This article is more than 5 years old. Information may no longer be current.
Experts propose solutions to the vaccine reimbursement issue
The second part of this round table highlights the importance of setting standards for vaccine reimbursement.
Click Here to Manage Email Alerts
Infectious Diseases in Children convened this round table in October during the 2006 American Academy of Pediatrics Meeting held in Atlanta. Chief Medical Editor Philip A. Brunell, MD, moderated the discussion. Part one was presented in our January 2007 issue.
PARTICIPANTS
Professor Emeritus at UCLA School of Medicine; Chief Medical Editor for Infectious Diseases in Children
General pediatrician in private practice in Bardstown, Ky., for 25 years; writes Clinical Practice Primer columns for Infectious Diseases in Children, on the editorial board for Infectious Diseases in Children
Associate Director of the Emory Vaccine Center, member of Editorial Board, Infectious Diseases in Children
Pediatrician in private practice in New Jersey, and chairman of the AAP’s Section on Administration and Practice Management, and president of RPMS, a medical consulting company; writes Practice Pearls column for Infectious Diseases in Children. Also affiliated with the University of Medicine and Dentistry of New Jersey.
General pediatrician for 24 years and a pediatric infectious disease sub-specialist; member of the AAP Immunization Task Force on Vaccine Finance, former member of the AAP Committee on Infectious Diseases. Professor Emeritus of Pediatrics at the University of Wisconsin School of Medicine and Public Health.
WALTER ORENSTEIN, MD: Almost everybody wants vaccines; they just want someone else to pay for them. There are not a lot of options for financing: 1) government, 2) insurance and 3) out of pocket.
The problem is that the various stakeholders have been hesitant to endorse solutions that might increase their own financial responsibilities. The insurance industry has not been supportive of new mandates. The Institute of Medicine recommended a universal federal reimbursement system in which reimbursement rates would be based on the cost-effectiveness of each vaccine, which would, in effect, set prices. The insurance industry would be mandated to cover recommended vaccines, but it would have been a subsidized mandate. The program would not have cost insurers any money, because the federal government would cover the vaccines. However, the industry opposed the IOM recommendations because of concerns that, at some point, the government would not meet its responsibilities and leave insurers with the requirement to cover vaccines.
It is unlikely that insurers or employers would support government mandates for the coverage of vaccines. Given the tightness of the federal budget, it is difficult to obtain more funding for vaccines, whether for purchase or reimbursement of private purchase.
We have to make a case as to why vaccines are different from other medical interventions. Hence, they should not have to compete with other health care needs for limited health care resources. Vaccines are special because they not only protect the vaccinees but the community as well.
There is also a need for resources for public health. Failure to appropriate adequate federal and state funds for vaccination of children normally served by public health is also causing serious problems, primarily for newly recommended vaccines. How many of the financing problems you experience are related to the newly recommended vaccines vs. the older vaccines? Where is your major frustration? Is it with the new vaccines?
RICHARD LANDER, MD: I found a slip from when I started to practice back in 1978. The polio vaccine cost me $2 and I could charge $4, which was a great mark-up. But if you look at $120 for Gardasil and $85 or so for Menactra, it is a huge problem because the mere ordering of the vaccine is tremendous ... So, the new ones are definitely a problem because of the cost.
STAN L. BLOCK, MD: And the floats are a problem. We have three or four months before we get reimbursed. We’re in the red for four months by up to $100,000 a month.
LANDER: The AAP is trying to address the floating part with managed care.
The Academy has a full-time staffer to address private payor advocacy. He sends out 1,800 letters to all of the carriers when new vaccines come out, letting them know what the vaccine is, what the recommendations are, and what the CPT code is.
