Financing Vaccines

1. Financing Vaccines James Lutz, MPA Program Manager / Senior Public Health Advisor Immunization Program Philadelphia Department of Public Health

2. Tdap HPV Mening

3. 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

4. Outline • Current Vaccine Financing System • Problems with the Current System • Groups Currently Addressing Problems • Potential Solutions

5. Six Roles of the Nation’s Immunization System Assure Vaccine Purchase AssureServiceDelivery Control and PreventInfectiousDisease Surveillanceof Vaccine Coverageand Safety Sustain and ImproveCoverage Rates Immunization FinancePolicies and Practices

9. 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

10. Uninsured and Total U.S. Population Under 200% of Poverty by Age in 2004 Source: ASPE tabulations of the 2005 Current Population Survey

11. 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

12. Changes in Childhood Vaccine Costs 1987-2007

13. Federal Contract Prices for Vaccines Recommended Universally for Children and Adolescents 1985, 1995, 2006 $1185 $894 $155 $45 Federal contract price shown for 1985 and 1995 are averages that account for price changes within that year.

14. Two Major Federal Funding Sources

15. Childhood vaccine doses distributed by funding sourceCalendar Year 2005 Source: Vaccine manufacturers Biologics Surveillance Data 2005 Note: Does not include influenza vaccine

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

18. 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)

19. 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)

20. 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

22. State Policies: Child Vaccine for Private Providers • VFC only 38% • VFC & underinsured 20% • VFC & underinsured select 16% • Universal select 12% • Universal 14%

23. 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.

24. 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.

25. 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

26. 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.

27. 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)

28. State Contributions to Medicaid FFS Vaccine Administration Fees • $2.00-$3.00AlabamaArkansasIndianaLouisianaMississippiMontanaNew MexicoOhioPennsylvaniaSouth DakotaUtahVermontWashington • < $1.00Hawaii • $1.00-2.00ColoradoConnecticutIowaKentuckyMaineMissouriNew HampshireNew JerseyNorth DakotaTexasWisconsin • $3.00-$4.00AlaskaGeorgiaMichiganNebraskaNevadaRhode IslandSouth Carolina • $4.00-5.00CaliforniaFloridaIdahoMarylandMinnesotaWyoming

29. Medicaid Fee-For-Service Vaccine Administration Fee by State, 2005 CMS cap CMS match State contribution

30. 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.

31. 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

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

33. 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

34. 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

35. 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

36. 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

37. 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

38. 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

39. NVAC Vaccine Financing MeetingJune 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?

40. 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.

41. 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.

42. 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 (?)

43. 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.

44. 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

45. 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

46. 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

47. Ideas to Fix Public Sector FFS Administration Fees? What Who Ad/Disadvantage • 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 • 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

48. 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?

49. 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”)

50. 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