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Quick Answer:
Buy & bill is the process where specialty practices purchase medications directly from a distributor and bill payers for reimbursement after administering them to patients. It gives practices full control over the drug supply chain and the opportunity for higher reimbursements. However, buy & bill only covers provider-administered drugs. For practices looking to capture the full spectrum of specialty medications, including oral and self-administered therapies, Medically Integrated Dispensing (MID), also known as In-Office Dispensing, extends the same philosophy of control, coordination, and revenue into a dispensing program.
Buy & bill is a drug acquisition and reimbursement model used across a range of outpatient specialty settings. Hospital outpatient clinics typically receive specialty products—including injectables, biologicals, IVIG, and immunoglobulins—through a hospital pharmacy. Independent physician practices, on the other hand, purchase drugs directly from a specialty distributor and bill payers after administration. This article covers how buy & bill works, its benefits and challenges, and how it compares to alternative models including white bagging, brown bagging, and clear bagging/in-office dispensing.
The process of a buy and bill approach is quite straightforward: First, a healthcare provider purchases the drug from a specialty distributor and stores it for the patient until the time for its administration. After the patient receives the drug, the provider submits a reimbursement claim to a third-party payer. The name of this method derives from the action of the drug being purchased by the provider ("buy") and then submitted ("bill") after administration.
The buy and bill method can be an excellent choice for medical practices that need to administer specialty drugs and want to have complete control over the entire drug’s life cycle. Rather than relying on a specialty pharmacy or collaborator to handle the drugs, the provider purchases, stores, and administers medications to patients, and then submits a claim to collect coinsurances and copayments.
Buy & bill is especially relevant for practices that offer in-office infusion (IOI) programs, where provider-administered drugs are a core part of the care model and controlling the drug supply chain directly impacts both clinical outcomes and financial sustainability.
There are two main benefits to using a buy & bill approach: more control over the drug supply chain and higher revenues. Regardless of practice size, buy & bill can offer significant advantages for practices that administer specialty drugs.
Still, a buy and bill approach can offer several advantages for practices, no matter their size.
Supply chain control. First of all, clinics that opt to use this method have much more control over their supply chain. You cannot just ensure the pedigree of a drug is secure but also maintain the product’s integrity and control its administration. Practices using buy and bill also have more control over medicine prices. In areas like oncology, where ASP markups have been shrinking, this can be a particularly attractive factor.
Higher reimbursements. Another significant benefit when using buy & bill is that physicians can earn a higher reimbursement because they bill payers for the drugs directly. When it is specialty pharmacies that store and dispense the products, they are the ones capturing most of the revenue. With a buy & bill approach, the provider can increase its revenue through reimbursement. Practices normally buy the drugs at their Average Sales Price (ASP) and add a markup.
Drug integrity and labeling. Externally delivered drugs often lack the manufacturer's original labeling because they're compounded or repackaged at the pharmacy. This creates integrity and authenticity concerns. Additionally, if a drug isn't dispensed exactly as specified, it may need to be destroyed, creating waste and added costs for the practice.
Buy and bill involves an upfront financial risk and can be more burdensome as providers need to manage extensive drug inventories. Additionally, it’s important for physicians to have the technical know-how and the infrastructure needed to properly manage the process.
As the ASP markups shrink in competitive therapeutic categories, the financial cushion that once made buy & bill attractive is getting thinner. While Medicare reimburses at ASP + 4.3%, commercial payers still pay substantially higher markups—but these benefits are highly unequal. Recent data shows commercial markups average 13% for office-based practices but reach 148% for hospital-based clinicians.6
This disparity creates significant consolidation pressure. Large health systems, particularly those with 340B eligibility, can negotiate purchase prices below ASP, capturing substantial margins on both Medicare and commercial patients. In contrast, smaller independent practices often purchase drugs above ASP, resulting in negative margins on Medicare patients and razor-thin margins even on commercially insured patients.6
For smaller specialty practices, this pricing dynamic makes traditional buy & bill increasingly difficult to sustain without either joining a larger health system or diversifying into complementary revenue streams that operate under different reimbursement structures.