In New Jersey, we were doing that beforehand. We would inform the managed care organizations time and time again, and even though they had their notice from us, they didn’t institute any change. We found that out eventually, because at our quarterly NJ-AAP pediatric council we invited someone on the national level from one of the pharmaceutical companies. They had two in the country who did nothing but go to managed care organizations to talk to them about their products, what was coming out, what the code would be, etc. This was an eye opener for us. I was sitting at one meeting with one managed care company where we had five medical directors from the one company, and we were discussing some vaccine price changes. Everyone claimed they were never told. After that meeting, I asked the person from the pharmaceutical company who their contact person for this managed care organization was. She gave me the name and that individual was sitting right there at the table. Managed care makes money by not raising their payments when our costs for purchasing the vaccines have increased because their float on not doing anything for three months, on millions of dollars of the vaccine, is a tremendous amount of money for them.
PHILIP BRUNELL, MD: It sounds like trying to bicker with a bunch of insurance companies is an inefficient system. You’re constantly negotiating and it’s going to vary from state to state. Is there any way of getting a handle on this so you don’t have to do that?
ORENSTEIN: I think part of the problem is we don’t have data showing an adverse effect of failure to immunize, particularly with the older vaccines.
LANDER: I hope we never see those figures because that means children will be suffering and children will be dying. I think one of the ways that it’s starting to come out in the public is when pediatricians refuse to give the vaccines and then say to their patients, “Listen, your insurer does not pay me adequately so if you want this vaccine, either you pay for it out of pocket and submit the bill to the insurer to see if you’ll get paid or I need to put a surcharge on this vaccine to get paid adequately.’ Both of these scenarios are illegal because you’re breaking the contract that you’ve had with insurance companies to provide vaccines for their members. Nothing is in the contracts that states we should lose money when providing those vaccines.
A lot of people advocate the use of waivers. Yes, those are illegal; however, lots of physicians are doing it. Sometimes the insurers are coming down on the doctors and threatening to terminate them from their plans. But as the public gets angry, the public then goes back to where they work and ask their human resource directors, “Why doesn’t my insurance company pay the doctor enough?”
ORENSTEIN: How widely different are the prices individual practices pay to get the vaccines in the first place?
THOMAS SAARI, MD: For years I oversaw the selection and purchase of vaccines for one of the largest managed care operations in Wisconsin. We received bundling arrangements for using certain vaccine packages over 12- to 18-month periods as a way to control costs and would forgo the use of some combination vaccines because we were unwilling to pay the premium associated with them.
BLOCK: What percentage would you estimate?
SAARI: I doubt no more than 10% on average. But 10% of an annual $2 million to $3 million vaccine budget is a lot of money when you look at it that way. Again, there are a lot of mechanisms of cost control that are available to those who purchase large quantities of vaccine products, which are unavailable to the solo practitioner or the three-person pediatric practice. The large groups can also hire pharmacy purchase experts to research and negotiate for the best deals. This discrepancy in controlling vaccine budgets is frustrating when the playing field is uneven for the practitioner. The same goes for dealing with the third-party payers for reimbursement. The big guys have more clout.
ORENSTEIN: That adds to the desirability of having some minimum standard for reimbursement. If there were, in fact, standards issued by a group like the CMS [Council of Medical Specialists] as to what minimum reimbursement should be, I wonder whether the insurers would take those standards seriously. As I understand it, many do look to Medicare for standards with regard to other services.
BLOCK: The only way it’s going to happen is if the state legislature or federal government comes into the pot here and says, ‘In order to provide insurance for anybody in this particular state, you have to provide reimbursement at 5% or 10% above cost for the vaccines that the ACIP approved and recommended.’
ORENSTEIN: That doesn’t take into account all the ERISA [Employee Retirement Income Security Act] plans because those are not controlled by state legislation. ERISA plans are employer-based plans. The employers self-insure.
However, I think the issue is that legislation may be fought, likely by two groups: one, the insurers and, two, the employers. Some sort of standard settings may be more acceptable. For example, if CMS sets a standard for fair reimbursement, every insurance plan might consider it and providers could use that standard in negotiating with insurers.
BRUNELL: How do you do that?
