From Price Differential to Purchaser Savings

The existence of a lower infusion price somewhere else does not tell a purchaser how much it can save.

The purchaser question can be reduced to a relatively simple economic construct:

Projected purchaser impact = infusion spending as a percentage of the relevant spending base × hospital-outpatient share × movable share × expected unit-price reduction

Each term answers a different question. And each needs to be estimated using the purchaser's own population and contracting environment.

The apparent simplicity of the equation is useful because it exposes where assumptions enter the savings claim.

Start with the denominator

The first term is not merely “infusion spending.” It is infusion spending expressed against a defined purchaser spending base. That denominator needs to be explicit.

A result expressed as a percentage of medical claims spending is not equivalent to a percentage of medical and pharmacy spending, total plan cost, premium-equivalent cost, or employer contribution. A 1% medical-claims reduction can become a materially different percentage when translated to another denominator.

This becomes especially important for infusion programs because therapies may cross benefit channels. A treatment administered under the medical benefit today could potentially be replaced by a therapy paid through the pharmacy benefit. If the analysis reports the decline in medical spending but does not include the replacement pharmacy spending, it has not measured purchaser savings.

The first component is therefore:

Infusion spending share = relevant infusion spending ÷ explicitly defined purchaser spending denominator

Denominator discipline is not presentation detail. It determines what the reported percentage means.

Identify the hospital-outpatient opportunity

The next question is how much of the infusion spending occurs in the higher-priced setting being examined.

For a purchaser:

HOPD share = infusion spending delivered in the relevant hospital-outpatient setting ÷ total relevant infusion spending

The appropriate numerator may require more than identifying a place-of-service code. Provider ownership, affiliation, treatment location and the structure of the claim can matter to understanding the economic arrangement.

At this stage, the purchaser has identified an observed opportunity, not savings.

Determine what is movable

The largest reduction in the original opportunity occurs at the mechanism.

For this analysis, movable should have a specific meaning:

Prospectively, movable represents the purchaser's best-supported estimate of spending for which the clinical and operational requirements for an executable alternative are expected to be satisfied. Retrospective measurement tests whether that underwriting assumption was borne out.

That is deliberately stricter than saying a lower-cost alternative site exists.

The Core Review outlined many of the relevant considerations:

·       treatment may need to remain in a particular setting during initiation;

·       some therapies may not be appropriate for home administration;

·       the intervention may need to occur before treatment is established;

·       provider cooperation;

·       alternative-site availability;

·       network structure;

·       drug sourcing, and

·       member communication and plan design.

Those are not adjustments applied after the movable percentage is calculated. They determine the movable percentage.

Conceptually:

Movable share = spending expected to satisfy the clinical and operational requirements for an executable alternative ÷ identified HOPD opportunity

The precise list may differ by purchaser and therapy. The important analytical rule is that spending should not be labeled movable before those conditions are resolved.

When outcomes are later measured, reporting savings only among successfully redirected cases can be misleading. The relevant denominator should remain the identified movable opportunity, not only the subset of cases in which redirection was ultimately completed.

Measure the price effect

Only after the movable population has been established does the price differential become economically useful. The relevant price term is not the largest observed differential. It is the differential the purchaser can achieve on the movable spending.

Conceptually:

Expected unit-price reduction = baseline allowed cost − expected alternative allowed cost

or, when expressed as a percentage:

Expected price reduction % = (baseline allowed cost − expected alternative allowed cost) ÷ baseline allowed cost

EBRI demonstrates why using a representative distribution matters. Its 2023–2024 analysis found a median HOPD/physician-office per-unit reimbursement differential of 64% and an average of 102%, while RHV highlights examples as high as 10X.

For a purchaser, however, neither the EBRI median nor the RHV anecdote is the appropriate final input. For prospective underwriting, the appropriate input is a defensibly estimated differential applicable to the purchaser's movable cases. After implementation, that estimate can be compared with the differential actually achieved.