The trend of using a buy & bill approach for healthcare providers has decreased in the last years. There are a number of reasons for this; for example, the Affordable Care Act (ACA) implementation changed risk corridors, and there are many new contracts between local and regional stakeholders.
For new drugs, it’s also become critical to develop new distribution channels that can minimize obstacles between the availability of a medication and how it can be distributed. In some cases, some drugs are better suited to be shipped directly from the manufacturer to a specialty pharmacy. However, many physician practices prefer to use buy and bill so they can purchase medications directly from a distributor and manage their life cycle themselves.
At the same time, payers and pharmacy benefit managers (PBMs) have pushed practices toward external dispensing models, particularly white bagging, as a cost-containment strategy. This has created a growing tension: practices want to retain control over the drug supply chain, while payers are steering volume toward their preferred specialty pharmacy networks.
Practices are exploring Medically Integrated Dispensing (MID) as a way to maintain control while expanding into oral and self-administered specialty medications beyond the traditional buy & bill model.Medically Integrated Dispensing (In-Office Dispensing)
There are a few alternative methods to buy and bill. Specialty pharmacies, which dispense medications for oncology, hemophilia, multiple sclerosis, and other complex and chronic conditions, tend to use white and brown bagging methods. In these external delivery approaches, the manufacturers ship the drugs to an external specialty pharmacy, which then sends them to the physician's practice. Clear bagging, by contrast, involves a health system's own internal pharmacy and is not considered an external delivery model.
This method involves a specialty pharmacy sending a patient's prescription directly to the provider's office. After it arrives, the provider must store the drug until it can be administered, often requiring a separate refrigerator and inventory for white-bagged products. Critically, white-bagged medications are billed through the patient's pharmacy benefit (Part D for Medicare), not the medical benefit, which means the practice loses the revenue it would otherwise capture under buy & bill. Additionally, because external specialty pharmacies are not integrated into the clinical workflow, they often cannot monitor whether a patient is still on therapy, has experienced adverse reactions, or is due for a refill before auto-shipping the next dose, creating medication waste and putting the practice at risk of accepting drug that may never be administered.
White bagging has drawn opposition from provider organizations. The American Medical Association (AMA), the American Society of Clinical Oncology (ASCO), and the American Society of Health-System Pharmacists (ASHP) have all raised concerns about patient safety risks, treatment delays, and medication waste associated with white bagging mandates. 1,2 As of 2025, 12 states have enacted legislation banning or restricting mandatory white bagging policies, with bills introduced in more than 30 states since 2021.1,2
For specialty practices, white bagging is particularly disruptive because the care team loses visibility into the dispensing process and the practice loses revenue associated with buy & bill. When a patient’s dosage changes at the last minute, pre-shipped medication may be unusable, creating waste, forcing appointment rescheduling, and delaying treatment. In 2022, 27% of oncology therapy products administered in physician offices under commercial insurance were subject to white bagging policies.3
In this model, the patient acquires a drug and is responsible for both storing it until it’s needed and transporting it to the physician’s office to get it administered. The main problem with this approach is that it’s risky to both the product and the patient, as there is no way to authenticate the drug’s integrity.
Brown bagging raises serious chain-of-custody concerns. There is no way to verify that the medication was stored at the correct temperature or handled properly during transport. Most hospitals and health systems have banned brown bagging outright due to the safety risks, and organizations including ASCO have formally opposed the practice.3
In a clear bagging model, the practice's own in-office dispensing team prepares and dispenses the prescription internally and delivers it to the point of care for administration.
Since everything stays within the practice, clear bagging offers more control and transparency than white or brown bagging. The in-office dispensing team can bill for the medication through the patient's pharmacy benefit, and the care team can coordinate dosing, preparation, and administration internally. This model is not dependent on an external specialty pharmacy—making it a viable approach for independent practices that have built out the dedicated infrastructure of medically integrated dispensing.