SAARI: The problem is that you’ve got about 75-plus immunization programs in the United States. Each one has its own mechanisms in terms of how they make these types of changes. Some are legislated; some are initiated by chief medical officers and so forth. There is no one particular mechanism to address this problem. That is why we have a two-tiered system of vaccine access today. Many of those immunization entities meet the road in solving this problem at the local, state and regional level.
Part of the problem is that there needs to be a certain level of expertise and energy by a handful of key players in each state to vocalize the kind of advocacy and support that is necessary to implement changes in immunization economics. In Wisconsin, we tended to look to the leadership of the state chapter of the AAP and the state medical society to take up the cause. As much as we’d like to think the feds are the ones to save the day, change is much more likely to occur on a state-by-state, system-by-system basis. The VFC program has been a wonderful federal entitlement to promote better immunization rates, but, in the end, how the states have implemented VFC has determined whether VFC has reached its full potential. Despite the addition of Prevnar and Menactra to the VFC formulary, there are a number of states that are still without programs to distribute those vaccines to their VFC providers.
LANDER: The problem is every state is different. What the general population of the AAP is now saying to national is, ‘We need your help.’
BLOCK: I think the ACIP, before they recommend it, needs to go through and establish the cost-benefit ratios.
ORENSTEIN: This has been a big bone of contention at the ACIP. The ACIP is doing a lot more on cost-benefit and cost effectiveness analysis regarding new vaccines and new vaccine policies. In the past, most vaccines were cost saving for society and now what we’re seeing are a number of recommendations where the vaccine may not be cost saving, but use of the vaccine a good buy compared to other generally accepted interventions. That’s a big change in mindset.
SAARI: The mandate of ACIP to consider cost-benefit issues when recommending vaccines doesn’t translate well in the private practice setting because it doesn’t go far enough when addressing the actual impact this vaccine recommendation will have on office economics. The 2004 Institute of Medicine (IOM) report on vaccine financing took ACIP to task for not giving sufficient consideration of vaccine cost on a provider’s ability to deliver the vaccine in the private sector setting.
The AAP Committee on Infectious Diseases recommendations for the introduction of a new vaccine have, from time to time, tried to anticipate what a costly new vaccine will do to the rapidity of its uptake in the pediatric office. They have considered giving the pediatrician some ‘wiggle room’ to prepare for implementation without running afoul of medical and legal worries due to delays over concerns about how adverse finances will affect the practice bottom line.
There actually was some recent discussion that perhaps the AAP-COID should have their ducks in a row with the manufacturers and the insurance industry over actual vaccine unit cost and how and when pediatricians will be reimbursed before a new vaccine recommendation is made. I have a problem with that because it appears we’re saying that pediatricians are not going to give certain vaccines unless our doctors are paid to their liking, and the AAP as an organization can’t lobby for something like that without raising antitrust issues. I’m more interested in looking for ways to try to get physicians off the hook from the medical and legal standpoint that will allow them to implement a vaccine at their own pace if vaccine economics are a factor.
BRUNELL: I don’t think leaning on the insurance companies for HPV, for instance, is going to really get you very far because what they’re looking at is a cost that’s going to be incurred 10, 20, 30 years from now. And they may be out of business or they may be bought by someone else.
LANDER: But they won’t be happy if 15% of the business has left them because the parents were so upset that Insurer A wouldn’t pay for the vaccines, but Insurer B will so they’ll switch to B. That’s the only power I think that we, private pediatricians, have is to tell our patients Company A doesn’t pay us. Companies B, C, D and E do. If you can switch insurance companies at your next enrollment area, do it.
BLOCK: Let’s go back one step for that one because I’m in rural America, folks. We don’t have affluence. Many parents have a job and they’re happy to have a job and it’s the only job they’re going to get for years. We don’t have the luxury of asking them to pay up front for anything because they can’t afford it. Many of them are working poor without medical insurance, and about one-third have Medicaid. So, we don’t have any financial buffers to say, ‘You’ve got to pay $300 for this vaccine.’ We just don’t have that luxury. There’s a great disconnect.
