BILL ANALYSIS Ó
AB 2064
Page 1
Date of Hearing: April 24, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 2064 (V. Manuel Pérez) - As Introduced: February 23, 2012
SUBJECT : Immunizations for children: reimbursement of
physicians.
SUMMARY : Requires health care service plans (health plans)
regulated by the Department of Managed Health Care (DMHC), and
health insurers, regulated by the California Department of
Insurance (CDI) that provide coverage for childhood and
adolescent immunizations, as specified, to reimburse physicians
or physicians groups (PG) not less than the actual cost of
acquiring the vaccine and the cost of administration of the
vaccine, as specified. Prohibits a health plan or health
insurer, as specified, that provides coverage for childhood and
adolescent immunizations from imposing a deductible, copayment,
coinsurance, or other cost-sharing mechanism or containing a
dollar limit provision for the administration of these vaccines.
Specifically, this bill :
1)Prohibits all contracts, instead of only risk-based contracts,
between a health plan and a physician or PG from including a
provision that requires a physician or PG to assume financial
risks for acquisition of children's immunization as a
condition of accepting the contract. Prohibits a physician or
PG from being required to assume financial risk for
immunizations, regardless of whether those immunizations are
part of the current contract.
2)Requires a health plan and health insurer that provides
coverage for childhood and adolescent immunizations, as
specified, to reimburse a physician or PG in an amount not
less than the actual cost of acquiring the vaccine plus the
cost of administration of the vaccine. States that for
purposes of this reimbursement, both of the following apply:
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 Centers
for Disease Control and Prevention (CDC), plus reasonable
costs associated with shipping and handling; and,
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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 as storage, insurance,
supplies, and medical equipment, shall be an amount not
less than that specified in the most current annual
Medicare physician fee schedule published pursuant to
federal code.
3)States that beginning January 1, 2013, with respect to
immunizations for children that are not part of the current
contract between a health plan and a physician or PG,
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 on Immunization Practices, the American Academy of
Pediatrics (AAP), and the American Academy of Family
Physicians, the health care service plan shall reimburse a
physician or PG in an amount not less than specified in 2)
above.
4)Deletes existing provisions that specify that for
immunizations that are not part of the current contract
between a health plan and a physician or PG, the plan shall
reimburse a physician or physician group the actual
acquisition cost, the average wholesale price, or the lowest
acquisition costs, as specified, until the contract is
renegotiated.
5)Prohibits a health plan or health insurer from including the
administration costs of required immunizations for children in
the capitation rate of a physician who is individually
capitated.
6)Prohibits a health plan or health insurance policy issued,
amended, or renewed on or after January 1, 2013, that provides
coverage for childhood and adolescent immunizations, as
specified, from doing either of the following:
a) Imposing a deductible, copayment, coinsurance, or other
cost-sharing mechanism for the administration of a
childhood or adolescent immunization or for procedures
related to that administration. States that this does not
prohibit charging a deductible, copayment, coinsurance, or
other cost-sharing mechanism for procedures, services, or
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treatment unrelated to an immunization; or,
b) Containing a dollar limit provision for the
administration of childhood and adolescent immunizations or
include the cost of those immunizations in a dollar limit
provision of the contract.
7)States that 2) above does not apply to service provided to a
health plan contract or health insurance policy entered into
with the Board of Administration of the Public Employees'
Retirement System (CalPERS), as specified.
8)Finds and declares the importance of pediatric immunizations
and states legislative intent on the need to ensure that
physicians are fully reimbursed for the costs to acquire and
administer recommended vaccines, as specified.
9)Recognizes the importance of the California Immunization
Registry in maximizing immunization rates and encourages
physicians to participate in the registry.
EXISTING LAW :
1)Provides for the regulation of health plans by DMHC and health
insurers by 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,
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.
3)Requires every health plan or health insurer that covers
hospital, medical, or surgical expenses on a group basis to
provide benefits for the comprehensive preventive care of
children 16 years of age or younger, as specified. Requires
every health plan or health insurer that covers hospital,
medical, or surgical expenses on a group basis to offer
benefits for the comprehensive preventive care of children 17
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and 18 years of age.
