Bonnie Kirschenbaum, MS, FASHP
“Reimbursement Matters” is a tool for maintaining your health system’s fiscal health. Please email the author at with suggestions on reimbursement issues that you would like to see covered.

Patient assistance programs (PAPs) and white bagging share many characteristics. Why, then, are attitudes toward these drug acquisition and distribution programs so different?

After all, both practices have several attributes in common. In both cases, for example, a distributor, manufacturer or specialty pharmacy sends the drugs to the pharmacy at no cost. Actually, we could add a third category to this as well: nominally or zero-priced drugs such as alemtuzumab (Campath, Genzyme) for leukemia patients. The principle behind each of these scenarios is that either the drug manufacturer or a payer who has purchased product from the drug manufacturer is making product available to the patient; the hospital pharmacy is serving as the intermediary to orchestrate this patient-specific transaction and to prepare the product for administration (Table 1). In the case of PAPs, the general trend is to applaud how successful the department has been in trimming drug spending, in helping a patient through a course of therapy and in navigating the complexities that may arise. When faced with white bagging, in contrast, facilities often take an “absolutely not in my hospital” stance, often due to (largely unfounded) concerns about drug integrity, proper storage and so on. In such scenarios, the hospital may, in effect, repurchase a white-bag medication and dispense it to the patient—an almost guarantee that the payer will reject the drug claim, thus burdening the patient with additional bills.

This dichotomy in attitude is very disturbing. Perhaps some basic information on how white bagging works will shed some light on how to shift attitudes.

Table 1. Program Features
Feature Patient Assistance Nominal Price White Bag
Drug is patient-specific Yes Yes Yes
Drug is supplied at no charge Yes Yes Yes
Billing for the medication is not allowed Yes Yes Yes
Billing for the drug administration is possible Yes Yes Yes
Drug is sent directly to the facility by the manufacturer, distributor or specialty pharmacy Yes Yes Yes
Pharmacy must follow special storage requirements Yes Yes Yes
Returns of unused medications are not allowed Yes Yes Yes
Pharmacy is responsible for disposal of unused drug Yes Yes Yes

First, let’s define some terms in a bit more depth. As noted, white bagging is the practice of having patient-specific medications or supplies delivered directly to the practice setting. That setting may be an outpatient infusion center, a physician’s office or a hospital, but the common link is that the drug is intended for use by a specific patient. As the medications may be prepaid or complimentary, no billing for these products/supplies transpires. However, billing for the clinic visit where the drugs are administered and for the drug administration itself still brings income to the facility.

The Centers for Medicare & Medicaid Services has specific requirements for how this transpires. Thus, following the guidelines determined by your Medicare administrative contractor or fiscal intermediary is essential. Basically, the drug is billed at a zero charge to indicate that it was given; this then allows the drug administration fee to be processed.

Making It Work

So now you’ve got your first weapon in the fight to take some of the tarnish off white bagging: letting your colleagues know that the hospital can in fact generate revenue by handling the administration of these medications. But to get maximum payments, you have to make sure that you or someone on your reimbursement team understands the nuances of proper coding for these drugs. One key point to remember: Common procedural terminology (CPT) codes are used to describe and bill for services/tasks performed, while Healthcare Common Procedure Coding System (HCPCS) codes are used to describe and bill for drugs and other items. There are no less than 40 CPT codes that are used to bill for drug administration. Some are specific to the type of drug administered, with more complex administrations receiving considerably higher reimbursement. Both private payers and Medicare reimburse for drug administration using these codes. Thus it’s important to look at the CPT definition of drug administration. It includes the following exact wording, according to CMS: use of local anesthesia; starting the IV; access to IV, catheter or port; routine tubing, syringe and supplies; preparation of the drug; flushing catheters at completion and hydration fluid.

Remember, in the eyes of the payer, they are reimbursing for handling and preparation. If the pharmacy has not worked internally to carve out that part of the payment bundle they are due, the payer doesn’t really want to get involved in that internal accounting. It’s actually what pharmacies are going to have to deal with when handling all aspects of bundled payment. Drugs costing less than $80 per day and being bundled into the clinic visit would be another good example. Unfortunately, pharmacy often is woefully unprepared to do this and quite naive as to how all this works.

Alternatively, some pharmacy departments have been able to advocate for separate handling payment by negotiating directly with the principal payers in their local geography. Such efforts are usually done through the negotiating team at the facility. Commercial models for this handling already exist in the patient assistance world.

Table 2. Key Steps To White Bagging
Form a multidisciplinary team to include:
  • Pharmacy
  • Patient navigators
  • C-suite representative
  • Hospital insurance team rep
Determine participating outpatient clinic areas
Identify medications to be white bagged
Determine the specialty pharmacies used by the predominant payers
Vet the specialty pharmacies that will be a part of the program
Design the flow to ensure product availability at the time of the administration clinic visit
Examine infrastructure and correct weaknesses:
  • Outpatient pharmacy does not have sufficient refrigerated storage for segregating white-bag drugs in a patient-specific manner
  • Pharmacy does not know the payer status of the patient when receiving a medication order
  • Pharmacy does not have a working relationship with the patient navigators
  • Pharmacy does not have a working relationship with the insurance team

Changing Perceptions

Perhaps the most difficult part of implementing a white-bagging program at your facility is to change widely held negative attitudes toward this distribution model. You can start that process, as noted, by pointing out that your facility can generate revenue by handling these drugs—and help the patients clinically and financially in the process. Your next task may be to allay concerns over product integrity, storage and so on. I would suggest letting your staff know that when white-bag medications are sent directly from the specialty pharmacy to the hospital or other practice site, the drugs are sent in their original packaging, with appropriate shipping packaging and usually insurance due to their high cost. This would be similar to PAP drugs or routine wholesaler shipments; the drugs do not go to the patient.

As you hopefully gain some adherents with these types of discussions, your next step will be to develop an organized, careful multidisciplinary approach that includes several steps as outlined in Table 2. Good luck!

This column was designed to be provocative, to remind you that the patient always comes first and to start you thinking about how to solve this conundrum with white-bagging at your facility. As always, we’re interested in your thoughts or comments. Post them online at the end of the web version of this article at Or you can email me directly at We need—and welcome— your feedback!