BRUNELL: Walt talked about the unevenness and I think that’s something we need to come back to because we’ve done wonderful in terms of immunization rates, but you look at the differences between the states and it’s significant. This may not be an issue for insurance companies. This may be about poor kids, but I suspect it involves more than just poor kids. The other thing is, we’re sitting around here with you guys in big medical groups. What about those in a two-person practice?
LANDER: I am from a four-person practice and my vaccine bills are incredible. Fortunately, the AAP New Jersey chapter has been a very strong advocate for the private pediatricians like myself. I’m the co-chair of the Practice Management Committee in New Jersey, so I try to work with insurers all the time. We’ve made progress. We’ve convinced them what they need to do, not all of them, but enough of them that it’s making a difference. I really feel sorry for Stan and the position he’s in, that his patients have no choice. As the new chairman of the Section on Administration and Practice Management for the National AAP, I hope to be able to help other states have dialogue with their managed care organizations. I have to reiterate that we do need the help of the National AAP, however.
ORENSTEIN: I think it’s important for people to understand that the ACIP deliberates and makes its recommendations at an open meeting. Those are not official CDC recommendations, which can require months. Publication in the MMWR, which may take six months or more, signals CDC acceptance of the ACIP recommendations. However, because ACIP recommendations are made in an open meeting, the press is often at that open meeting and reports the outcome prior to CDC acceptance. The problem is the public may expect vaccines based on press reports. While some insurance companies may cover those vaccines after the ACIP’s initial deliberations, others may wait until final recommendations. Another problem is financing new recommendations in the middle of a contract. I know the AAP has tried to offer some standard language for contracts that would cover such contingencies. As best I can tell, most of these insurance firms eventually do cover ACIP recommended vaccines. They may not be at the rate you want them to, but one of the biggest aggravations, as I understand it, is the delay in coverage. If we were to rank the problems in the financing, what’s the greatest headache?
BLOCK: For me, the problem is the lack of consistency between different insurance companies. They’re all paying a different rate. One year they’re covered fully, and we’re keeping on with the vaccines. All of a sudden, boom! They’re paying only 80% of what we got paid before.
ORENSTEIN: So if the CMS set minimum standards, published them in the MMWR or whatever and reinforced them, you don’t think that insurers would pay attention?
LANDER: Most of the insurers will look to what the Medicare rates are. As pediatricians, we don’t deal with Medicare. So, when Medicare goes down to 4.46% for the home Medicare line, you know darn right well the private insurers are going to say, ‘Well, Medicare went down 4.46%, so will we.’ So, we’re going to be taking home 4.46% less money.
SAARI: The standards for vaccine administration fees for immunizations given through the VFC program were set around 1994 for each state by a Health Care Financing Administration study. If you look at the chart depicting the maximum allowable HCFA-approved immunization administration fee in each state compared with the actual fee paid today, you can see the failure of all but one state (New York) to take them seriously even a decade later. There has to be more than a standard for maximum or minimum administration fee benchmarks. There has to be a mechanism of enforcement that has some teeth in it.
ORENSTEIN: If there is anything we can do short of legislation to resolve the problems, it will be easier. If you could set some standards and potentially collect data, since every pediatrician and every family physician knows what the rates are, you could name the companies and their rates and begin to publicize that kind of information. That may be a way to determine an industry standard. That also may be a little bit more palatable than legislation, which I think would lead to a tremendous battle.
LANDER: But you can’t wait. Pediatricians can’t wait, which is why in New Jersey, after six years of meeting with managed care, we went to our legislators in the hopes of having laws passed to help us. Our states have already done this with success. Hopefully, there will be other states doing the same thing in the near future.
ORENSTEIN: You may be able to do that. At the national level, I think it would be a difficult.
