White bagging, or the seventh circle of health insurance Hell

Let's say you're a patient with a low income who qualifies for help from a drug company. That drug company is willing to deliver the drug, free of charge, to an infusion center near you.

Great, right?

And let's say your insurance is contracted with Scottsdale Chemo Hut. (Sure, it would be nice to get the infusion done at your oncologist's office, but your insurance won't cover treatment there, even though it will cover office visits. That is the sixth circle of Hell, which has more circles than Saturn has rings when it comes to health insurance issues.)

So let's say you are getting everything set up with Chemo Hut, and in the process you  speak to the pharmacy manager. And you are told this: Chemo Hut does not accept drugs directly from drug companies. The drug can arrive in an armored vehicle, in a suitcase chained to the wrist of the president of the company, and they'll still refuse to accept it.

And why is this? Because Chemo Hut cannot bill for it. If they use their own supplier, they can make money. Increasingly, more hospitals and infusion centers are refusing to administer free drugs that their patients qualify for. This is because they are upset about a trend known as "white bagging."  

Under white bagging, insurance plans use their own specialty pharmacies to supply drugs at a cheaper rate than those purchased through the hospital supply chain. By some estimates, this now accounts for some 25% of infusions. Complimentary drugs for the less financially fortunate are collateral damage in this tug of war between insurers, who want to contain costs, and hospitals, which want to maximize profits.

Hospitals also complain about the inconvenience of having to store these drugs separately and write things like "for David Arenson only" on the outside of the box.

FYI, there is also something called "brown bagging," in which the drug is delivered to the patient, who totes it in along with their lunch. Maybe I can see that one being a problem. Chemo Hut may not want to be responsible for infusing you with ofatumumab you bought off a guy in a truck down the block.

Still, for patients who need chemotherapy and who cannot otherwise afford it, Chemo Hut and other hospitals and centers are making no exceptions, and this makes life difficult, not to mention a little more absurd than it already is.

In my case, Chemo Hut will infuse the drug if it is ordered through their supplier; our insurance company does not work with specialty pharmacies, and it has approved the drug under my medical benefit, which means I have to pay 20% coinsurance. Or, we estimate, upwards of $20,000 by the time all is said and done.

Well, lucky me, Chemo Hut also has a financial assistance program. A patient may qualify for a reduction in the bill of up to 100%. I say "may" and I use the term guardedly, because a patient may also not qualify, and be stuck with angry collection agencies and dings on their credit if they are unable to pay. The coinsurance the patient owes must now be written off as a loss. And while the insurance company will pay 80% at a negotiated rate, there is probably not a huge amount of profit there. So how much money is Chemo Hut actually making when all is said and done?

Chemo Hut could have administered free drug and still earned money on the costs of infusion, which is not chump change. But that would have been too easy. I know from running a business that sometimes you sell something and make a lot of money, and sometimes you sell something and make a little, but that you need both kinds of sales to stay profitable. (Not to mention the moral issues involved, but we're talking the health care system here, so that may not apply.)

There is one alternative, perhaps. One might ask the insurance company to approve infusion of the drug in the oncologist's office after all. The oncologist doesn't have a problem with white bagging because the oncologist actually cares about the patient. The oncologist, BTW, would like to be "in network" with the insurance and is willing to negotiate a fair price.

All of this would save the insurance company from having to pay huge sums of money for an expensive drug that can be gotten for free. Compared to the costs of the drug, paying the cost of administration is a substantial savings.

The savings would be, as they say on Vulcan, logical. This is Earth, though, specifically the United States. The insurance company (and Chemo Hut) would rather create a ridiculous financial morass that benefits no one, including the patient.