BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 2093
A
AUTHOR: V. Manuel P?rez
B
AMENDED: May 28, 2010
HEARING DATE: June 23, 2010
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CONSULTANT:
0
Chan-Sawin
9
3
SUBJECT
Immunizations for children: reimbursement of physicians
SUMMARY
Requires a health care service plan (health 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,
as specified. Prohibits a health plan or insurer from
requiring cost-sharing for immunizations for enrollees or
insureds.
CHANGES TO EXISTING LAW
Existing law:
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).
Requires every health plan or insurer that covers hospital,
medical, or surgical expenses, on a group basis, to provide
certain preventive health care benefits for children,
including immunizations.
Prohibits a risk-based contract between a physician or
physician group, and a DMHC-regulated health plan, from
Continued---
STAFF ANALYSIS OF ASSEMBLY BILL 2093 (V. Manuel P?rez)Page
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requiring the physician, or physician group, to assume
financial risk for the cost of acquiring required
immunizations for children, including immunizations that
are not part of the contract.
Specifies the reimbursement rate for immunizations that are
not part of the current contract between a health plan and
a physician or physician group.
Requires a health plan to provide reimbursements for
immunizations within 45 days of receiving documentation
that the immunizations were administered.
Specifies that a health plan shall not include acquisition
costs in the capitation rate of a physician who is
individually capitated.
This bill:
Prohibits any contract issued, amended, delivered, or
renewed on or after January 1, 2011 between a physician or
physician group, and a DMHC-regulated health plan or
CDI-regulated insurer, from requiring the physician or
physician group to assume financial risk for the cost of
acquiring required immunizations for children, regardless
of whether those immunizations are part of the contract.
Requires a health plan or insurer that covers childhood and
adolescent immunizations to reimburse a physician, or
physician group, in an amount no less than the "actual cost
of acquiring the vaccine" plus the "cost of administration
of the vaccine." Provides an exemption to this requirement
for contracts entered into between health plan or insurers
and the Board of Administration of the Public Employees'
Retirement System (CalPERS), and for the Medi-Cal and
Healthy Families programs.
Defines the "actual cost of acquiring the vaccine" as the
vaccine's private sector cost per dose, as published on the
most current Pediatric Vaccine Price List published by the
federal Centers for Disease Control and Prevention (CDC),
plus reasonable costs associated with shipping and
handling.
Defines the "cost of administration of the vaccine" to be
an amount no less than that specified in the most current
STAFF ANALYSIS OF ASSEMBLY BILL 2093 (V. Manuel P?rez)Page
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annual Medicare physician fee schedule, and includes
physician time, clinical staff time, office staff time, and
other practice expenses associated with providing the
immunization, such a storage, insurance, supplies, and
medical equipment.
Deletes the current requirement for a health plan to
reimburse a physician, or physician group, for
immunizations that are not part of a current contract at
the lowest of the following three rates: 1) the physician's
actual acquisition cost; 2) the "average wholesale price"
as published in the Drug Topics Red Book; or, 3) the lowest
acquisition cost through sources made available to the
physician by the health plan.
Requires a health plan or insurer to reimburse a physician,
or physician group, 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
(AAP), and the American Academy of Family Physicians,
pursuant to the requirements of this bill. Provides an
exemption to this requirement for the Medi-Cal and Healthy
Families programs.
Specifies that a health plan or insurer shall not include
acquisition or administration costs in the capitation rate
of a physician who is individually capitated.
Prohibits a health plan or insurer from imposing a
deductible, copayment, coinsurance, or other cost-sharing
mechanism for the administration of, or procedures related
to the administration of, a childhood or adolescent
immunization. Specifies that cost-sharing may be imposed
for procedures, services, or treatments unrelated to the
immunization. Provides an exemption to these requirements
for the Medi-Cal and Healthy Families programs.
Prohibits a health plan or insurer from imposing a dollar
limit for the administration of childhood and adolescent
immunizations.
Makes various legislative findings and declarations.