BRUNELL: Let’s see if we can come to some kind of consensus on a few points. Walt is suggesting national legislation may not be the best way or the easiest way to go for a variety of reasons.
National recommendations he thinks would be a good thing to do. National recommendations, however, would have to be implemented in each state so instead of just one set of laws it would require 50 or 51 sets of laws. The other thing is the data, and the importance of having data in each state. My own addition would be to make sure we have information from single practitioners or very small practices represented as well as very large practices and to address my concern about unevenness from state to state.
LANDER: Those practices that contract well get better deals and get more money for the same thing than my small group does. We have to be stronger and larger to deal with the managed care companies.
BLOCK: It needs to come from the governing body, or the AAP needs to give us these details and tell us how to negotiate.
LANDER: But it is there. For instance, the Section on Administrative Practice Management launched a Web site with lots of pointers on how to code properly, how to negotiate contracts.
BRUNELL: You’re just expending a lot of energy on things that are not patient related.
LANDER: Many of us in the Academy are teaching residents about the business of medicine and how to survive. The better informed all pediatricians are, the easier it will be to affect changes.
BLOCK: The practitioner shouldn’t have to be bothered with saying, ‘Can I get reimbursed? Am I going to get reimbursed with this company? Do I have to worry about getting administration fees? Am I going to worry about whether I can catch them all for their vaccines?”’ I can’t even get them vaccinated because I can’t catch them in the office enough for them to receive their vaccines.
BRUNELL: Walter, you have indicated the way to go nationally, how to get that done, and you’re going to talk about going to the Academy legislative representatives and see if they’ll push it. How do you get to the AAP?
LANDER: There’s one of several ways. One is that a resolution will be presented to the AAP board, which will then have several groups look at it. Some things are fast tracked. For instance, the statement on the consumer-driven health plan was fast tracked and a statement came back from the board in less than six months. Actually we are hoping to fast track it for less than a year. Now a year is an eternity for us but in corporations, that’s the way it works. It has to be presented first to the board, and then they’ve got to act on it. If they agree that this is something that we should try to go after legislatively, then the Washington office gets involved and the person there specifically involved with these issues will take care of it. But the board is very much aware of what’s going on now because pediatricians in the trenches have said this is the line in the sand. Vaccines are where we are taking our stand.
BRUNELL: So, how do you get the board to act on this?
SAARI: I think the AAP Executive Board is pretty well energized. I also think if you’re talking about going to war over vaccine financing, they’ve discussed different war strategies and what the AAP can and can’t do as an organization.
There needs to be a plan of action that we can put out to the practitioner and say, ‘We’ve feel your pain, we’ve been struggling with this at the board and committee level, this is the situation as we see it and these are the options we’re going to pursue to see where they take us.’ The AAP knows who the key stakeholders are and has approached all of them in anticipation of an immunization-financing summit early in 2007. The concern many of us have is that we were down this road two years ago with NVAC and the IOM. Despite a number of important recommendations made, none were implemented because of resistance from several of the key stakeholders who were a part of that process.
LANDER: There was a resolution presented [at the AAP meeting] stating that there must be X percentage of AWP [average wholesale price] paid. If it becomes one of the top 10 resolutions, it is fast tracked. Now, whether the insurers will listen to us is a different story, which is why I think we also have to keep going from a legislative angle. Physicians should certainly contact their chapter presidents and if their state has one, the practice management committee, to get this fast tracked.
SAARI: I think the sense that a lot of this battle will be done on a state-by-state basis is starting to get some focus. States that have had success in satisfying and protecting the financial interests of practitioners when implementing new immunization recommendations, either through universal purchase programs or by assuring adequate administration fees, can be pointed to as models to be considered by states that haven’t yet stepped to the plate. There is a domino effect that tends to occur in immunization implementation that’s been proven over and over again to influence the neighbors of successful immunization programs. I can point to the pattern of state implementations of the hepatitis B, varicella and pneumococcal conjugate vaccine programs as good examples of how this works. I think the charge to the AAP is to energize their state chapters to make immunization finance the central focus of the AAP, identify the programs that have had success, show how they did it and describe the tools necessary to replicate success state by state.
