BILL ANALYSIS
AB 2093
Page 1
Date of Hearing: April 6, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 2093 (V. Manuel Perez) - As Introduced: February 18, 2010
SUBJECT : Immunizations for children: reimbursement of
physicians.
SUMMARY : Requires a health care service plan or health insurer
(collectively carriers) that provides coverage for childhood and
adolescent immunizations to reimburse a physician or physician
group the entire cost of acquiring and administering the
vaccine, and prohibits a carrier from requiring cost-sharing
from immunizations. Specifically, this bill :
1)Requires a carrier that covers childhood and adolescent
immunizations to reimburse a physician or physician group in
an amount not less than the actual cost of acquiring the
vaccine plus the cost of administration of the vaccine.
Specifies the following:
a) The actual cost of acquiring the vaccine is the
vaccine's private sector cost per dose, as published on the
most current Pediatric Vaccine Price List of the federal
Centers for Disease Control and Prevention (CDC), plus
reasonable costs associated with shipping and handling;
and,
b) The cost of administration of the vaccine, which
includes physician time, clinical staff time, and office
staff time, as well as other practice expenses associated
with providing the immunization such a storage, insurance,
supplies, and medical equipment, to be an amount not less
than that specified in the most current annual Medicare
physician fee schedule.
2)Excludes from 1) above services provided under contracts
entered between carriers and the State Department of Health
Care Services for enrolled Medi-Cal beneficiaries.
3)Excludes from 1) above services provided under contracts
entered between carriers and the Managed Risk Medical
Insurance Board for enrolled Healthy Families beneficiaries.
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4)Requires a health plan to reimburse a physician or physician
group, in an amount not less than that specified in 1) above,
for immunizations for children that are not part of a current
contract, including, but not limited to, immunizations in the
most current versions of the Recommended Childhood and
Adolescent Immunization Schedules jointly approved by the
federal Advisory Committee on Immunization Practices, the
American Academy of Pediatrics, and the American Academy of
Family Physicians.
5)Prohibits a health plan from including the costs of acquiring
or administering required immunizations for children in the
capitation rate of a physician who is individually capitated.
6)Prohibits a health plan contract or health insurance policy
from imposing a deductible, copayment, coinsurance, or other
cost-sharing mechanism for the administration, or procedures
related to the administration, of a childhood or adolescent
immunization.
7)Prohibits a health plan contract or health insurance policy
from containing a dollar limit that includes the
administration of childhood and adolescent immunizations.
8)Makes legislative findings and declarations regarding
immunizations as a successful and cost-effective public health
intervention; rising pediatric vaccine acquisition costs;
physician costs for vaccines; the effects of inadequate
provider reimbursement for vaccines; insured families'
financial barriers to immunizations; and, the importance of
ensuring continued access to vaccines.
EXISTING LAW :
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) and health insurers by the
California Department of Insurance (CDI).
2)Requires health plans licensed under the Knox-Keene Health
Care Service Plan Act of 1975 to cover all medically necessary
basic health care services, as defined. Defines basic health
care services to include: physician services; hospital
inpatient and outpatient services; including outpatient
physical, occupational, and speech therapy; diagnostic
laboratory and X-ray services; preventive and routine care,
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such as vaccinations and routine checkups; emergency and
urgent care services, including ambulance and out-of-area
emergency services; and, medically appropriate home health
services. There is no requirement for health insurers subject
to regulation by CDI to cover medically necessary basic
services or any specific minimum basic benefits.
3)Prohibits a risk-based contract between a physician or
physician group and a health plan from requiring a physician
or physician group to assume financial risk for the cost of
acquiring required immunizations for children as a condition
of accepting the contract. Prohibits a health plan from
requiring a physician to assume financial risk for
immunizations that are not part of the contract.
