Another complexity in medical billing

KFF Health News published an article describing the practices of "white bagging" (where infusion medications are sent to pharmacies to send to medical facilities) and "brown bagging" (where infusion medications are sent to patients). These practices are meant to curb costs, compared to the practice of the medical provider or facility buying the medication and then being reimbursed for it. Understandably, while these practices may save insurers money, they create more overhead for providers to manage. The article discuss delays in treatment and increased administrative burdens on patients; additionally, some patients may end up paying more via cost sharing. The article also points out that some providers have come to rely on profits from reselling costly infusion drugs. Some providers have responded by refusing to treat patients whose insurers require either of these practices.

From a systems perspective, these optimizations from both the insurers and the providers seem to yield an inefficient outcome overall. If true costs were publicly known, the government might be able to design a system where everybody comes out better off. With different parties able to hide costs, at least one party is likely to complain about being penalized unfairly when any government regulation is applied.