Financing Vaccines

James Lutz, MPAProgram Manager / Senior Public Health

AdvisorImmunization Program

Philadelphia Department of Public Health

HPV

Tdap

Mening

Acknowledgements

Centers for Disease Control and Prevention (CDC)

National Vaccine Advisory Committee (NVAC)

Institute of Medicine (IOM)

Dr. Walter Orenstein, Emory Vaccine Center

Ms. Kate Cushman, MPH, Immunization Program, Philadelphia Department of Public Health

Outline

Current Vaccine Financing System Problems with the Current System Groups Currently Addressing

Problems Potential Solutions

Six Roles of the Nation’s Immunization System

Six Roles of the Nation’s Immunization System

Assure Vaccine Purchase

AssureService

Delivery

Sustain and ImproveCoverage Rates

Surveillanceof VaccineCoverage

and Safety

Control and PreventInfectiousDisease

Immunization FinancePolicies and Practices

Sources of Insurance Coverage: United States 2004*

* The percentages do not add to 100% because individuals can have more than one type of insurance either simultaneously or sequentially during the year.

Source: ASPE tabulations of the 2005 Current Population Survey

Uninsured and Total U.S. Population Under 200% of Poverty by Age in 2004

Source: ASPE tabulations of the 2005 Current Population Survey

Current Financing for Vaccines

Private Sector- Private Insurance- Out-of-pocket (providers and patients)

Public Sector- Federal PHS 317 Grant- Federal Vaccines For Children (VFC)- SCHIP - State/Local Funds

Changes in Childhood Vaccine Costs 1987-2007

1987 1987 2007 2007

CDC Catalog CDC Catalog

$33.70 $115.99 $1,152 - $1,164 (+335%)

$1,704 -$1,716 (+138%)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

1985 1995 2006 Male 2006 Female

Dol

lars

3 HPV

3 RV

2 Hep A

1 Mening

1 Td/Tdap

4 PCV7

6 Flu

2 Var

2-3 Hep B

3-4 Hib

1-2 MMR

4 Polio

5 DTP/DTaP

Federal contract price shown for 1985 and 1995 are averages that account for price changes within that year.

$45

$155

$894

$1185

Federal Contract Prices for Vaccines Recommended Universally for Children

and Adolescents 1985, 1995, 2006

Attributes 317 VFCEligibility Not restricted < 19 years of age

and Medicaid-enrolled; or

uninsured; or Native American, Alaska Native; or

underinsured seen only at FQHC/RHC

Source Discretionary annual

appropriation

Mandatory

Stability of funding Significant

fluctuations possible; not

keeping up with current costs

Stable funding stream

Key partners Mostly public Private and public

Two Major Federal Funding Sources

317 Immunization Grants

6%

Vaccines for Children (VFC)

43%

State 5%

Other/ Private Sector46%

Childhood vaccine doses distributed by funding source

Calendar Year 2005

Source: Vaccine manufacturers Biologics Surveillance Data 2005

Note: Does not include influenza vaccine

V F C a n d S e c t io n 3 1 7 V a c c in e V F C a n d S e c t io n 3 1 7 V a c c in e F u n d in g t o I m m u n iz a t io n F u n d in g t o I m m u n iz a t io n

P r o g r a m sP r o g r a m s

$ 0

$ 2 00 ,0 0 0,00 0

$ 4 00 ,0 0 0,00 0

$ 6 00 ,0 0 0,00 0

$ 8 00 ,0 0 0,00 0

$ 1 ,0 00 ,0 0 0,00 0

$ 1 ,2 00 ,0 0 0,00 0

$ 1 ,4 00 ,0 0 0,00 0

$ 1 ,6 00 ,0 0 0,00 0

$ 1 ,8 00 ,0 0 0,00 0

$ 2 ,0 00 ,0 0 0,00 0

19

90

199

1

199

2

199

3

19

94

1995

19

96

199

7

199

8

1999

20

00

200

1

200

2

2003

200

4

20

05

200

6

200

7 P

B

S e c ti o n 3 17

V F C

Percent increase of the cost of full series vs. percent increase of 317

appropriation

-1510356085

110135160185210235260

1999 2000 2001 2002 2003 2004 2005 2006est.

