In-office infusion can be a meaningful revenue line for a neurology practice, and it carries compliance and cash-flow risks that a spreadsheet projection rarely captures. Here is the full picture.
Key Takeaways
- Buy-and-bill margin on Medicare Part B drugs is typically ASP plus 6 percent for non-340B providers; that spread must cover drug purchasing, storage, administration staff, infusion chair overhead, and billing cost to be net-positive.
- Starting January 1, 2026, CMS requires that Maximum Fair Price units for drugs selected under Medicare price negotiation be included in ASP calculations, compressing the ASP baseline for affected drugs.
- Drug selection, patient throughput, payer mix, and billing accuracy all determine whether an infusion suite generates margin or quietly subsidizes itself from office visit revenue.
- HHS-OIG has active work plan items on infusion-related billing, including administration code unbundling and drug wastage documentation – practices should audit both before volume scales.
The infusion suite is one of the few places a neurology practice can own the full episode of care – the prescription, the drug purchase, the administration, and the billing – and earn a margin on each component. For practices administering high-cost biologics for multiple sclerosis, myasthenia gravis, or other chronic neurological conditions, the buy-and-bill model can represent a significant and legitimate revenue line. It can also become the practice’s largest financial exposure if the economics were modeled on optimistic assumptions, the billing controls were never installed, or the drug mix shifted after the suite was built.
The baseline buy-and-bill structure for Medicare Part B drugs is straightforward: the physician practice purchases the drug, administers it, and bills Medicare at ASP plus 6 percent – the average sales price plus the statutory add-on. For non-340B providers, that spread is intended to cover the cost of acquisition, storage, and handling. Whether it actually does depends entirely on the drug, the acquisition price the practice negotiates with its distributor, and the administrative cost structure of the suite. No single ASP-plus-6 margin covers every drug equally, and the first mistake most practices make is modeling infusion economics on one or two high-margin drugs and assuming the rest perform similarly.
Beginning January 1, 2026, that math shifted slightly. CMS finalized a policy requiring that units sold at the Maximum Fair Price under the Medicare Drug Price Negotiation Program must be included in the ASP calculation. For drugs that have a negotiated MFP and significant Part B volume, inclusion of MFP units in the ASP base will compress the calculated ASP and therefore compress the payment at ASP plus 6. Practices running infusion suites with drugs in the first or second negotiation cycle should model the impact now rather than discover it on an EOB in February.
What the Margin Analysis Actually Requires
A defensible infusion economics model is built drug by drug, not as an aggregate. For each drug in or entering your suite:
- Acquisition cost versus ASP. What does the practice actually pay its distributor, and how does that compare to the current quarter’s published ASP? CMS publishes the ASP quarterly; your acquisition cost changes with contract terms and market dynamics. The spread between them is your gross drug margin before any costs are allocated.
- Administration code yield. The infusion administration codes – 96413 for the first hour, 96415 for each additional hour, and the relevant hydration and therapeutic codes alongside – generate their own reimbursement. That revenue must be modeled separately and payer by payer, because commercial payer rates for administration codes vary considerably from Medicare.
- Direct suite costs. Drug storage requirements, refrigeration, pharmacy or nursing staff, infusion chair overhead allocated per session, and the billing complexity cost of Part B drug claims. Neurology infusion billing has a higher-than-average denial rate in many practices because drug, administration, and diagnosis code combinations must align precisely.
- Cash-flow cycle. The practice purchases the drug on net-30 terms, administers it, submits the claim, and collects from Medicare in 30 days if the claim is clean. That is a manageable cycle for a stable-volume suite. For a suite that is still ramping, the drug purchase cost runs ahead of collections, and practices that did not model the working capital requirement find themselves financing inventory with operating cash at an inconvenient time.
ASP plus 6 percent is what Medicare pays. Whether that covers your actual cost of delivering the drug depends on numbers that are specific to your practice and your distributor agreement – none of which appear in the fee schedule.
The Compliance Exposure That Lives Inside the Revenue
In-office infusion generates compliance risk in proportion to its revenue, which is why HHS-OIG maintains active work plan interest in this area. The most common billing problems in neurology infusion are not fraudulent; they are structural – the kinds of errors that accumulate when billing staff are not trained specifically on Part B drug claims and administration code rules.