The key benefits of clear bagging include tighter medication chain-of-custody, real-time coordination between the dispensing team and clinical staff, and reduced waste from last-minute dosage changes—since preparation happens within the same care environment as administration. For specialty practices looking to achieve this level of control, Medically Integrated Dispensing (MID) provides exactly that infrastructure: an in-house dispensing program built directly into the practice workflow that enables the same coordination and oversight advantages without relying on a health system-owned pharmacy.
*Medical benefit - (Part B for Medicare)
^Pharmacy benefit (Part D for Medicare)
For independent specialty practices in rheumatology, neurology, gastroenterology, oncology, dermatology, and other fields, the bagging landscape creates a clear challenge: white and brown bagging pull revenue and control away from the practice, while clear bagging requires a health system-owned pharmacy infrastructure that most independent practices don't have.
This is exactly why Medically Integrated Dispensing (MID) has emerged as a strategic approach for specialty practices. MID integrates medication dispensing directly within the practice, enabling the care team to maintain control over patient care coordination, reduce therapy delays, and capture appropriate revenue for clinical services.
According to NCODA (National Community Oncology Dispensing Association), integrated dispensing networks achieve less than 5% prescription abandonment (compared to 20% industry average), fill prescriptions in under 2 days (compared to 14–30 days), and maintain over 90% adherence rates (compared to 60% industry standard).⁴
For independent specialty practices facing margin compression on buy & bill, MID offers a critical strategic advantage: revenue diversification under a different reimbursement structure. While buy & bill margins continue to shrink, especially for practices without 340B eligibility or large-system purchasing power, MID operates under the pharmacy benefit with AWP-based reimbursement, providing more predictable and sustainable margins. This allows practices to maintain financial viability without consolidating into larger health systems, while still retaining the clinical control and care coordination benefits that made buy & bill attractive in the first place.
Buy & bill has traditionally covered provider-administered drugs, injectables, infusions, and biologics given in the office. But it doesn’t address the growing category of oral oncolytics, self-administered biologics, and other specialty medications that patients currently pick up from external pharmacies, often with significant delays and abandonment risk.
This is where Medically Integrated Dispensing (MID) becomes a natural extension of the buy & bill model. MID brings the dispensing of oral and self-administered specialty medications inside the practice, applying the same philosophy of control and coordination that makes buy & bill attractive, but extending it to drugs that don’t require provider administration.
Rather than sending patients to a separate specialty pharmacy or mail-order service, the practice itself fulfills prescriptions, maintaining continuity of care and enabling real-time coordination between prescribers, pharmacists, and clinical staff.
For practices already managing buy & bill for infused therapies through an in-office infusion program, adding an in-office dispensing program creates a second complementary revenue stream—while giving patients a truly integrated care experience where all their specialty medications are managed under one roof.
The complete picture looks like this:
Together, these three programs give a specialty practice control over essentially the entire specialty medication lifecycle for their patient population.
If you are looking to increase your practice’s revenue or simplify the process of coordinating health, opting to use a buy and bill method for specialty drugs has several proven benefits. Transitioning to a buy & bill approach requires careful planning and staff allocation.
You should focus on the following priorities to get started with a buy and bill approach to specialty drugs:
Insurance approvals: Make sure a member of your staff can focus exclusively on getting approval for the specific treatments you want to cover.
Clinicians: Check that you have enough licensed clinicians that can administer the products and implement patient support programs.
Inventory management: Set up a way to keep track of your inventory, volume, and lead time for all your specialty drugs, as well as the patients that will need them.
DSCSA compliance: The Drug Supply Chain Security Act establishes federal requirements for prescription drug tracing and verification. Whether you’re managing buy & bill inventory or implementing in-office dispensing, your practice must have systems in place for trading partner verification, product tracing, and verification capabilities.
A trusted solution is a must when it comes to managing buy & bill medications effectively.
Consider Medically Integrated Dispensing (MID): If your practice prescribes oral or self-administered specialty medications that are currently fulfilled by external pharmacies, Medically Integrated Dispensing can capture that volume in-house, reducing abandonment, improving adherence, and generating additional practice revenue.
If you are a smaller practice, it’s essential to consider the size of your staff and their current responsibilities and prepare appropriate training so you can ensure the buy and bill method can be managed properly along with regular clinical activities.