Per

cen

t In

crea

se Cost of the FullSeries

Vaccine PurchaseAppropriation

Percentage Calculations: % increases are cumulative using 1999 as the base year.

2005/2006 estimate factors in the cost to vaccinate one adolescent with one dose of Meningococcal and one dose of Tdap, and 2 doses of Hepatitis A.

The 2006 estimates are based on inflationary increases and this figure will be updated based on federal contract price updates. This estimate does not include potential new vaccines which may be added to the schedule in 2006.

Limitations to VFC

Delay in licensing of a vaccine by FDA and recommendation for routine use by ACIP/AAP to inclusion in VFC

Current panel of VFC providers is insufficient to reach VFC-eligible children (especially with new adolescent vaccines)

Children who are under-insured must receive vaccines at rural or federally qualified health centers (leads to further fragmentation of care)

Section 317 Federal Discretionary Vaccine

Grant Congress must appropriate budget

each year Because discretionary, the 64 Grantees

(50 States, DC, NYC, Chicago, Houston, Philadelphia, San Antonio and the U.S. territories) must follow no eligibility requirements for 317 granted vaccines

Used differently across the Grantees (e.g., adults, non-VFC children, clinics, private providers)

State/Local Public Health

State contributions include– Medicaid – administration fees only– Contribution to system infrastructure– Contribution to vaccine purchase (States may

purchase from the Federal contract) Extent of state contribution is variable

and impacted by addition of new vaccines to the recommended immunization schedule

State Policies: Child Vaccine for Private

Providers VFC only 38%

VFC & underinsured 20% VFC & underinsured select

16% Universal select 12% Universal 14%

Vaccine Funding For Adults (19-64 Years of

Age) at Risk? Virtually non-existent in the Public

Sector Vastly under-utilized and under-

funded in the Private Sector Small percentage of adults at risk

vaccinated via funding from manufacturers’ vaccine assistance programs.

Medicare Coverage

Part B pays 100 percent for the influenza and PPV vaccines and their administration.

Part B pays 80% of the Medicare-approved amount for hepatitis B vaccine after the yearly Part B deductible is met for those at risk.

Zoster vaccine covered under Part D Medicare vaccination benefits have

been under-utilized.

Issues with Public Insurance

Delays in VFC coverage of newly recommended vaccines

Appropriateness of administration fees for Medicaid-insured children?

Responsibility of provider to collect out-of-pocket administration fee from family for VFC vaccines administered to uninsured

Other Public Sector Issues

317 Program funding not keeping pace. Impairs states’ ability to:– Provide universal coverage (in universal

states)– Cover State eligible (underinsured) in VFC– Cover adult vaccinations for uninsured (HPV,

Tdap) Not all State contributions are keeping

pace.

Public Sector Medicaid Vaccine Administration

Fee Maximum allowable fee set by HCFA for each

state– Published in Federal Register September 2,

1994– Has never been updated or changed – No minimum administration fee– States match federal funding using their

FMAP rate VFC providers are not allowed to turn away

an uninsured child for inability to pay the administration fee (many eat the cost)

State Contributions to Medicaid FFS Vaccine Administration Fees

< $1.00Hawaii

$1.00-2.00ColoradoConnecticutIowaKentuckyMaineMissouriNew HampshireNew JerseyNorth DakotaTexasWisconsin

$2.00-$3.00AlabamaArkansasIndianaLouisianaMississippiMontanaNew MexicoOhioPennsylvaniaSouth DakotaUtahVermontWashington

$3.00-$4.00AlaskaGeorgiaMichiganNebraskaNevadaRhode IslandSouth Carolina

$4.00-5.00CaliforniaFloridaIdahoMarylandMinnesotaWyoming

Medicaid Fee-For-Service Vaccine Administration Fee by

State, 2005

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

CMS Contribution

State Contribution

Maximum Cap

State contribution

CMSmatch

CMScap

Federal Impact on Private Sector Coverage

Many insurers key off of ACIP, but ACIP recommendations are slow to be published;

Publication in CDC’s MMWR signifies acceptance of recommendation by HHS;

Example: HPV – MMWR publication date was 10 months after ACIP vote;

Need more rapid way to signify HHS acceptance than MMWR publication.