4)Requires that comprehensive preventive care for children for
purposes of 3) above include periodic health evaluations,
immunizations, and laboratory services in connection with
periodic health evaluations, and screening for blood lead
levels in children at risk for lead poisoning, as specified.
5)Prohibits a risk-based contract between a physician or PG and
a health plan from requiring a physician or PG 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.
6)Requires a health plan to reimburse a physician for
immunizations within 45 days of receiving from the physician
documentation that the immunizations were administered.
7)Establishes the California Health Benefit Exchange pursuant to
the federal Patient Protection and Affordable Care Act (ACA)
which authorizes states to establish health benefit exchanges
for individuals and small business to compare health insurance
products and purchase policies from among four categories:
Bronze, Silver, Gold, and Platinum, and for some purchasers,
to obtain subsidies and tax credits.
8)Provides that every contract between a health plan and a
provider of health care services shall be in writing, and
shall set forth that in the event the plan fails to pay for
health care services as set forth in the subscriber contract,
the subscriber or enrollee shall not be liable to the provider
for any sums owed by the plan.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The California Medical Association
(CMA) is the sponsor of this bill. The author states that
when providers are not adequately reimbursed for their actual
immunization costs, they face serious financial difficulties
which threaten the viability of their practices. Some
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physicians simply can no longer absorb these costs and may be
forced to discontinue or delay offering the most costly
vaccinations or must require parents to pay up front. This
trend could shift the burden of vaccine financing to local
public health clinics or other public programs. CMA argues
that with limited public resources to absorb this burden,
immunization rates could drop.
2)BACKGROUND .
a) Immunization-related expenses . In 2011, AAP published
a paper on pricing vaccines and immunization
administration. The paper lists the following as
vaccine-related expenses:
i) Purchase price or acquisition cost of vaccine;
ii) 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;
iii) Storage costs, including refrigerators and freezers,
locks, alarm systems, temperature monitoring devices, and
generators for continued electrical supply;
iv) Insurance against loss of vaccine;
v) Wastage and non-payment; and,
vi) Lost opportunity costs for the money invested in
vaccines and for which a reasonable return on investment
might otherwise be expected.
The AAP paper indicates that the appropriate payment must
be free of any discounts and based on a transparent and
verifiable data source, such as the CDC vaccine price list
for the private sector, and cover the vaccine purchase
price and all related expenses as indicated above, and a
return on the investment for the dollars invested in
vaccine inventory.
a) Physician Underpayment . In California, some
pediatricians report that despite 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 on a national survey
of pediatricians and family practice physicians found that
about half had delayed the purchase of specific vaccines
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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.
b) California Health Benefits Review Program (CHBRP) .
CHBRP was created in response to AB 1996 (Thomson), Chapter
795, Statutes of 2002, which requests the University of
California to assess legislation proposing a mandated
benefit or service, and prepare a written analysis with
relevant data on the public health, medical, and economic
impact of proposed health plan and health insurance benefit
mandate legislation. The provisions of this bill which are
subject to the CHBRP analysis are the provisions specified
in 6) in the Summary above which prohibits a health plan or
health insurer from i) imposing a deductible, copayment,
coinsurance, or other cost-sharing mechanism; or, ii)
containing a dollar limit provision for the administration
of childhood and adolescent immunizations.
i) Medical Effectiveness . CHBRP states that it is not
feasible for CHBRP to review the large volume of
literature on the medical effectiveness of the
administration and efficacy of each of the Advisory
Committee on Immunization Practices (ACIP) recommended
vaccines and their immunization-related procedures
within the 60-day time frame allotted for this analysis.
Therefore, the medical effectiveness review utilized
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the information compiled by ACIP on immunization-related
procedures and vaccine efficacy. CHBRP indicates that
due to the rigor and thoroughness of the ACIP systematic
review on the efficacy and safety of vaccines, it
concluded for purposes of this report, that any vaccine
that has been recommended as part of the routine
immunization schedule has clear and convincing evidence
that it is effective in preventing disease. The 12
vaccines currently recommended by ACIP for routine use
in children and adolescents (aged 0-18) are: diphtheria,
tentanus, acellular pertussis, haemophilus influenza
type b, hepatitis A, hepatitis B, human papillomavirus,
influenza, measles, mumps, rubella, meningococcal
conjugate, pneumococcal conjugate, inactivated
poliovirus, rotavirus, and varicella.
ii) Benefits Coverage, Utilization, and Cost Impacts .
