BILL ANALYSIS
AB 1201
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Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1201 (V. Manuel Perez) - As Amended: April 28, 2009
Policy Committee: Health Vote:12-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill expands provisions established by SB 168 (Speier),
Chapter 845, Statutes of 2000 and requires health plans and
insurers (carriers) to reimburse physicians for childhood
vaccinations according to specified conditions. Specifically,
this bill:
1)Requires carriers to reimburse physicians and physician groups
at actual cost plus an administrative fee.
2)Defines actual cost to include the invoiced purchase price
plus reasonable costs associated with shipping, handling, and
insurance. Requires the administrative cost to be at least as
much as the amount paid according to Medicare fee schedules.
3)Establishes contract prohibitions regarding cost sharing by
patients and immunization benefits with regard to health plan
cost limits.
FISCAL EFFECT
1)Increased premium pressures of at least $5 million (33% GF) in
the Healthy Families Program (HFP). Additional unknown
pressures greater than $5 million (50%-100% GF) in Medi-Cal
and CalPERS health benefit premium pricing. The most direct
fiscal impact would be in HFP because that program has the
greatest concentration of beneficiaries receiving pediatric
immunizations. Under current law, HFP serves 900,000 children
at an annual cost of $1 billion (33% GF). The HFP estimate
assumes a one-half of one percent increase in HFP premium
pressures, or an increase of 50 cents per month per child. In
the current year, HFP costs are $120 per member per month.
AB 1201
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2)Pediatric vaccines in Medi-Cal are funded by the federal
government by the Vaccines for Children Program (VFC) (100%
federal). California pays an administrative cost of $9 (50%
GF) per vaccine in the VFC. It is unclear how Medi-Cal
pricing, with respect to costs or administrative fees,
established by this bill would impact costs or access to
immunizations. Pricing impacts associated with this bill are
also less distinct because Medi-Cal costs are largely driven
by a cohort of high-cost adults. Healthy children do not drive
costs in a program with 7 million enrollees.
3)Per prior testimony, a number of terms in this bill may lead
to unintended pricing and administrative workload for
immunization suppliers, providers, and health plans and
insurers. The pricing established by the bill appears
open-ended for administrative costs, for example: "reasonable
cost associated with shipping, handling, insurance, and
storage" provides no upper limit. In addition, administrative
pricing between Medi-Cal and this bill are of particular
concern. According to one local Medi-Cal managed care plan,
this bill would increase a per vaccine administrative cost
from $9 to Medicare's $21.
COMMENTS
1)Rationale . This bill is co-sponsored by the California
Medical Association (CMA), the American Academy of Pediatrics,
and the California Academy of Family Physicians. According to
the sponsors, health officials are concerned that there will
be an exodus by doctors providing pediatric immunization due
to low reimbursements. For example, in the 1980s, immunization
reimbursement problems lead to a drop in immunization rates
that contributed to a resurgence of measles that caused 11,000
hospitalizations and 120 deaths.
The sponsors indicate the capitation rate paid by health plans
to pediatricians does not cover the full cost of acquiring and
administering children's vaccines. Current law requires health
plans to offer benefits for children's comprehensive
preventive care, including recommended immunizations, and
requires the costs of new vaccines to be considered in the
contracted rate. This bill goes several steps further to
require pediatric immunizations to be a distinctly priced
service with respect to direct and indirect costs.
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2)Immunization Costs . The cost and number of immunizations have
risen steadily, with three new vaccines added in the last four
years. The current cost of fully immunizing a child is about
$400, and may increase to $630 if a new pneumonia vaccine
recently approved by the federal Food and Drug Administration
is added to the list of recommended childhood vaccines.
According to the author, when the capitation rate is
inadequate, the pediatrician is financially penalized for
promoting good public health practices. A survey completed by
CMA 10 years ago identified a cumulative shortfall of $300 per
patient for the costs of immunizations. According to the
sponsors, this problem has only worsened over the past decade.
This bill may reduce cost shifting of the financial burden of
vaccines to physicians and move the risk back to the health
plans and insurers.
3)Concerns . Health plans and insurers oppose this bill due to
ambiguous pricing terms that could lead to significant cost
increases that would lead to premium pressures. In addition,
health plan are concerned about the movement away from
capitated rates, a key feature of managed care.
4)Related Legislation . SB 168 (Speier), Chapter 845, Statutes of
2000 prohibits a risk-based contract from requiring a
physician or medical group to assume financial risk for the
acquisition costs of required immunizations for children as a
condition of accepting the risk-based contract.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081