BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2093|
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THIRD READING
Bill No: AB 2093
Author: V. Manuel Perez (D), et al
Amended: 8/20/10 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 7-1, 6/30/10
AYES: Alquist, Strickland, Cox, Leno, Negrete McLeod,
Pavley, Romero
NOES: Aanestad
NO VOTE RECORDED: Cedillo
SENATE APPROPRIATIONS COMMITTEE : 7-1, 8/2/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Ashburn
NO VOTE RECORDED: Emmerson, Walters, Wyland
ASSEMBLY FLOOR : 73-1, 6/2/10 - See last page for vote
SUBJECT : Immunizations for children: reimbursement of
physicians
SOURCE : American Academy of Pediatrics
California Academy of Family Physicians
California Association of Physician Groups
California Medical Association
DIGEST : This bill prohibits any contract issued,
amended, delivered, or renewed on or after January 1, 2011
between a physician or physician group, and a Department of
Managed Health Care-regulated health plan or Department of
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Insurance-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.
Senate Floor Amendments of 8/20/10 allow a physician group,
with a certain type of contract with a health care service
plan (health plan), as specified, to assume financial risk
for administering vaccines, remove the provisions
prohibiting a health plan or insurer from imposing
cost-sharing or dollar limits for immunizations, and make
other technical and clarifying amendments.
ANALYSIS :
Existing law:
1. Provides for the regulation of health plans by the
Department of Managed Health Care (DMHC) and health
insurers by the Department of Insurance (CDI).
2. 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.
3. Prohibits a risk-based contract between a physician or
physician group, and a DMHC-regulated health plan, from
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.
4. Specifies the reimbursement rate for immunizations that
are not part of the current contract between a health
plan and a physician or physician group.
5. Requires a health plan to provide reimbursements for
immunizations within 45 days of receiving documentation
that the immunizations were administered.
6. Specifies that a health plan shall not include
acquisition costs in the capitation rate of a physician
who is individually capitated.
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This bill:
1. 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.
2. Defines the "cost of administration of the vaccine" to
be an amount no less than that specified in the most
current 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.
3. 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: (a) the
physician's actual acquisition cost, (b) the "average
wholesale price" as published in the Drug Topics Red
Book, or (c) the lowest acquisition cost through sources
made available to the physician by the health plan.
4. 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, 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.
5. Provides an exemption to these requirements for the
Medi-Cal, Public Employees' Retirement System, and
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Healthy Families programs.
6. Makes various legislative findings and declarations.
Background
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 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 (NVAC) Report .
The NVAC was established in 1987 to advise and make
recommendations to the Director of the National Vaccine
Program, housed within the United States Department of
Health and 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
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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
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
DMHC filings modification $60 ongoing minor and
absorbable Special*
* Managed Care Fund
SUPPORT : (Verified 8/23/10)
American Academy of Pediatrics (co-source)
California Academy of Family Physicians (co-source)
California Association of Physician Groups (co-source)
California Medical Association (co-source)
American College of Emergency Physicians, California
Chapter
American Congress of Obstetricians and Gynecologists,
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District IX California
Association of Northern California Oncologists
California Academy of Physician Assistants
Children Now
Osteopathic Physicians and Surgeons of California
Stanford School of Medicine
OPPOSITION : (Verified 8/23/10)
Anthem Blue Cross
Association of California Life and Health Insurance
Companies
California Association of Health Plans
Health Net
Molina Healthcare of California
ARGUMENTS IN SUPPORT : [Based on prior (August 9, 2010)
version of the bill] 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, 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
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
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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 (CAPG)
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.
ARGUMENTS IN OPPOSITION : [Based on prior (August 9,
2010) version of the bill] The California Association of
Health Plans (CAHP) 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.
CAHP argues that these are considered expenses that are
part of the overall negotiated rate for providing medical
services, and generally factored into provider
reimbursements through capitated contracts. This bill sets
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 and 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 effectively prohibits
copayment or coinsurance for the entire visit.
Health Net points out that while pediatric vaccines in
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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.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall,
Bill Berryhill, Blakeslee, Block, Blumenfield, Bradford,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Logue, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, Nestande, Niello,
Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, John
A. Perez
NOES: Fuller
NO VOTE RECORDED: Tom Berryhill, Lieu, Miller, Norby,
Audra Strickland, Vacancy
CTW:mw 8/23/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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