BRUNELL: But wouldn’t it fortify the individual states to have a national standard?
SAARI: It would definitely help, but, again, how it’s implemented at the state level is a different story because of state politics concerning immunization matters. I can only refer to immunization recommendations coming from the AAP COID. You’ll recall that the original recommendations for varicella vaccine made back in 1995 took eight years to get to the point where 80% of kids were getting the vaccine. The AAP and ACIP can make all the recommendations they want. It’s really how it gets interpreted, transcribed and financed on the local and state level that really makes the difference in acceptance.
ORENSTEIN: What I used to say when I was at CDC is if you don’t have the recommendation, then you can be sure nobody’s going to get the vaccine. It’s that tension between having a recommendation that will allow supporters to advocate for resources to implement it vs. knowing at the time of a recommendation that you can assure its implementation because resources are adequate.
The issue with regard to reimbursement is to set a standard soon after the recommendation and track how well insurance is meeting that standard. The standard could be set by the AAP, but I think the CMS would have more of an authority than the AAP to issue or endorse the standards.
LANDER: The AAP has no authority. All we can do is make the suggestion. I think it’s better to have a mandated legislation, because then the insurers have to comply. It’s not a recommendation. It’s something that the government is saying this is what you must do.
BLOCK: All right. I’d like to go on to the next point, which is where the rubber meets the road. Getting most of our teenagers vaccinated with three doses of HPV may be impossible. We’ve already been through this dilemma with hepatitis B.
SAARI: Why is it impossible?
BLOCK: Early on we didn’t capture but 10% to 20% of adolescents with hepatitis B vaccine. Until it became routine for babies, it didn’t have much effect at all. We could not catch the teens to get those second and third doses of hepatitis B vaccine. You’ve got to have a school mandate for entry or compliance, and that’s a legislative issue again.
SAARI: I think that impression nicely points out the power of mandates to implement a three-dose hepatitis B series in adolescents. Otherwise, I would agree with you 100%. Unless you’ve got the stick, the carrot alone won’t do it.
We used a progressive mandate for hepatitis B in Wisconsin that included middle-school kids in the initial cohort and followed through with school-based hepatitis B immunization clinics over the first three years of our state program. We complemented the stick approach with a lot of activism to guarantee a good outcome.
BLOCK: Just like chickenpox. We didn’t capture but 20% to 30% of kids with this vaccine until we implemented a school mandate. Now we get more than 80% vaccinated. This occurred once you were required to have it by age 4 before you entered into preschool or kindergarten, then everybody got it. Now, it is even required by most day cares for entry.
ORENSTEIN: I’m a little concerned, given all the controversies about some of these vaccines, starting off with mandates. I think voluntary acceptance should be the first approach. Mandates should be considered after there is general acceptance of a vaccine, yet there are still outbreaks. They should be used to ‘pick up the stragglers.’
ORENSTEIN: In general, I’m worried with our efforts to involve consumers more in health decisions that we should not use mandates as a first step. I think once general acceptance is there, mandates may be more viable.
SAARI: You can’t have it both ways. You can’t have the CMS setting administration fee benchmarks that go ignored for over 10 years and expect practitioners to continue business as usual as immunization becomes a loss leader for the practice. The AAP and ACIP shouldn’t continue setting benchmarks for immunization practice standards without giving due consideration to the impact those standards have on the private practice of medicine. Both scenarios require the kind of teeth necessary to get important prevention programs up and running in a timely fashion.
Without enforcement the CMS administration fee benchmarks affected change in only a small handful of states and none of the others. The AAP/ACIP immunization practice standard for varicella vaccine treaded water for what seemed like forever. Unless we are willing to come up with an enforceable, unified plan for private sector vaccine reimbursement, physicians are going to be waiting a long time for relief. I fear for the future of the immunization program of this country if that is the case.