STAFF ANALYSIS OF ASSEMBLY BILL 2093 (V. Manuel P?rez)Page
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FISCAL IMPACT
Provisions of the bill that would have resulted in public
sector costs were amended out of the bill in the most
recent version.
BACKGROUND AND DISCUSSION
According to the author, California law already requires
health plans and insurers to provide or offer coverage for
recommended immunizations. However, health plans and
insurers are notorious for not reimbursing physicians for
the entire cost of providing vaccines, which forces
physicians to absorb these costs. In addition to the
actual purchase price of the vaccine, there are a myriad of
other administration costs associated with giving
immunizations, which are often under-reimbursed. The
author points out that many primary care physicians are at
a breaking point and, as costlier new vaccines are approved
and recommended, this problem will only get worse.
Under reimbursing physicians for the costs of vaccines puts
public health at risk. If children are unable to receive
vaccines, they are put at risk of contracting and spreading
preventable diseases. The author also points out that
decreasing access also increases costs to the state. When
physicians can no longer absorb these costs, they are often
forced to discontinue or delay offering vaccinations, or
require parents to pay up front. Privately insured
children who are not able to access vaccines from their
private physicians often go to state-supported public
clinics. This trend shifts the burden of vaccine financing
to families or to public programs.
Furthermore, insured children and their families often face
financial barriers to immunization, such as deductibles,
copayments and other out-of-pocket expenses. Health plans
and health insurance companies should be looking for ways
to incentivize immunizations, not create financial
obstacles to them. In order to effectively protect the
public health, the author believes it is imperative to
ensure continued access to disease-preventing vaccines to
achieve maximum immunization for children by stabilizing
the state's vaccine finance system.
STAFF ANALYSIS OF ASSEMBLY BILL 2093 (V. Manuel P?rez)Page
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Importance of pediatric immunizations
Pediatric immunizations have proven to be one of the most
successful, safe, and cost-effective public health
interventions of the 20th century. According to the CDC,
immunizing individual children helps to protect public
health, including those people who are not immunized. This
includes those who are too young to be vaccinated (e.g.,
children less than a year old cannot receive the measles
vaccine, but can be infected by the measles virus), those
who cannot be vaccinated for medical reasons (e.g.,
children with leukemia), and those who cannot
physiologically respond to vaccination. Immunization also
slows down or stops disease outbreaks. Annually, millions
of childhood deaths are prevented by vaccinations, and
vaccine-preventable disease levels are at or near record
lows.
Vaccines are also among the most cost-effective components
of preventive medical care. In 2003, the CDC estimated a
direct cost savings of $6.30 for every dollar spent on
vaccinations. If societal costs are factored in, the
savings increase to $18.40 per dollar spent. A 2005
national study showed that the seven childhood immunization
recommended by the federal Advisory Committee on
Immunization Practices (ACIP) saved $9.9 billion in direct
medical costs and $43.3 billion in societal costs annually.
Other studies have shown significant savings from the use
of varicella (chickenpox), influenza, pneumonia, pertussis
(whooping cough) and meningitis vaccines.
2009 National Vaccine Advisory Committee Report
The National Vaccine Advisory Committee (NVAC) was
established in 1987 to advise and make recommendations to
the Director of the National Vaccine Program, housed within
the U.S. Department of Health & Human Services. In 2008,
the NVAC released a white paper entitled "Assuring
Vaccination of Children and Adolescents without Financial
Barriers: Recommendations from the National Vaccine
Advisory Committee" that contained a detailed overview of
the issues the nation face when addressing the financing of
vaccines, along with 24 recommendations.
Among its findings, the report noted that the current
system of vaccine financing and delivery may not assure
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access for all children and adolescents without financial
barriers. Vaccines recommended after 2004 are
substantially more expensive than vaccines recommended
prior to 2000, and thus present a greater financial burden
to patients or providers if not reimbursed by insurance.
