of those drugs.

The General Assembly should prohibit the use of both exclusive white and brown-bagging policies that compromise the timing and/or quality of care of drug therapies delivered to patients. 

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