Issues with Private Insurance

Variability in reimbursement for vaccine and administration costs – no clear standard

Movement toward employer/beneficiary purchased catastrophic policies not including preventive services

Limits on reimbursement for vaccines given by specialists (I.e., not given by “PCP” = oftentimes no reimbursement)

Delays in amending contracts to include newly recommended vaccines

Private SectorInsurance Issues

AHIP survey (61/140 - 44% response rate) 91.8% follow ACIP recommendations 62% of plans reimburse based on Thompson’s Average

Wholesale Price (published quarterly) Only 47% of PPO’s who responded act on ACIP

recommendations within 3 months Most plans wait until final CDC recommendations are

published in MMWR

Source: AHIP Coverage. Immunization Practices and Policies. Jan-Feb 2006.

Administrative Costs to Vaccine Providers

Storage of vaccine Upfront cost of vaccine versus

wait for reimbursement – the “float”

Wastage and non-payment Office and medical staff time Office and medical supplies Counseling time for each vaccine

What is the Problem?

New vaccines added to the schedule and new vaccine recommendations have created a crisis in the delivery system

This crisis threatens to greatly reduce or eliminate the private provider role in delivery

Threatens to (further) fragment the medical home

Increased stress on the public sector

What is the Problem (continued)?

The crisis is not readily visible– There is no resurgence of vaccine-preventable

diseases due to failure to vaccinate– Morbidity not yet prevented by new vaccines may

not be recognized as a big problem– Our goal is to prevent tragedies, not to deal with

them– Our goal is to assure all persons have no financial

barriers to access to all vaccines recommended by the ACIP

– Warnings have been sounded. We ignore them at our peril

2004 Institute of Medicine Report

Study supported by CDC Committee formed in 2002 Four meetings Commissioned survey of state vaccine

finance practices Commissioned 8 background papers Report previewed in late 2003 Report issued in 2004

2004 IOM Report Recommendations

New insurance mandate, government subsidy, and voucher plan for vaccines recommended by ACIP;

Alter ACIP membership to associate vaccine coverage decisions with social benefits and costs, including price;

NVPO convene stakeholders; CDC initiate a research program to improve

measurement of the societal value of vaccines

Groups Working to Address Vaccine

Financing Problems NVAC Working Group on

Financing AAP Task Force on Immunization Infectious Disease Society of

America American Medical Association

NVAC Vaccine Financing Meeting

June 28-29, 2004 61 participants

– Large manufacturers and biotech firms– Fed, state, local health departments– Distributors/purchasers– Health care providers– Consumers

Pros and cons of options? Additional options? Which option supported and why?

Summary of June 28-29 Meeting

Agreement on:– Vaccines are

undervalued;– Assure access– Adequate reimbursement– Regulatory harmonization– Strengthen liability

protection– Better understand

insurance coverage– Better understand

factors responsible for low immunization coverage in adolescents and adults

Little support for IOM proposal for mandate, subsidy, and voucher;

Many favored improvements in current system:– Expanding VFC for

underinsured children– Removing VFC price caps– “Vaccine for Adults”– Increase Section 317 for

children, adolescents and adults.

2004 NVAC Work Group Recommendations

Expand Section 317 and rapid appropriation when new vaccines recommended, cover adolescents/adults; Expand VFC: underinsured children in all public and private settings, remove price caps; Regulatory harmonization to facilitate vaccines licensed in other countries; increase communication; Promote “first dollar” insurance vaccine coverage, administration fees, and prompt coverage of new vaccines.

Where are We Now?

IOM proposal for mandate/subsidy/voucher has not been implemented

ACIP does consider cost effectiveness (but not IOM emphasis), membership includes health economist

NVAC recommendations:– 317 essentially the same– VFC expansion proposed but not passed– Foreign vaccines not yet implemented

Vaccine coverage rates still high (?)