Moreover, state and federal program funds have failed to
keep pace with the number of newly recommended vaccines,
leading to a two-tiered vaccination program in some states,
which could result in many underinsured children and
adolescents not receiving these vaccines. In some cases,
privately insured children may be vaccinated in the public
sector with publicly purchased vaccines. Among its
recommendations, the NVAC report proposed expanding the
national Vaccines for Children program to include payment
for vaccine administration.
Cost of pediatric vaccinations
According to a 2003 Institute of Medicine report, access to
immunizations is complicated by an expanding array of
approved vaccines, higher costs of recent additions to the
vaccine schedule, and increasing fragmentation of public
and private insurance coverage for immunization.
Currently, public funds pay for more than half of all
childhood vaccine purchases in the United States.
Government purchasing policies have sought to limit
expenditures and decrease the cost of vaccines. Vaccine
manufacturers face declining financial incentives to
develop and produce vaccines, and the number of producers
of recommended vaccines for the American market has
declined from more than 25 companies 30 years ago, to only
5 today.
Due to the increasing numbers of approved and recommended
vaccines that have been added to the recommended schedule
and increasing prices, the cost of the vaccines has grown
significantly over the past decade. According to a 2008
CDC-commissioned report, the number of vaccines recommended
in the routine childhood and adolescent immunization
schedule has grown from 7 vaccines in 1984, to 16 vaccines
in 2008. The report further points out that the cost to
fully immunize one child in the public sector has risen by
nearly 500 percent, from $282.19 in 2000 to $1,407.06 in
2008. This is compared to $45 for the full regimen in
1985.
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Cost for vaccines has also grown for those who are
privately insured or receive insurance through their
employer. As a result, private insurance coverage of
vaccines has eroded, weakening the vaccine finance
infrastructure and shifting the burden to the public sector
and private providers.
Immunization related expenses
In 2007, the American Academy of Pediatrics (AAP) published
a paper on provider vaccination administration costs, which
detailed vaccine-related expenses and
vaccine-administration costs. The paper lists the
following vaccine-related expenses:
1. Purchase price or acquisition cost of vaccine.
2. Personnel costs (clinical and administrative staff)
for ordering and inventory, including staff time to
monitor vaccine stock, place orders, negotiate prices,
delivery and payment terms, and monitor storage
procedures (locks, alarms, temperature controls,
etc.).
3. Storage equipment costs, including refrigerators
and freezes, locks, alarm systems, temperature
monitoring devices, and generators for continued
electrical supply, as vaccines must be stored at a
specific temperature.
4. Insurance against loss of vaccine.
5. Wastage and non-payment, usually estimated at a
minimum of five percent for each office. This
includes drawing up the vaccine and having the
patient/family reconsider, non-payment, and loss due
to leakage, dropped vials, and vaccines rendered
unusable.
6. Lost opportunity costs for the money invested in
vaccines, and for which a reasonable return on
investment might otherwise be expected.
The AAP paper additionally lists the following as
immunization administration expenses:
STAFF ANALYSIS OF ASSEMBLY BILL 2093 (V. Manuel P?rez)Page
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1. Physician work, including time required to perform
the service, technical skill and physical effort, and
mental effort and judgment.
2. 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).
3. Professional liability insurance
The AAP report concludes that the total costs of providing
a vaccine is approximately 17 to 28 percent above the
direct vaccine purchase price. Another recent study
published by AAP, which surveyed nearly 600 pediatricians
and family physicians about their vaccine financing
attitudes and behaviors, found that 49 percent of
respondents had delayed purchasing specific vaccines for
financial reasons in the last 3 years, and 53 percent had
experienced a decreased profit margin from immunizations in
that same timeframe. In addition, 11 percent of physicians
indicated that in the past year, they had seriously
considered not giving vaccines to privately insured
children anymore.
Arguments in support
The California Medical Association (CMA), a co-sponsor of
the bill, states that the purchase of vaccines is the
single most expensive part of a pediatric or family
practice. 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 health
plan or insurers should be providing incentives toward
preventive care, not creating obstacles.
