Impact of Pandemic-Related Drug and Supply Shortages on the Infusion Industry

February 7, 2023

The National Home Infusion Association (NHIA) has prepared a white paper summarizing the impact of cost increases incurred by infusion providers due to pandemic-related supply shortages with a particular focus on parenteral nutrition (PN) components and disposable supplies. NHIA found that prices for PN components and disposable items rose dramatically during the pandemic due to supply chain challenges and shortages. The white paper offers recommendations for payors regarding ways to ensure complex home infusion services such as PN remain widely available.

Disposable supplies are bundled with professional services, equipment, and administrative costs and paid as a set amount to the provider each day the patient infuses the medication. In most cases, drugs are billed separately, so as the cost of a drug increases over time, the indexed allowable for the drug also tends to increase. The exception to this rule is drugs that are considered standard ingredients in PN. Unlike other therapies where drugs are billed separately, standard PN nutritional components are all bundled into the per diem payment. With reimbursement relatively fixed, providers have almost no flexibility to offset the rapid increases in acquisition costs resulting from shortages.

The analysis of 402,940 bags of PN from 12 home infusion providers found a cumulative 5-year price increase per bag of PN is 50.12% over 2016 costs. In addition, the mean overall cost increase for 223 disposable supplies in 2021, which affects a broad range of therapies, was 9.88%. Prior to 2021, the typical cost increase was reported by the distributor to be on average 5% annually.

“It’s important that payors have a full understanding of the context in which home infusion providers are delivering high-quality, cost-effective care and work to reflect those factors in their reimbursement models,” said Connie Sullivan, BSPharm, President and CEO of the National Home Infusion Association. “Most of us are familiar with pandemic supply chain issues and associated price increases, but for many home infusion providers those challenges have combined with prolonged product shortages and other market dynamics to stress their ability to provide services to patients who need them.”

While the per diem payment model has proven highly successful in creating broad access to home infusion services, it leaves providers vulnerable to economic shocks created by shortages or policy changes that impact items and services included in the payment bundle, the paper concludes. NHIA recommends payors consider the increased cost of items and services included in per diem payment bundle as they negotiate rates with providers and ensure that payment reflects the complexity of the care being provided.

NHIA would like to thank Integrated Medical Systems (IMS) and WellSky for their partnership and contributions to this report.

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