Unbundling of administration codes is the most frequent. The infusion administration hierarchy means the initial code is primary and sequential infusion codes apply only when a separate drug is administered after the first. A practice that bills 96413 for every infusion plus 96415 for every additional hour without correctly distinguishing concurrent from sequential administration will generate overpayment exposure on audit. Similarly, drug wastage documentation – which requires recording the amount of drug drawn, the amount administered, and the amount discarded, with the wastage amount separately billed under the J-code with a wastage modifier – is frequently incomplete in practices that added wastage billing after the suite was already operating.
None of this is exotic knowledge, but it requires billing staff who have been specifically trained on the infusion billing rules and a periodic claim audit – at minimum quarterly during the first year – that checks administration code combinations and wastage documentation against the medical record. The revenue is real; so is the recoupment risk if the billing is not clean.
340B Eligibility and What It Changes
Qualifying for 340B drug pricing through a Federally Qualified Health Center look-alike, rural health clinic, or disproportionate share hospital arrangement can substantially alter the infusion economics model – and it is available to some private practices through entity relationships that many owners have not explored. 340B acquisition prices can be materially lower than commercial distributor prices for the same drug, which expands the gross drug margin before administration revenue is counted. The eligibility rules are narrow and the compliance requirements ongoing; state law adds layers on top of federal eligibility criteria. If your practice has a qualifying entity relationship you have not explored, it is worth a conversation with health law counsel before the next distributor contract renewal.
From the Field
A two-neurologist practice in the Southwest had operated an infusion suite for three years treating multiple sclerosis patients with high-cost biologics. The suite appeared profitable on the practice’s P and L, but the owner could not reconcile the reported margin with the checking account balance. A review found three problems running simultaneously: the drug margin model had been built using ASP at the time the suite opened and had not been updated as ASP moved quarterly; the administration code mix contained a recurring unbundling error on sequential infusion sessions that had generated a pattern of commercial payer denials being written off rather than appealed; and the working capital cycle had been quietly financed by delaying vendor payments. Rather than deliver a model, our fractional CFO engagement rebuilt the drug-by-drug margin analysis using current ASP and actual acquisition cost, sat with the billing coordinator to audit six months of infusion claims and identify the sequential-infusion coding error, and implemented a quarterly ASP monitoring process. The unbundling denials were appealed where timely filing permitted. The suite remained viable – the economics were real – but the margin was half what the prior model had shown.
Consulting Versus Fractional Execution
An infusion economics consultant can build the model, identify the compliance gaps, and recommend the billing controls. If your practice has a billing manager who can implement the administration code audit process and a clinical lead who can maintain the wastage documentation protocol, consulting may be the more efficient choice, and we will scope it that way on request.
What we see more often is a neurology practice where the infusion suite was designed by a drug company field representative and built by a practice manager who has moved on, leaving a billing process that nobody currently owns at a sufficient level of specificity. That is a fractional executive engagement: rebuilding the drug margin model, auditing the claims, installing the quarterly ASP monitoring, and working alongside the billing coordinator until the process is documented and running without supervision. Ask any firm that calls itself fractional whether they will work inside your billing system with your staff, or deliver a report and leave the implementation to you. That distinction is unregulated by any licensing board and it determines what you are actually buying.
Sources
- CMS, Medicare Part B Drug Average Sales Price — https://www.cms.gov/medicare/payment/fee-for-service-providers/part-b-drugs/average-drug-sales-price
- CMS, ASP Reporting and 2026 MFP Policy Changes — https://www.cms.gov/medicare/payment/part-b-drugs/asp-reporting
- King and Spalding, 2026 Physician Fee Schedule Final Rule Changes to ASP Calculation and Drug Payment Policies — https://www.kslaw.com/insights/articles/2026-physician-fee-schedule-final-rule-changes-to-asp-calculation-and-reporting-policies-and-other-drug-payment-policies
- CMS, Calendar Year 2026 Medicare Physician Fee Schedule Final Rule — https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-final-rule
More in the Neurology Series
- The Economics of an E/M-Heavy Neurology Practice After the Office Visit Changes — how E/M coding changes and the G2211 add-on code reshape neurology office visit revenue.
- In-Office Neurodiagnostics: EEG, EMG, and the Business Case for Doing Them Right — how to run an in-office neurodiagnostic program that survives a payer audit.
- Neurology Access and Referral Management: What Long Wait Times Are Actually Costing You — the operational and financial cost of long neurology wait times and how to move the number.
- Telehealth and Staffing Models for a Cognitive Specialty — how to build a neurology telehealth and staffing model that is financially sound and operationally stable.