Successfully managing buy & bill, MID and infusion programs requires robust technology infrastructure and dedicated operational support. Practices need systems that can handle inventory tracking with lot and serial number management, DSCSA compliance, prior authorization workflows, EHR/PM integrations, and real-time coordination between clinical and pharmacy teams.
According to ASHP surveys of health-system specialty pharmacies, the top operational challenges include restricted access to payer networks, the ability to hire and retain qualified staff, and managing complex workflows across multiple stakeholders.7 Specialty pharmacy turnaround times are heavily influenced by technology integration, with successful programs reporting that workflow improvements through technology are essential to minimize delays.
For practices without the resources to build these systems in-house, turnkey solutions that integrate buy & bill inventory management, dispensing operations, and infusion coordination can significantly reduce implementation barriers and accelerate time to value.
OnePulse Connect – Buy & Bill is an all-in-one medication management solution that helps you streamline workflows and operations and focus on patient care.
Users assign specific purchase orders to patients, and track items by lot and serial numbers.
OnePulse Connect offers powerful integrations for practice management, suppliers, and financial software. Contact Elevate Health Technologies to better understand how this inventory management solution can help you improve profitability and efficiency.
OnePulse Connect-Dispensing is a turn-key solution for implemented In-Office Dispensing at your practice, providing additional revenue opportunities and streamlined care. Learn more.
OnePulse Connect – Infusion: Best-In-Class In-Office Infusion Care (new, red text) — OnePulse Connect- Infusion is seamless way to bring In-Office Infusion services to your practice- enabling patients to receive infusion treatments at their trusted site of care. Our program includes consistent, high-tough support from our nurses, robust patient education, and ongoing communications needed for the best possible outcomes. Learn more.
What is the difference between buy & bill and specialty pharmacy fulfillment?
In buy & bill, the healthcare provider purchases the drug directly from a distributor, administers it to the patient, and bills the payer for reimbursement under the medical benefit. With specialty pharmacy fulfillment, an external pharmacy fills the prescription and either ships it to the provider (white bagging), or to the patient (brown bagging). The key difference is who controls the drug and who captures the revenue: in buy & bill, the practice retains both.
How do specialty practices get reimbursed for buy & bill drugs?
After purchasing the drug and administering it to the patient, the practice submits a claim to the patient’s insurance. For Medicare Part B, reimbursement is typically calculated at the drug’s Average Sales Price (ASP) plus a 6% markup. 5 Commercial payers negotiate their own rates, which can vary significantly. The practice also bills separately for the administration service (CPT codes for injection or infusion).
What is the ASP markup for buy & bill medications?
Medicare Part B reimburses at ASP + 4.3% after sequestration adjustments, though this baseline margin is highly unequal across practice types. Commercial payers negotiate independently, and markups typically range from 6–18% depending on the drug, the payer contract, and the practice's purchasing power. Recent data shows commercial markups average 13% for office-based practices but reach 148% for hospital-based clinicians6—a disparity driven largely by 340B eligibility and large-system purchasing power. Independent practices without these advantages increasingly find Medicare patients unprofitable to treat under buy & bill alone.
Can a practice implement buy & bill and Medically Integrated Dispensing (MID) at the same time?
Yes, and the models are complementary. Buy & bill covers provider-administered drugs (infusions, injections, biologics given in the office), while Medically Integrated Dispensing covers oral and self-administered specialty medications. Together, they allow a practice to manage the full spectrum of specialty drugs in-house. Many practices pair both programs with an in-office infusion suite for a complete specialty drug management model.
What is white bagging and why are states banning it?
White bagging is when a specialty pharmacy ships a patient’s medication directly to the provider’s office for administration. States are restricting or banning mandatory white bagging policies because of concerns about patient safety, treatment delays, medication waste, and loss of provider revenue. The AMA, ASCO, and ASHP have all opposed mandatory white bagging. As of 2025, 12 states have enacted legislation addressing these mandates.1,2
What is DSCSA and how does it affect buy & bill?