4)Requires a health plan to reimburse a physician for
immunizations within 45 days of receiving from the physician
documentation that the immunizations were administered.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, pediatric
immunizations have proven to be one of the most successful,
safe, and cost-effective public health interventions of the
20th Century. While the author maintains that existing law
prohibits carriers from requiring physicians or physician
groups to assume financial risk for the costs of acquiring
required immunizations for children, the author argues that
the cost of administering a vaccine is not included in the
prohibition. The author specifies administration costs
associated with giving immunizations to include refrigeration
and storage, clinical staff time, and medical supplies such as
gloves and syringes. The author contends that health plans
and insurers often do not reimburse for the entire cost of
providing vaccines, which forces physicians to absorb these
costs. The author states that as small businesses, physicians
face severe financial strain when they absorb the costs
associated with vaccine administration. According to the
author, some physicians may be forced to discontinue or delay
offering the most costly vaccinations, or require parents to
pay up front, which could shift the burden of vaccine
financing to parents' out-of-pocket expenses or to public
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programs. The author further argues that as costlier new
vaccines are approved and recommended, the problem will only
get worse. The author states this bill is intended to ensure
that physicians are fully reimbursed for the costs to acquire
and administer recommended vaccines and that out-of-pocket
expenses do not deter patients from immunizing their children.
2)Immunization-RELATED EXPENSES . In 2007, the American Academy
of Pediatrics (AAP) published a paper on pricing vaccines and
immunization administration. The paper lists the following as
vaccine-related expenses:
a) Purchase price or acquisition cost of vaccine;
b) Personnel costs for ordering and inventory, including
staff time to monitor vaccine stock, place orders,
negotiate prices, delivery and payment term, and monitor
storage procedures;
c) Storage costs, including refrigerators and freezes,
locks, alarm systems, temperature monitoring devices, and
generators for continued electrical supply;
d) Insurance against loss of vaccine;
e) Wastage and non-payment; and,
f) Lost opportunity costs for the money invested in
vaccines and for which a reasonable return on investment
might otherwise be expected.
The AAP paper lists the following as immunization
administration expenses:
a) Physician work;
b) Practice expenses, including staff time, medical
supplies (non-sterile gloves, exam table paper, syringe
with needle, the CDC information sheet, alcohol swabs,
bandage) and medical equipment (exam table); and,
c) Professional liability insurance.
AAP used a methodology developed by the federal Centers for
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Medicare and Medicaid Services and the administration expenses
shown above to calculate the value of immunization
administration. AAP estimates that the value of administering
an immunization to a child under age eight is $21.33 for the
first injection and $10.66 for each additional injection. AAP
estimates the value of administering an immunization orally or
intranasally to a child under age eight is $13.33, and each
additional administration is $10.28. AAP concludes that the
total costs of providing a vaccine is approximately 17-28%
above the vaccine purchase price.
3)PHYSICIAN REIMBURSEMENT . In California, some pediatricians
report that despite the existing law requiring full
reimbursement for acquisition of vaccines, they are not
receiving reimbursements that cover the full direct costs. A
2008 article in Pediatrics entitled, "Primary Care Physician
Perspectives on Reimbursement for Childhood Immunization," a
national survey of pediatricians and family practice
physicians found that about half had delayed the purchase of
specific vaccines for financial reasons and experienced a
decreased profit margin from immunizations in the past three
years. The article reports 5% of pediatricians and 21% of
family physicians said their practice had seriously considered
whether to stop providing all vaccines to privately insured
children. The article and other reports state that because of
high vaccine costs, many physicians do not keep enough
vaccines on hand to meet demand, or simply do not stock a
vaccine, such as the human Papilloma virus (HPV) vaccine,
which costs $360 for the full three dose vaccination. The
development and recommendation of new vaccines increases the
cost of fully vaccinating a child. According to a 2008 news
article, in 1995, the federal government's cost to purchase
all recommended vaccines for a child up to age 12 was $155; by
2007, the cost had risen to $927 for a boy and $1,214 for a
girl (including the HPV vaccine). The 2009 CDC Vaccine Price
List shows that private sector purchasers are charged
substantially more for vaccines than the prices CDC
negotiates. CDC prices for vaccines are often one-third less,
and in some cases less than half what manufacturers charge
private sector purchasers.
4)SUPPORT . The California Medical Association (CMA), cosponsor
of this bill, states that the purchase of vaccines is the
single most expensive part of a pediatric or family practice.
CMA further states that, due to increasing numbers of approved
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and recommended life-saving vaccines, as well as increasing
prices, pediatric vaccine purchase costs have increased
dramatically in recent years and could triple by the year
2020. CMA maintains that physicians face higher vaccine
prices than large public purchasers and usually lose money
when they provide immunizations due to under-reimbursement by
private health plans, which could discourage physicians from
purchasing adequate doses to meet the demand of their
practices. CMA argues that carriers should be providing
incentives toward preventive care, not creating obstacles.