Benefits Coverage .
Of the population with health insurance
subject to the mandate, nearly all (98.3%) enrollees
have mandate-compliant benefit coverage for
immunization-related procedures with no cost sharing.
The remaining 1.7% of enrollees (381,000) have
benefit coverage not compliant with the mandate. If
this bill were enacted, 100% of enrollees would have
compliant benefit coverage for immunization-related
procedures.
DMHC-regulated Medi-Cal managed care plans
already provide mandate-compliant coverage for
immunization-related procedures with no cost sharing
for enrollees. Therefore, CHBRP estimates that this
bill would have no impact on this subpopulation.
DMHC-regulated CalPERS HMOs already provide
mandate-compliant coverage for immunization-related
procedures with no cost sharing for enrollees.
Therefore, CHBRP estimates that this bill would have
no impact on this subpopulation.
DMHC-regulated the Managed Risk Medical
Insurance Board plans (which enroll beneficiaries of
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the Healthy Families program, the Aid to Infants and
Mothers program, and the Major Risk Medical
Insurance Program) already provide mandate-compliant
coverage for immunization-related procedures with no
cost sharing. Therefore, CHBRP estimates that this
bill would have no impact on this subpopulation.
CHBRP estimates no measurable impact of the
mandate on the number of uninsured due to the
estimated premium increases of less than 1%.
Utilization Impacts
CHBRP estimates that there will be some increase in
utilization due to the change in cost sharing, but that
the total increase in the number of immunizations will
be less than 100 for all age groups. However,
approximately 89,000 immunization-related
procedures would no longer be subject to cost-sharing.
Cost Impacts
Increases in per member per month (PMPM)
premiums due to the prohibition on cost sharing for
immunization-related procedures vary by regulator.
There would be no impact on DMHC-regulated plans if
this bill were enacted, but there would be some
impact for CDI regulated policies.
Increases as measured by percentage changes
in PMPM premiums among CDI-regulated policies are
estimated to range from a low of 0.003% (for the
large-group market segment) to a high of 0.0101% (for
the individual policies market segment). Increases
as measured by PMPM premiums are estimated to be
$0.02 for CDI-regulated policies.
Total net health expenditures are projected
to increase by $155,000 (0.0001%). This is due to a
$648,000 increase in health insurance premiums
partially offset by reductions in enrollee
out-of-pocket expenditures for covered benefits
($493,000).
i) Public Health Impact . CHBRP estimates that the
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health insurance benefit mandate in this bill would
result in fewer than 100 additional immunizations, which
would have no impact on California's rates of
immunizations and vaccine-preventable diseases and their
related mortality. Evidence shows that decreased cost
sharing is associated with increased immunization rates,
thus CHBRP projects that this bill would remove the
cost-sharing barrier. CHBRP estimates that
approximately 89,000 immunization-related procedures
would be no longer subject to cost-sharing post mandate.
This would result in a savings of about $493,000 in
out-of-pocket expenses (coinsurance and deductibles) for
those enrollees with newly compliant coverage who use
immunizations. Those children whose parents abstained
from or delayed immunization due to cost-sharing
requirements for immunization-related procedures may
benefit from this measure, as this cost barrier to
completing recommended immunizations in a timely manner
would be eliminated. CHBRP estimates that beyond 12
months post mandate, this measure would have no
statistically significant impact on California's rates
of immunizations and vaccine-preventable diseases and
mortality due to an estimated increase of less than 100
additional immunizations administered; however, those
persons who abstained from or delayed immunization due
to cost-sharing requirements for immunization-related
procedures may benefit by helping them complete their
recommended immunization schedule.
a) Federal Essential Health Benefits . The ACA requires
qualified health plans to cover specified categories of
federal essential health benefits (EHBs) by 2014. The ACA
defines EHS as including: i) ambulatory patient services;
ii) emergency services; iii) hospitalization; iv)
maternity and newborn care; v) mental health and substance
use disorder services, including behavioral health
treatment; vi) prescription drugs; vii) rehabilitative and
habilitative services and devices; vii) laboratory
services; ix) preventive and wellness services and chronic
disease management; and, x) pediatric services, including
oral and vision care. The Secretary of the Health and
Human Services Agency is charged with defining these
categories through regulation and ensuring that the EHB
floor "is equal to the scope of benefits provided under a
typical employer plan."