The Drug Supply Chain Security Act (DSCSA) establishes federal requirements for prescription drug identification, tracing, and verification throughout the supply chain. Practices using buy & bill must comply with DSCSA expectations for dispensers, including trading partner verification and product tracing. The same requirements apply to practices implementing Medically Integrated Dispensing (MID) programs.
How does In-Office Infusion work with buy & bill?
In-Office Infusion (IOI) is the clinical program, the infusion suite, nursing staff, and administration infrastructure. Buy & bill is the drug acquisition and reimbursement model used within that program. When a practice starts an IOI program, they typically use buy & bill to purchase infusible drugs from distributors and bill payers after administering them. The two are inherently linked: IOI is how you deliver the therapy; buy & bill is how you pay for and get reimbursed for the drug.
What specialties benefit most from buy & bill?
Specialties that are commonly used by buy & bill include oncology, rheumatology, neurology, gastroenterology, dermatology, and urology. These specialties manage complex therapies that often require provider administration, including biologics, immunomodulators, and infusion-based treatments. The model is most financially viable for practices with sufficient patient volume to justify inventory investment and dedicated staff for benefits investigation and billing.
How does Medically Integrated Dispensing reduce prescription abandonment?
According to NCODA, integrated dispensing networks achieve less than 5% primary prescription abandonment, compared to a 20% industry average. This improvement comes from dispensing medications at the point of care, where the clinical team can address patient concerns, manage copay assistance, and initiate therapy before the patient leaves the office. When patients don’t have to make a separate trip to an external pharmacy, the most common friction points that lead to abandonment are eliminated.
What happens if a white-bagged medication arrives damaged or at the wrong dose?
When white-bagged medications arrive damaged, expired, or at an incorrect dose, the practice typically cannot substitute from inventory since the medication is patient-specific and billed through the external pharmacy. This often requires rescheduling the patient's appointment, reordering the medication, and delaying treatment—sometimes by days or weeks. The practice also cannot bill for the wasted medication since they didn't purchase it. In contrast, with buy & bill or MID, practices maintain inventory control and can make immediate adjustments to ensure patients receive timely treatment.
Can practices bill for clinical pharmacy services in addition to dispensing?
Yes. Practices with MID programs can bill for comprehensive medication management (CMM) services using CPT codes 99605-99607 when pharmacists provide face-to-face patient assessment, medication therapy review, and care plan development. These services are separately reimbursable and complement the dispensing revenue. Additionally, practices may bill for medication administration services, patient education, and care coordination activities depending on the payer and state regulations.
How does ASP markup compression affect the decision to implement buy & bill vs. MID?
ASP markup compression makes buy & bill increasingly challenging for smaller independent practices. While Medicare reimburses at ASP + 4.3%, commercial payers pay substantially higher markups, but these benefits are highly unequal (13% for office-based vs. 148% for hospital-based practices).6 Large health systems with 340B eligibility (a federal drug pricing program that allows certain hospitals and clinics to purchase drugs at significantly discounted prices) can purchase drugs below ASP and capture significant margins, while smaller practices often purchase above ASP, resulting in negative or minimal margins.
This creates a strategic imperative for revenue diversification. MID operates under the pharmacy benefit (not medical benefit), using AWP-based reimbursement rather than ASP-based pricing. This provides more stable margins and allows practices to capture revenue from oral and self-administered specialty medications, a growing segment that buy & bill doesn't address. Many practices are implementing both models simultaneously: maintaining buy & bill for infused therapies while adding MID to diversify revenue streams and reduce dependence on increasingly compressed ASP margins.
Elevate Health Technologies is committed to making healthcare better for everyone. We collaborate with healthcare providers, patients, pharmaceutical manufacturers, and payers to deliver personalized solutions and innovative technologies that truly make a difference.
OnePulse Connect empowers healthcare practices by optimizing efficiency and streamlining care, whether through buy-and-bill management, inventory tracking, medically integrated dispensing, or in-office infusion services. Our tailored approach delivers deep data insights, advanced analytics, and dynamic patient engagement platforms.
Together, we move as One Pulse, driving smarter, faster, and more connected health technologies for improved outcomes and better patient experiences.
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