The American Academy of Pediatrics (AAP), another
co-sponsor, asserts that, due to increasing numbers of
approved and recommended life-saving vaccines and increasing
prices, pediatric vaccine purchase costs have increased
dramatically and could triple by the year 2020. When
providers are not adequately reimbursed to cover the direct
STAFF ANALYSIS OF ASSEMBLY BILL 2093 (V. Manuel P?rez)Page
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and indirect costs of providing immunizations, the viability
of their practice is threatened, which jeopardizes access.
The California Academy of Family Physicians (CAFP), also a
co-sponsor, 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.
The California Association of Physician Groups points out
that, during the recent H1N1 flu pandemic, health plans
touted their commitment to removing "all barriers" from
patients receiving access to the vaccine. However, CAPG
members learned that several health plans refused to
reimburse administrative costs.
The American Congress of Obstetricians and Gynecologists
states that, by providing reimbursement for the Human
Papillomavirus (HPV) vaccine, physicians can protect against
the main types of HPV, which are linked to 70 percent of
cervical cancers and 90 percent of genital warts. The $4
billion annual cost to treat precancerous and abnormal
cervical cellular changes will be notably reduced with
increasing rates of HPV vaccination.
Children Now, a non-partisan research and advocacy
organization, supports this bill, stating that infant and
childhood immunizations are key to the health of our
state's children. Children without access to these vital
services are not fully safe from preventable infectious
diseases, and it is critical that remaining barriers, such
as out-of-pocket costs and under-reimbursement of
physicians, are removed so that all California children
have the opportunity to grow up healthy and strong.
Argument in opposition
The California Association of Health Plans opposes this
bill on the grounds that health plans do not typically pay
for physician's indirect costs, such as of staffing,
overhead, or medical equipment. CAPH argues that these are
considered expenses that are part of the overall negotiated
rate for providing medical services, and generally factored
STAFF ANALYSIS OF ASSEMBLY BILL 2093 (V. Manuel P?rez)Page
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into provider reimbursements through capitated contracts.
This bill would set a precedent by moving the reimbursement
of the administration of vaccines out of provider rate
negotiations and into a different, legislatively defined
standard.
The Association of California Life & Health Insurance
Companies (ACLHIC) raise concerns about 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 copayment or coinsurance for the entire visit.
Health Net points out that while pediatric vaccines in
Medi-Cal are funded 100 percent by the federal government,
the state only pays $9 (50 percent General Fund) in
administration fee per vaccine. In comparison, Health Net
commercial contracts pay, on average, more than double that
amount.
Anthem Blue Cross, ACLHIC, and Health Net also argue that
substantial administrative costs would result from revising
all the products this bill would affect, as this bill will
disrupt health plans and insures' automated payment systems
and further exacerbate the already high administrative
costs insurers face.
Molina Healthcare of California opposes the bill, stating
that, by imposing the Medicare fee schedule as the
benchmark for reimbursement of vaccine administration
services (even if the physician's actual costs are lower,
or the physician is willing to take a lower administration
fee), this bill is inflationary, and discourages price
negotiation and competition.
Related bills
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. Set for hearing in the Senate Appropriations
Committee on June 28, 2010.
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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.
Set for hearing in the Senate Business, Professions &
Economic Development Committee on June 21, 2010.
AB 1201 (V. Manuel Perez) of 2009 was substantially similar
to this bill. Failed passage in Assembly Appropriations
Committee.
Prior legislation
AB 2420 (Richman), Chapter 798, Statutes of 2002, prohibits
a health plan contract from requiring, or allowing, a
health care provider to assume or be at any financial risk
for specified medications, including specifically adult
vaccines. Permits a health care provider to assume
financial risk after making the request in writing at the
time of negotiating an initial contract or renewing a
contract with a health plan.
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. Vetoed by the Governor.
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.
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. Failed passage in the Senate
Appropriations Committee.
AB 1053 (Thomson) of 1997 would have required plans to
cover all medically necessary vaccines, 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. Vetoed by the Governor.
