By Jason Peterson, RPh and Beckie Fenrick, PharmD, MBA
Infused and injectable therapies play a critical role in treating complex conditions, but they also represent some of the highest-cost claims for plan sponsors. Costs can vary widely depending on where the medication is administered, how it is billed and how the drug is sourced.
By understanding how outpatient infusions are delivered and billed, plan sponsors can more effectively identify high-cost drivers and uncover strategies that reduce spend while maintaining quality of care.
Understanding Provider-Administered Outpatient Infusion Therapies
Many injectable medications, like insulin, can be self-administered. Outpatient infusion therapies, however, require a healthcare professional due to complex preparation, risk of adverse reactions and administration routes that must be done in a clinical setting (IV, intradermal, intramuscular).
Outpatient infusions may occur in a range of clinical environments, each with different fee structures and cost implications:
- Hospital Outpatient Department (HOPD): a hospital-based unit providing infusions without overnight stays
- Physician Office Infusion Center (OIC): infusion care delivered within a physician’s office
- Ambulatory Infusion Center (AIC): standalone, non-hospital outpatient facilities dedicated to infusion therapy
- Ambulatory Infusion Site (AIS): nurse- and pharmacist-operated suites typically managed by home infusion pharmacies
- Home Infusion Therapy: medication is administered in the patient’s home under clinical supervision
In contrast, inpatient administration takes place in hospitals or facilities such as Inpatient Rehabilitation Facilities, Long-Term Acute Care Hospitals, and skilled nursing facilities. This distinction is important because billing methodology—and ultimately costs—shift significantly between inpatient and outpatient settings.
How the Buy-and-Bill System Impacts Outpatient Infusion Pricing
The traditional buy-and-bill approach is still the most common outpatient infusion model. In this structure, providers purchase the medication, administer it, and then bill the payer under the medical benefit for both the drug and administration services.
Because the provider controls the drug’s acquisition, this approach can lead to pricing variability and markup. Understanding how buy-and-bill functions helps explain why some outpatient settings—particularly hospital outpatient departments—produce much higher costs for the exact same therapy.
Why HCPCS Billing Codes Matter for Infusion Pricing
Infused and injectable medications are billed using Healthcare Common Procedure Coding System (HCPCS) codes, which directly influence how much a plan pays. These codes determine how the drug is reported, in what units, and at what quantity:
- J codes represent permanent codes for provider-administered injectable drugs.
- Q and C codes are temporary codes used for newer products until a permanent J code is assigned.
Each code corresponds to a specific billing unit—often in milligrams—which affects the total billed amount. For example, Remicade® (infliximab) uses J1745, representing 10 mg per unit, meaning a 500 mg dose is billed as 50 units of J1745.
Because billing is tied to these units, even small differences in site-of-care pricing, acquisition costs, and markup practices can meaningfully impact total spend.
High Infusion Costs in Hospital Outpatient Departments (HOPDs)
Across studies, HOPDs consistently charge the highest prices for infused medications.
Research shows:
- HOPDs markup drug costs 120-630% above acquisition
- Reimbursements average 276-289% higher than physician offices
- Medicare pays 2.5x more for the same therapy in HOPDs vs. physician offices
- One decade-long analysis found chemotherapy infusions for commercially insured patients cost 2.5x more in HOPDs than OICs
The conclusion here is that the site of care is one of the strongest predictors of infusion cost.
How Payers Can Reduce Outpatient Infusion Spend
Reducing outpatient infusion costs requires a combination of strategies that address both where medications are administered and how they are sourced and billed. Several proven approaches can help plan sponsors meaningfully reduce spend while maintaining patient safety, convenience, and quality of care.
1. Shift to Lower-Cost Sites of Care
Redirecting members from high-cost HOPDs to clinically appropriate lower-cost settings—such as physician offices, AICs, AISs and home infusion—can, in many cases, significantly reduce costs without disrupting the patient experience.
2. Use Pharmacy Benefit Distribution Models to Limit Drug Markups
Alternative distribution and reimbursement models help limit the high drug markups common under buy-and-bill by shifting drug costs to the pharmacy benefit—where pricing is typically lower and more predictable—while still allowing administration to be billed under the medical benefit. These models, often referred to as white, brown, clear and gold bagging, streamline how drugs are dispensed and delivered by routing medication through pharmacy channels rather than traditional provider procurement.
3. Leverage Vendor Programs and Point Solutions
Major payers and independent vendors offer site-of-care optimization and specialty pharmacy programs that coordinate care, manage distribution and direct members to lower-cost infusion locations. These solutions help support therapy delivery in the most cost-effective and clinically appropriate setting.
4. Evaluate the Full Infusion Strategy for Savings Opportunities
Infusion therapies make up a substantial portion of medical spend, but plan sponsors can reduce costs by using a mix of the three aforementioned strategies.
With the right strategies, plan sponsors can take control of outpatient infusion spend while maintaining quality and convenience. Navigating cost-saving strategies can be complex, but Navion’s expert team is at the ready to walk you through each step. Reach out today to explore your options.
