Some doctors say BlueCross BlueShield's new policy harms patients who need specialty drugs

Staff file photo by Dan Henry/Chattanooga Times Free Press - An aerial of BlueCross BlueShield of Tennessee's headquarters building on Cameron Hill.

Some providers who infuse specialty drugs say a new policy from Tennessee's largest health insurance company could cause them to end the service, threatening their practice and forcing patients to find a new place to receive their life-changing drug infusions.

Starting Jan. 1, BlueCross BlueShield of Tennessee will stop reimbursing providers for certain specialty drugs typically administered in a doctor's office or hospital setting. These expensive medications are used to treat conditions ranging from autoimmune disorders - such as rheumatoid arthritis, Crohn's disease and ulcerative colitis - to some types of cancer and eye conditions. The change doesn't affect drugs patients inject or take on their own.

Providers will instead be required to obtain those drugs through a specialty pharmacy in BlueCross BlueShield's preferred network. The move is the insurer's attempt to slow the skyrocketing cost of specialty pharmaceuticals, which account for only 1% of prescriptions but almost half of the company's prescription costs, according to company spokesman Roy Vaughn.

"We're not asking providers to change their current process other than having [the drugs] shipped from a different source than they are today. We're still going to pay providers for administering the drugs and for those visits by members," Vaughn said.

For now, the change only applies to BlueCross BlueShield of Tennessee members in 100 self-funded employer groups, including the state health plan. Within these groups, there are about 5,500 employees and dependents who require specialty pharmaceuticals, according to BlueCross officials.

The new policy was also set to apply to some TennCare beneficiaries within BlueCross' managed care organization starting Jan. 1. However, that process has been delayed until July 1 amid backlash from providers - as well as some legislators - who say they were blindsided and never consulted as to how the change could affect patient care.

Dr. Colleen Schmitt, president of the Chattanooga-Hamilton County Medical Society, is a gastroenterologist with Galen Medical Group and relies on specialty infusion drugs for her patients. When other treatment fails, Schmitt said these drugs can be "game changers" for patients with severe Crohn's disease and colitis.

"The goals of the medications are to keep [patients] out of the hospital, to keep them from surgery, to keep them off steroids," Schmitt said.

Galen performs infusions in-house, but Schmitt said the group may no longer be able to offer the service without reimbursement for the drugs to cover costs of personnel and infrastructure. Instead, she would have to refer infusion patients to another location - such as hospitals - which could delay care and cost patients more money, she said.

"These are chronic conditions that are debilitating, and we have to be able to evaluate the patient, check their lab work," Schmitt said. "This is going to make it a lot more complicated for them, and quite honestly, we are better able to coordinate their care."

Dr. Joseph Huffstutter, a Chattanooga-based rheumatologist and chairman of the Tennessee Medical Association's legislative committee, shares similar concerns.

photo Staff file photo / The BlueCross BlueShield of Tennessee campus in downtown Chattanooga is environmentally designed with glass windows that allow sunlight to warm the building, cutting down on heating costs. In the center of the building is a courtyard with tables and a fountain. Gardens and walking trails are also scattered throughout the campus.

Huffstutter said he started infusing patients in his office 20 years ago as an alternative to sending them to the hospital, where they'd get slapped with an "astronomical" bill. Although he will keep infusing patients with Medicare and other insurance in his office, he said he'll no longer be able to cover the overhead of infusing BlueCross patients in employer groups affected by this decision.

"I feel like my patients and fellow physicians are being experimented on in order to optimize profits," Huffstutter said.

Currently, most providers who perform in-house infusions buy directly from a drug wholesaler, then bill the insurer and the patient for the cost of the medication plus a small mark-up to pay for infusion nurses, equipment and storage space.

Vaughn said allowing providers to "buy and bill" wasn't a big issue in the past, but now specialty drug prices are "growing at an unsustainable level." BlueCross and the Tennessee-based employers it serves paid $900 million for provider-administered specialty drugs in 2018, according to an email from BlueCross officials.

The new policy is a response to customers asking BlueCross to do more to help them manage specialty drug costs, and other insurance companies are employing more disruptive strategies to control costs, such as moving patients to different sites of care, Vaughn said.

The change will help BlueCross keep prices lower, Vaughn said, because the specialty pharmacies have agreed to "much more competitive pricing." Vaughn said any savings generated from this effort would go directly to participants, and he estimated it will save the state health plan between $9 million and $12 million in taxpayer dollars.

"Specialty drugs are more common than they used to be. They're prescribed more, and there are more of them in the pipeline," he said. "It's a problem that we can see getting even greater in the future if we don't take some action now. These are self-funded groups, so any dollars that are saved go back into their health care benefit program."

Vaughn said another problem with the current system is that doctors are able to mark up drug prices.

"We're not asking [patients] to change the site that they're getting their care from. We're asking providers to join with us to help save these groups and members' dollars," Vaughn said, adding that the drugs will be shipped from a specialty pharmacy in the BlueCross network to a provider within 24 hours of the physician ordering it.

Huffstutter said this policy will likely have the opposite effect by increasing costs due to medication waste, citing horror stories from the self-injectable drug market. For example, sometimes patients aren't healthy enough to receive an infusion when they show up for their appointment, they miss an appointment altogether or shipping errors occur.

"With us buying the drug, we can keep stock of it and only dispense it to a patient when they're here and getting infused," he said. "If they're ordering from a specialty pharmacy, it actually has to be dispensed for a particular patient, and you can't return it."

He also takes issue with BlueCross' claim that providers inflate drug costs, since Medicare prices are set by the government, and providers have a contractual obligation with commercial insurers when it comes to pricing.

"We get a price list from [BlueCross BlueShield] for the price of infused medications. It is updated quarterly, just as Medicare price lists," Huffstutter said. "What I really think is going on here is if they get these drugs from specialty pharmacies, they'll be able to hide the true cost of the drug."

State Rep. Jason Zachary, R-Knoxville, said he facilitated a meeting between BlueCross, providers and other key officials after he received a flurry of messages from angry doctors about a month ago.

"Costs on both sides drive so many of these decisions, so we left there with the understanding that we needed to see some kind of win-win," Zachary said.

As a result, BlueCross officials said they will allow a six-month transition period and opportunities for providers to participate in the specialty pharmacy network.

"I'm not going to say I'm satisfied, but you've got collaboration between BlueCross and providers now," Zachary said. "Where before, I'm being told by providers, they had no knowledge of this and really had no input into how this program would be rolled out."

Contact Elizabeth Fite at or 423-757-6673.