The California Academy of Family Physicians (CAFP), co-sponsor
of this bill, states that many primary care practices are
operating on very thin financial margins which could
potentially challenge access to immunizations. CAFP maintains
that unvaccinated children can contract and spread dangerous
or life-threatening diseases. In order to protect the public
health, CAFP argues that it is imperative that continued
access is ensured to disease preventing vaccines.
5)OPPOSITION . Health Net argues in opposition that physicians'
indirect costs associated with health service and
administration are considered part of the overall negotiated
rate for providing medical services. Health Net further
argues that, historically, administration costs are factored
in the vaccine reimbursement and only the physician would know
what negotiated rate he or she would require to be made whole.
The Association of California Life & Health Insurance
Companies (ACLHIC), and Health Net object to the prohibition
on cost-sharing mechanisms, stating that a full range of
services may be provided at the same visit that a child
receives immunizations, so this bill would effectively
prohibit co-payment or coinsurance for the entire visit.
Anthem Blue Cross, ACLHIC, and Health Net also argue
substantial administrative costs would result from revising
all the products this bill would affect stating this bill will
disrupt health plans and insures' automated payment systems
exacerbating the already high administrative costs insurers
face.
6)RELATED LEGISLATION .
a) AB 1946 (Fletcher) of 2009 makes a technical and
nonsubstantive change to the same code section as this
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bill. AB 1946 is currently in the Assembly Rules
Committee.
b) AB 354 (Arambula) of 2009 removes age and grade
restrictions from vaccination requirements for children
entering schools and child care facilities, and adds the
American Academy of Family Physicians to the list of
entities whose recommendations the Department of Public
Health must consider when updating the list of required
vaccinations. AB 354 is currently in the Senate
Appropriations Committee.
c) AB 977 (Skinner) of 2009 creates a pilot project that
allows pharmacists to administer influenza and pneumonia
vaccines to persons over seven years of age, as specified.
AB 977 is currently in Senate Business, Professions &
Economic Development Committee.
7)PREVIOUS LEGISLATION .
a) AB 1201 (V. Manuel Perez) of 2009 was substantially
similar to this bill. AB 1201 would have required a health
care service plan or health insurer that provides coverage
for childhood and adolescent immunizations to reimburse a
physician or physician group the entire cost of acquiring
and administering the vaccine, and prohibits a health plan
or insurer from requiring cost sharing for immunizations.
AB 1201 died on the Assembly Appropriations Committee
Suspense File.
b) AB 142 (Richman) of 2001 would have prohibited health
plan contracts from requiring health care providers to
assume any financial risk for any specified medications and
adult vaccines. AB 142 was vetoed by Governor Gray Davis
stating that AB 142 would interfere with the private
contractual relationships between plans and providers.
c) SB 168 (Speier) Chapter 845, Statutes of 2000, requires
health plans to reimburse physicians for immunizations at
not less than the actual acquisition costs of the vaccine.
d) SB 1291 (Polanco) of 2000 would have required California
to utilize a federal option that permits states to purchase
federal discounted bulk childhood vaccines for Healthy
Families Program enrollees. SB 1291 died on the Assembly
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Appropriations Committee Suspense File.
e) AB 1053 (Thomson) of 1997 would have required plans to
cover all medically necessary vaccines and prohibited plans
from including vaccine costs within capitation rates, as
specified, and required health plans to augment provider
reimbursements for additions made to the recommended
childhood immunization schedule. AB 1053 was vetoed by
Governor Pete Wilson stating that how physicians are paid
would be best left to the contracting parties.
8)POLICY QUESTIONS AND COMMENTS . Given that a single health
care visit may include multiple services, including
immunizations, the author may wish to address the application
of the cost-sharing prohibition to visits involving
immunizations and other health services.
REGISTERED SUPPORT / OPPOSITION :
Support
California Academy of Family Physicians (cosponsor)
California Medical Association (cosponsor)
American Congress of Obstetricians and Gynecologists, District
IX (California)
California Academy of Physician Assistants
Opposition
Anthem Blue Cross
Association of California Life & Health Insurance Companies
Health Net
Molina Healthcare
Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916)
319-2097