2006-7 NVAC Working GroupCharge

Obtain input from stakeholders …on the challenges in creating optimal approaches to vaccine financing in both the public and private sectors, and their impact on access.

Establish a process for selecting and addressing 2 – 3 key topics per year with input from the subcommittee chairs

By the end of each year, have developed specific and targeted policy options for the first 2 – 3 topics, and be prepared to address another 2 – 3 topics in the next year.

Present findings and policy options to the full NVAC for discussion and recommendations.

Working Group Membership

NVAC– Gus Birkhead, chair– Jon Abramson– Jon Almquist– Mark Feinberg– Gary Freed– Lance Gordon– Alan Hinman– Calvin Johnson– Jerome Klein

AHIP – Alan Rosenberg Nat’l Business Group on

Health - Liz Greenbaum/Ron Finch

Health Economist - Mark Pauley

Academia - Walt Orenstein Agency liaisons

– CDC – Lance Rodewald– CMS – Jeff Kelman

NVPO– Bruce Gellin, Angela Shen,

Ray Strikas, Emma English

NVAC Working GroupData Gathering Plan

Interviews with individual manufacturers Survey of office practice managers on current

costs, charges, and reimbursement experience Survey of physicians on attitudes on finance

issues Possible survey of insurers, self insured

employers Fact finding with CMS Stakeholder hearing planned

Finance Working Group Focus

Public Sector:– Administration fees:

Medicaid admin fee not adequate in many states No administration fee in VFC for uninsured

(providers may charge parents but cannot turn anyone away for inability to pay).

– 317 Program not keeping pace Private Sector:

– Pharmaceutical issues – inventory costs– Insurance issues – coverage

Ideas to Fix Public Sector FFS Administration Fees?

State-by-state lobbying to raise state contribution

Raise the maximum rate Require a minimum rate Increase Fed/State share Adjust rates to incentivize

combined antigen use VFC take-over of

administrative fees

You

HHS

Congress Congress

?

AMA Congress

What Who D: FFS rates don’t

impact Managed Care

D: Most states already not at maximum rate

D: States will oppose ?

? A: Covers uninsured

kids in VFCD: Opens up VFC

Ad/Disadvantage

Insurance Mandates?

High proportion of insurers say they follow ACIP. Even states with mandates, it is difficult to determine

how much to reimburse (?AWP+25%) Mandates don’t always specify administration fee How is “appropriate” level of reimbursement agreed

upon? – Voluntary guidelines versus mandates States cannot regulate ERISA (self insured) plans Explore insurance tax incentives?

Private SectorPharmaceutical Solutions?

Ways to reduce the financial burden on vaccine providers– Have vaccine manufacturers fund the

inventory in physician practices;– Frequent, small frequent shipments (“just

in time”) to reduce inventory costs;– Defer payment by providers for more than

30-60 days (help with the “float”)

NVAC Working Group Process

Continue discussions with CMS Physician surveys – Fall 07 Stakeholder hearing – Fall 07 Plan first White Paper with

recommendations to NVAC and Assistance Secretary for Health by Fall 07

Support adequate 317 funding

Summary

Vaccine finance/delivery system is in crisis due to funding system not keeping pace with new vaccines added to the schedule and new vaccine recommendations

Financial barriers to access must be removed

Providers bearing brunt of burden: Must receive more reasonable reimbursement for vaccines, vaccine inventory and maintenance, vaccine administration, etc.

Summary (continued)

Radical changes to current financing system are unlikely due to the political strength and opposing perspectives of the key stakeholders (Provider organizations, insurance industry, vaccine manufacturers, Federal/State/Local administrations, etc.)

Improving financing system necessary but not sufficient to improving access to vaccines (e.g. influenza rates in Medicare)

Potential solutions will likely come via an incremental approach addressing problems issue by issue

Thank You! Questions?

Jim LutzPhone# (215) 685-6603James.Lutz@phila.gov