ORENSTEIN: It’s ludicrous to me to say it’s $2 worth of work in one state and $18 in another to administer a vaccine. I think that has not gotten a lot of people’s attention. If you’re talking about legislation, you’re going to be talking about influencing the CMS, and then I think that’s the kind of information that has to appear on the front page of the New York Times or the Washington Times. But those are the kinds of things that aren’t being shown.
BRUNELL: They might also conclude that if they can do it for $2, why do you have to pay $18?
ORENSTEIN: Exactly. That’s part of the problem. Pediatricians have been willing to eat those costs thinking it’s in the best interests of the children.
SAARI: I think one of the other issues with administration fees has to do with giving multiple vaccines in the same office visit. We’re giving combination vaccines now where we used to do two or more shots now condensed down to one with a single administration fee. Shouldn’t administration fees be based on the number of antigens given, not on the number of injections?
LANDER: Most insurers won’t even abide by what they should be paying for the RVU. I think it’s 0.49 and then the second or third is 0.17. So, the people who set the RVUs have already said there’s less value in the administration of the second or the third or the fourth dose.
BRUNELL: Where do the RVUs come from?
LANDER: The process is through the AMA, and it goes down to what’s called the RUC [American Medical Society/Specialty Society Relative Value Scale Update Committee]. Here people get together to determine the value of the service rendered. They look at the time before the patient comes in, when the patient is in, when the patient has left and how much physician time has been involved with each. There’s also a geographical index. For instance, the same service is worth more in New York City because the cost of doing business in New York City is higher than in New Jersey. Even within New Jersey, Southern New Jersey, my part of New Jersey, which is really almost the north, and then the real northern part by Manhattan, will all have different geographic indices. So, it’s there, it’s established. Probably you get it through the AMA. But the key factor is the conversion rate. Every year, the feds say that, ‘OK, one RVU (relative value unit) is worth $36 and next year it’s $36.50 then this could be called a multiplier.’ So, if I fix a nursemaid’s elbow in a kid that has 3.7 RVUs, 3.7 times whatever that multiplier for that year is would then be considered 100% of the Medicare rate.
BRUNELL: But then you have a national standard. It may vary from state to state, but you have a standard that’s set.
LANDER: You have a standard, but thrown into it would be geographic quotient.
SAARI: But there’s no legal obligation for the insurance carrier to follow it.
BRUNELL: Right, but if you had a national recommendation then you would have a basis for negotiation just as you have with RVUs.
LANDER: The pharmacy companies sell the product. It’s then our problem to get proper payment from the managed care people. However, because of the problems in the last few years, the pharmaceutical companies know they darn well better help us. They can make all the vaccines they want, but if we’re not going to get paid appropriately, then we won’t continue to use their products. So, they now realize this and are working with us. Again, there are geographic differences.
BRUNELL: I’m not proposing relative value units. I’m proposing a national standard.
ORENSTEIN: The issue is we would then see how that works. Basically it would at least give ammunition that this is what a prestigious body has said should be a national standard and we have a marker. The issue is basically having data to see how close to meeting the target we are.
And, I think you have to have a standard for the private sector. What companies have said to me in the past is part of the reason that they can give discounts to the public sector is large purchase. Also, in the past, they’ve felt an obligation to the poorer kids who are served by the public sector. So the private sector pays a higher price. I think the focus needs to be on insurance.
BLOCK: Or uninsured.
ORENSTEIN: What I heard, Stan, is that your number one issue is the level of reimbursement you’re getting and its inconsistency. That may be something that can be fixed with standards. Initially, these standards would be voluntary. If that doesn’t work, you can rethink it later. The issue of underinsurance is a different issue. I don’t have an easy solution outside of legislation. The ideal thing would be to eliminate underinsurance. I mean there should be no such thing.
