The Complexities of Specialty Drug Reimbursement and the Evolution of Kidney Care Delivery

Ben H.

Hatched by Ben H.

Oct 02, 2023

3 min read


The Complexities of Specialty Drug Reimbursement and the Evolution of Kidney Care Delivery


In the world of healthcare, the topic of reimbursement is often a contentious one. This article explores two distinct but interconnected issues: the disparities in reimbursement rates for specialty drugs between hospitals and physician offices, and the evolving landscape of kidney care delivery through a strategic partnership between Strive Health and Nephrology Associates of Northern Illinois and Northern Indiana (NANI). By examining these topics, we can gain insights into the challenges and potential solutions within the healthcare industry.

Specialty Drug Reimbursement Disparities:

One major issue within the reimbursement system is the stark contrast between how hospitals and physician offices are reimbursed for specialty drugs. Commercial payers often allow hospitals to markup specialty drug costs by thousands of dollars per claim, resulting in exorbitant mark-ups when combined with discounted 340B Drug Pricing Program acquisition costs. This practice often leads to hospitals earning more than the drug's manufacturer. In contrast, physician offices are reimbursed at a significantly lower rate, only receiving the equivalent of 124% of a drug's average sales price (ASP) and lower administration fees. This creates a significant disparity in reimbursement rates and raises questions about the fairness of the system.

The Impact of Reimbursement Rates on Healthcare Costs:

The discrepancies in reimbursement rates have a direct impact on healthcare costs. The chart below, derived from the 2023 State of Specialty Spend and Trend Report, highlights the normalized reimbursement rates at different sites of care compared to the ASP of drugs. In 2022, commercial health plans reimbursed hospitals at 199% of a drug's ASP and paid administration fees of $429. Physician offices, on the other hand, received reimbursement equivalent to only 124% of the ASP and were paid fees of $129. This significant difference in reimbursement rates contributes to the rising cost of healthcare and the financial burden placed on patients.

The Evolution of Kidney Care Delivery:

In a separate but equally important development, Strive Health and NANI have formed a strategic partnership to reinvent kidney care delivery. Strive Health, a leader in value-based kidney care, and NANI, the largest independent nephrology group in the nation, aim to jointly pursue and manage global risk payment models. This partnership signifies a shift towards a more patient-centered and value-driven approach to kidney care. By embracing value-based care models, the organizations seek to improve outcomes, enhance patient experience, and reduce the overall cost of care.

Insights and Actionable Advice:

1. Addressing Reimbursement Disparities:

To address the significant reimbursement disparities between hospitals and physician offices, policymakers and payers should consider implementing a more equitable reimbursement system. This could involve standardizing reimbursement rates based on the drug's ASP, regardless of the site of care. By creating a more level playing field, healthcare costs can be better controlled, and patients can receive quality care without undue financial burden.

2. Embracing Value-Based Care Models:

The strategic partnership between Strive Health and NANI highlights the importance of value-based care in improving kidney care delivery. Healthcare organizations should explore similar collaborations and partnerships to adopt value-based care models in various specialties. By aligning incentives with patient outcomes, healthcare providers can deliver better care at a lower cost.

3. Enhancing Transparency and Accountability:

Transparency and accountability are crucial in addressing the complexities of reimbursement and healthcare delivery. Payers, providers, and pharmaceutical manufacturers should work together to enhance transparency in drug pricing, reimbursement rates, and financial relationships. This transparency will help identify inefficiencies, reduce costs, and ensure that patients receive the care they need without undue financial burden.


The issues surrounding specialty drug reimbursement and the evolution of kidney care delivery highlight the complexities within the healthcare industry. By addressing reimbursement disparities, embracing value-based care models, and enhancing transparency and accountability, we can work towards a more equitable and sustainable healthcare system. It is crucial for stakeholders to collaborate, innovate, and prioritize patient outcomes in order to overcome these challenges and improve the overall quality of care.

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