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1)SUPPORT . The Health Officers Association of California
states that reimbursement rates from insurance companies and
from Medi-Cal are so low that medical providers are less and
less able to bear the costs of purchasing, storing, and
educating patients regarding vaccines, and administering
vaccines in their offices. As a result, even patients with
insurance are increasingly seeking vaccinations from local
health departments. CMA states that as small businesses,
physicians face severe financial strain when they continue to
absorb the unreimbursed costs associated with vaccine
administration. The purchase of vaccines is the single most
expensive part of a pediatric or family practice. 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.
AAP states that if inadequate reimbursement continues, many
physician practices will be unable to bear the cost of
vaccines, and children will lose access to potentially
life-saving vaccines. When providers are unable to stock and
administer vaccines, many of them will need to ask families
to come back for another visit when the vaccine is available,
or choose to refer patients to another source, which will
result in missed vaccines. This may also result in shifting
privately insured patients onto the state public health
system, increasing costs to the State. Many of the other
sponsors stress the importance of making vaccines available
to physician offices at sustainable rates to ensure access to
disease-preventing vaccines.
2)OPPOSITION . The California Association of Health Plans and
Health Net state that although the stated goal of this bill
is to require health plans to pay for the indirect costs
associated with a health service, health plans do not
typically pay directly for the cost of physician staffing,
overhead or medical equipment. These are considered expenses
that are part of the overall negotiated rate for providing
medical services. The opposition states that this bill moves
the reimbursement for the administration of a vaccine out of
negotiated provider rates and into a standard defined by the
Legislature. Overall, this bill would increase costs for
health plans operating in the commercial market and State
public programs.
3)RELATED LEGISLATION . AB 2009 (Galgiani), pending in Assembly
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Appropriations Committee, authorizes the Department of Public
Health to establish vaccination priority, as specified. AB
2109 (Pan), pending in Assembly Appropriations Committee,
establishes requirements for exemptions from required
vaccinations prior to entry to schools, as specified.
4)PREVIOUS LEGISLATION .
a) AB 2093 (V. Manuel Pérez) of 2010, would have
prohibited 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.
AB 2093 was vetoed by Governor Schwarzenegger who
indicated it "is an inappropriate effort to carve various
elements out of negotiated provider contracts and set
those reimbursement rates in statute. Existing law
already requires health plans to fully cover certain
preventive benefits, including immunizations. Reimbursing
providers for their "administrative costs" at a Medicare
rate completely undermines the purpose of capitation and
provider contracts, especially if a provider's actual
costs are below the Medicare fee."
b) AB 1201 (V. Manuel Pérez) of 2009, is substantially
similar to the provisions of this bill, and would have
required health plans and health insurers to reimburse
physicians for childhood vaccinations, according to
specified conditions. AB 1201 died in Assembly
Appropriations Committee.
5)AUTHOR'S AMENDMENTS . The author indicated that it will
delete the provisions of this bill prohibiting health plans
or health insurers from: a) imposing a deductible, copayment,
coinsurance, or other cost-sharing mechanism; or, b)
containing a dollar limit provision for the administration of
childhood and adolescent immunizations. These provisions are
also the subject of the CHBRP analysis.
REGISTERED SUPPORT / OPPOSITION :
Support
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American Academy of Pediatrics (cosponsor)
California Academy of Family Physicians (cosponsor)
California Medical Association (cosponsor)
Health Officers Association of California (cosponsor)
100% Campaign
American Congress of Obstetricians and Gynecologists, District
IX California
California Chapter of the American College of Emergency
Physicians
California Coverage & Health Initiatives
Children NOW
California Primary Care Association
Children's Defense Fund-California
Children's Specialty Care Coalition
Osteopathic Physicians and Surgeons of California
The Children's Partnership
United Ways of California
Opposition
California Association of Health Plans
Health Net
Analysis Prepared by : Rosielyn Pulmano / HEALTH / (916)
319-2097