SAARI: Expanding VFC to include those patients currently falling through the cracks?
BLOCK: That’s what the problem is. Right now, if a family has a $2,500 deductible, I cannot give their child VFC vaccines. I’ve been begging our nurses a hundred times a year. They all say to me ‘that’s ridiculous.’ The parents say, ‘I don’t want it because it costs too much. I’ll go to the health department.’ Will they get it there? I do not know. And talk about fragmenting your medical home! I’m saying, ‘OK, somebody give us a break.’
ORENSTEIN: VFC was very carefully developed to focus on two major groups of kids.
One is the kids on Medicaid and two is the kids with no insurance whatsoever. We have two other categories we’ve been talking about today. One category is children who VFC would consider underinsured. That’s a kid with an insurance policy that specifically does not include vaccines. The second issue is the one you just brought up, Stan, which is children who are de facto underinsured because they have an insurance policy that covers immunization, but they have such large deductibles or co-pays that in fact they are also underinsured. However, VFC doesn’t cover underinsured kids in private provider offices. It does cover kids who go to federally qualified health centers or rural health centers, who have insurance with no immunization coverage. It does not cover children with large deductibles or co-pays anywhere.
The health departments are having some big problems because if you look at financing for health departments, you’ve got VFC, which is an entitlement, and then you have two sources of annual appropriations. You have something called the Section 317 Grant or the 317 Grant Program, which is a federal annual appropriation for which there are no eligibility criteria. Children served by this funding source could be insured. They could be underinsured. They could be anybody. What’s happening with the newer vaccines is that in a number of states, they’re only able to cover the VFC children because federal and state appropriations have not been made to purchase vaccines for children ineligible for VFC. Now, pediatricians may not even have the alternative of referring children to the health department for vaccines, because the health department may not have the resources to serve anyone who is not VFC eligible.
SAARI: Setting benchmarks for vaccine reimbursement would be a big help in the majority of cases, not all. Administration fee reimbursement has got to be recognized as crucial for pediatricians to maintain their ability to provide immunization services in the medical home. Previous benchmarks set up for administration fees as they apply to VFC-provided vaccine need to be updated, and we must find ways to get them implemented in every state. The AAP is in a position to assist getting this done through the networks established by state AAP chapters.
ORENSTEIN: A couple of points. One is that we need to make the case that financing vaccines is different than almost every medical intervention, that the vast majority of vaccine-preventable diseases are contagious diseases, and that vaccinations not only protect the individual who is vaccinated but also our communities and our country as a whole. Hence, it needs special attention over and above the other kinds of interventions we implement. Second, we have a problem with insured kids, and the problem seems to be extreme variability in the financing, which in many cases undercuts the actual costs of the pediatrician to give those vaccines. How do we solve that problem? I think the best way is to set some national standards for minimal reimbursement issued by a national authority, such as the CMS. I think the AAP can go a long way in providing that kind of effort. A third issue that we need to think about is administration fees. There needs to be some standards for those fees, and I think the CMS ought to issue those standards. The fourth issue, which we didn’t give as much time to, deals with inventory problems. It would be helpful for pediatricians not to have to front the cost for an inventory of a new costly vaccine. It would be preferable to see stock advanced by manufacturers and distributors, and pediatricians given terms for delayed payment. The AAP and others need to work with the vaccine companies and distributors to solve this problem. It’s in the manufacturers best interest to provide a substantial inventory ahead of time and allow delayed payment, to foster rapid implementation of their new vaccine. There are other issues, but those are the main points I wanted to cover.
LANDER: It’s been said around the table that unfortunately, the health of the children is tied into the business of pediatrics. I think the public needs to be aware of what’s going on. They need to be involved because their children are being affected. I think that the AAP needs to really address these issues on a national level. It’s a slow process, but there’s a significant sense of urgency here so we can’t take the usual amount of time to solve this issue.
Read part one of this round table in the January issue of Infectious Diseases in Children.