This distinction also separates price opportunity from price capture.

Putting the components together

The resulting gross purchaser-impact construct is:

Projected gross purchaser impact = spending share × HOPD share × movable share × expected achievable price reduction

The equation is intentionally simple. Its value is that it prevents a large unit-price differential from being presented as though it applied to the entire plan.

Each preceding term narrows the opportunity before the price differential is applied.

The calculation should be made using one consistent denominator. If the projected result is 0.8% of medical spending, every component should ultimately reconcile back to that medical-spending base. If the result is stated as a percentage of medical and pharmacy spending or total plan cost, the same discipline applies.

Projected gross impact is not projected net purchaser impact

One additional reconciliation is required.

The equation above estimates the prospective economic effect of changing the treatment arrangement. It does not necessarily establish the amount economically retained by the purchaser.

Program fees, incremental administrative expenses and purchaser-funded incentives may need to be deducted.

Stop-loss can also change financial incidence. A reduction in an allowed claim does not automatically mean that every avoided dollar would otherwise have been paid by the employer. Where the claim sits relative to the specific attachment point, including any claimant-specific laser, affects who economically retains the reduction.

The final reconciliation is therefore:

Projected net purchaser impact = projected gross purchaser impact − expected intervention costs, adjusted for the purchaser's expected financial-risk position

The effect of current claims on future stop-loss premiums is different.

Measure the result against the same structure

After implementation, the purchaser can replace the prospective assumptions with observed results. The analysis should preserve the same denominator and report the share of the movable opportunity that was successfully repriced or redirected, the replacement allowed amounts, realized program costs and the portion of the claim reduction economically retained by the purchaser.

Prospective underwriting asks what can reasonably be achieved. Retrospective measurement asks what was achieved and whether it reconciles to the opportunity originally underwritten.

Do not confuse site-of-care savings with treatment substitution

There is another issue that should be explicit because it can materially affect the measurement.

Site-of-care is not the only mechanism capable of changing infusion spending.

Biosimilar substitution may lower the cost of the infused drug without changing the site. EBRI's prior work found that biosimilars generally reduced acquisition costs while higher HOPD reimbursement could offset part of that advantage.

Similarly, a patient may move from an infused therapy to an oral or otherwise differently administered treatment. That possibility is not evaluated in the attached RHV or EBRI sources, so its magnitude cannot be inferred here.

But the measurement principle is important. When results are measured, site-of-care is not the only mechanism that may have changed infusion spending.

If the purchaser simultaneously changes site, drug, or treatment modality, the observed spending reduction should not automatically be attributed entirely to site-of-care optimization.

Conceptually:

Observed spending change reflects site effect, therapy/product effect, and other treatment changes.

The components may interact, so the arithmetic will not always decompose perfectly. But the attribution problem remains.

The longer-run questions are different: whether biosimilar adoption compresses the underlying site differential, whether oral alternatives reduce the population exposed to infusion economics, whether hospitals alter pricing in response, and whether the composition of the opportunity changes over time.

Evidentiary ceiling

A purchaser can identify a large HOPD infusion price differential without having identified a comparably large savings opportunity.

The relevant question is how much of total purchaser spending enters the category, how much occurs in the targeted setting, how much is fully movable after clinical and operational considerations, and what price reduction can reasonably be expected on that movable spending.

Only then can the purchaser estimate the projected result, which can later be reconciled against intervention cost, actual financial-risk attribution, and observed performance.

A defensible savings analysis therefore preserves the denominator from the initial spending opportunity through the final purchaser result.

The smaller the denominator becomes between those points, the more important it is to show where and why the opportunity was reduced.

EBRI Issue Brief Source: Fronstin, Paul, and M. Christopher Roebuck, “Location, Location, Location: Spending Differences for Physician-Administered Outpatient Medications by Site-of-Treatment,” EBRI Issue Brief, no. 666 (Employee Benefit Research Institute, September 24, 2026)