PRIOR ACTIONS
Assembly Health: 15-0
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Assembly Appropriations: 13-4
Assembly Floor 73-1
COMMENTS
1.Price benchmark for vaccines does not reflect discounts
available through bulk purchasing. This bill deletes
current law, which requires health plans reimbursement to
physicians the actual cost of the vaccine and, instead,
specifies the private sector cost per dose (the price to
purchase the vaccine in the private sector, as reported by
the pharmaceutical industry), as published by the CDC. By
establishing the reimbursement cost of vaccines at this
rate, plus the cost of shipping and handling, this bill
does not reflect cost-savings from bulk purchasing of
vaccines that large provider groups and medical societies
may have the ability to negotiate. The author may wish to
consider the following amendment to allow the actual
purchase price of the vaccine, if lower than the CDC
private sector cost per dose, to be used in defining the
"actual cost of acquiring the vaccine":
(a) On page 5, line 4, after "Prevention,"
insert:
or the actual purchase price of the vaccine,
whichever is lowest,
(b) On page 7, line 10, after "Prevention,"
insert:
or the actual purchase price of the vaccine,
whichever is lowest,
1.What types of costs should a health plan or insurer be
required to cover, related to the administration of
immunizations? Besides the purchase price of the vaccine
and the cost of the provider's time, the author and
sponsors contend that health plans and insurers should also
reimburse the physician for the "cost of dispensing the
vaccine, including shipping, storage/inventory,
administrative and disposal costs." This may include such
costs as staff time to manage and inventory vaccines,
special refrigeration units to ensure the vaccines are
stored at a specific, stable temperature, etc. However,
STAFF ANALYSIS OF ASSEMBLY BILL 2093 (V. Manuel P?rez)Page
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many of these costs are traditionally factored into the
overhead cost of a medical office. The sponsors argue that
the administration of vaccines is a very unique procedure
that incurs higher than normal overhead costs. In
addition, doctors also spend significant time talking with
parents about vaccine risks and benefits, which are
unreimbursed additional costs.
2.Is the exemption for CalPERS and Healthy Families
appropriate? This bill is intended to address access
problems that privately insured children may face if
physicians start dropping pediatric immunization due to
cost issues. However, similar problems may face Healthy
Families providers, and providers seeing patients covered
by plans and policies contracted with CalPERS (children in
the Medi-Cal program are supported by the federally funded
Vaccines for Children Program, which provides an additional
administrative reimbursement). It is not unreasonable to
believe that physicians providing care for children covered
by Healthy Families or CalPERS may face similar access
problems as cited by the author and sponsor for privately
insured children.
3.Suggested technical amendments:
(a) Section 1367.36 (c) is repetitive and may be
consolidated into subsection (a):
i. On page 4, delete lines 25-33 and
replace with:
1367.36. (a) A contract between a health care
service plan and a physician or physician
group that is issued, amended, delivered, or
renewed in this state on or after January 1,
2011 shall not include a provision that
requires a physician or a physician group to
assume financial risk for the acquisition and
administration of required immunizations for
children 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,
STAFF ANALYSIS OF ASSEMBLY BILL 2093 (V. Manuel P?rez)Page
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and the American Academy of Family Physicians,
as a condition of accepting the contract. A
physician or physician group shall not be
required to assume financial risk for
immunizations, regardless of whether those
immunizations are part of the current
contract.
ii. On page 5, delete lines 13-23
(a) The author may wish to take amendments to
address an apparent drafting conflict in Section
1367.36 (e) and (f).
POSITIONS
Support: American Academy of Pediatrics (co-sponsor)
California Academy of Family Physicians
(co-sponsor)
California Association of Physician Groups
(co-sponsor)
California Medical Association
(co-sponsor)
Association of Northern California Oncologists
American College of Emergency Physicians, California
Chapter
American Congress of Obstetricians and
Gynecologists, District IX
California
California Academy of Physician Assistants
Children Now
Osteopathic Physicians and Surgeons of California
Stanford School of Medicine
Oppose: Anthem Blue Cross
Association of California Life & Health Insurance
Companies
California Association of Health Plans
Health Net
Molina Healthcare of California
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