Expensive vaccines may wipe out wrong target—the doctor

New and expensive vaccines added to the schedule for adolescents, adults and children over the last several years have created a crisis in the delivery system that threatens to reduce or eliminate the private provider's role, say experts following the issue.

For example, 62% of decision makers in practices said they had delayed purchase of vaccine some time in the prior three years due to financial concerns, said a survey commissioned by the National Vaccine Advisory Committee (NVAC), a board that advises the federal agency that coordinates efforts among the federal agencies involved in vaccines and immunizations.

Perhaps more ominously, in the prior year 16% of practice decision makers had seriously considered stopping vaccinations for privately insured patients due to the cost and reimbursement issues, according to the same study, which appeared in the December Pediatrics journal.

Guthrie Birkhead, MD, chair of the NVAC and deputy commissioner in the New York State Department of Health, said the nation can't afford to lose that many vaccinators.

“That would be a public health disaster,” he said.

Since 2005 three new vaccines have been recommended for adolescents: tetanus toxoid, reduced diphtheria toxoid and acellular pertussis vaccine (Tdap), tetravalent meningococcal conjugate vaccine (MCV4) and quadrivalent human papillomavirus vaccine (HPV). The recommendation to vaccinate adults with Tdap and Zoster vaccine will also bring this issue to the forefront for practices who care only for adults.

The cost of the recommended schedule of vaccines for children and adolescents rose from $155 in 1995 to $1,105 for boys and $1,407 for girls in 2008, at federal contract level prices, notes an upcoming NVAC report available online. Prices physicians pay privately may be higher.

Practices must purchase vaccines up front, which can tie up thousands of dollars in stock. Administration fees must cover expanded counseling time to address parents' vaccine concerns, vaccine information statements and entering the information in an immunization register. Then, there is the hazard of losing vaccines to a power failure, possibly requiring alarm systems and insurance.

With more expensive vaccines in the pipeline, the problem will not get better on its own. Last fall NVAC has made recommendations (available online) such as expanding federal payment for vaccine administration and reviewing the maximum allowable Medicaid administration reimbursement for each state. The committee has a vaccine financing report due soon and is continuing to work on the issues as the new administration settles in.

The finances of vaccination

A study initiated by NVAC and published in December's Pediatrics journal shows that many practices could improve their immunization business practices. (Both studies are available online for a $12 single article access fee.)

There are huge differences among practices in what they pay for vaccines as well as in what they get paid for vaccines and administration.

According to a survey of 76 practices in five states led by Gary Freed, MD, of the University of Michigan:

• Price paid per dose for Menactra ranged from $80.36 to $93.43; reimbursement ranged from $82.00 to $121.95;
• Price paid per dose for Gardasil ranged from $116.00 to $129.57; reimbursement ranged from $119.25 to $177.67.

In some instances, Dr. Freed said, he could not even find prices on the Internet as high as those some practices said they were paying. Also, for each of the vaccines for adolescents (Gardasil, Menectra, Adacel and Boostrix) nine of the 76 practices lost money on Boostrix and 13 lost money on Menactra.

Of the practices losing money, Dr. Freed said, many weren't aware they were because they had never done this kind of analysis.

In addition, in January the American Academy of Pediatrics put on its Web site “The Business Case for Pricing Vaccines and Immunization Administration,” available at practice.aap.org/content.aspx?aid=1808&nodeID=2000, outlining the costs to be taken into account, noting the coding and estimating that the cost of providing vaccine is about 17% to 28% above the vaccine purchase price.

The continuous analysis practices need to do “is a lot of work,” says Dr. Fryhofer.

Strategies for success

The outlook isn't entirely dismal. The most successful practices in the Pediatrics study reported vaccine profits 2.5 to 4.3 times as high as the mean net yield of others in the study. For most vaccines, the net yield was better for larger practices, for those in metropolitan areas and for those in purchasing cooperatives.

Strategies for success include negotiating better prices, seeking discounts, joining cooperatives and making the most of every opportunity to vaccinate. Practices should look for ways to get discounts on vaccines and they should analyze their entire payer mix to identify low payments for particular vaccines or payers with low reimbursements.

“One of the secrets of getting kids vaccinated is to take advantage of every patient encounter,” says Sandra Adamson Fryhofer, MACP, a member of the ACP Adult Immunization Board. But her practice is small and she compensates for the upfront costs by ordering only about 10 shots at a time and she notes, “That means that you need to have someone to check your inventories frequently in order to do the frequent ordering.”

Dr. Freed advises practices to join a buying cooperative, as half of the practices in the reimbursement survey did, and then continue to make sure the cooperative is getting the best prices. Not all buying cooperatives in the study were, he noted.

But even outside of a cooperative and even for a small practice, he says, “It's always possible to negotiate.”

And physicians can negotiate better with insurers if they are aware of all their costs, said Robert Hopkins, Jr., FACP of Little Rock, Ark., also a member of the ACP Adult Immunization Advisory Board.

He and others also suggested that physicians should be certain they are using the correct codes and billing procedures and that they address reimbursement issues with ACP and AMA, state medical societies or state insurance commissions.

Dr. Fryhofer added that doctors can consider writing a prescription for the patient to pick up the vaccine at a drug store. Or a practice might find other avenues, such as health departments, to give immunizations.

But if physicians take such steps, she said, they should tell patients what is happening and why their practices can't stock the vaccine: “Sometimes it helps for the patient to call the insurance company.”

Dr. Hopkins adds that although vaccines are just one piece of reimbursement, if insurers are not paying well for the services, sometimes it's a necessary business decision to drop them, even though it is difficult on patients.

“You have to look at the bigger picture and realize how important these are for our patients,” said Dr. Fryhofer. “And I think that is a motivation to try to solve some of these problems.”