BILL ANALYSIS Ó
AB 2064
Page 1
Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2064 (V. Manuel Pérez) - As Amended: April 30, 2012
Policy Committee: HealthVote:15-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires health plans and insurers to reimburse
physicians and physician groups for certain costs related to the
administration of vaccines. Specifically, this bill:
1)Requires health plans and insurers that cover child and
adolescent vaccines to reimburse physicians/physician groups
in an amount not less than the actual cost of acquiring the
vaccine plus the cost of administering the vaccine.
2)Defines the vaccine acquisition cost as those standardized
costs detailed on the most current Pediatric Vaccine Price
List published by the Centers for Disease Control and
Prevention, plus shipping and handling costs.
3)Defines the vaccine administration cost as not less than the
cost specified in the most current Medicare physician fee
schedule.
4)With respect to vaccines that are not part of a contract
between a physician/physician group and a health plan or
insurer, strikes existing reimbursement requirements and
applies the reimbursement provisions in (1-3) above.
5)Allows physicians and physician groups to assume financial
risk for providing required immunizations, but prohibits a
health plan or policy from requiring a physician or a
physician group to accept financial risk or impose additional
risk that would violate the reimbursement provisions in (1-3)
above.
6)Exempts CalPERS plans from reimbursement provisions in (1-3)
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above.
FISCAL EFFECT
1)Projected additional costs in the millions of dollars (49% GF,
51% federal funds) annually to Medi-Cal and Healthy Families
Program to reimburse providers, through Medi-Cal managed care
plans, at the Medicare rates for vaccine administration.
Reimbursement for vaccine administration in Medi-Cal managed
care will have to increase substantially from $9 for an
initial vaccine administration fee to around $25 to comply
with this bill.
2)The provision requiring reimbursement for the actual purchase
price for vaccines would have a negligible effect on Medi-Cal,
as vaccines for Medi-Cal eligible children are generally
provided to physicians free of charge through the federal
Vaccines For Children program.
However, fiscal impact on HFP is possible from this provision.
Data that would allow a precise estimate is not available. If
all HFP plans had to raise reimbursement by $1 per vaccine
administered, costs would increase by $1 million (35% GF, 65%
federal funds).
3)Unknown increased premium pressures across the commercial
market, possibly in the tens of millions of dollars. This bill
would apply to approximately 5 million privately insured
children who will, on average, receive more than one vaccine
per year. If reimbursement for each vaccine provided increased
by an average of $5, increased premium costs in the commercial
market of $30 million.
4)Actual total cost increases could be substantial as the bill
does not establish or define a maximum reimbursement level for
either the administrative fee or the reasonable costs for
shipping and handling. This bill would also reduce likely
reduce physicians' incentives to seek discounted vaccine
pricing or to improve practice efficiency, which could
increase health care costs with no measurable consumer
benefit, as any costs related to vaccines would be reimbursed.
5)Unknown, potentially significant costs, if the federal
government indicates that this mandate exceeds a defined set
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of "essential health benefits" (EHBs) all individual and
small-group plans must cover beginning in 2014. Under federal
law, the state must defray costs associated with mandates that
exceed the EHBs on behalf of certain individuals enrolled in
these plans.
COMMENTS
1)Rationale . The author states this bill will ensure that
physicians are adequately reimbursed for the costs of
purchasing and administering vaccines. He states health plans
and insurers are notorious for under-reimbursing for the cost
of providing vaccines, which forces physicians to absorb these
costs. A recent survey of physicians shows as the number of
recommended vaccines and associated costs grow, physicians who
provide vaccines to children and adolescents report
dissatisfaction with reimbursement levels and increasing
financial strain from immunizations.
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 further to require pediatric immunizations to be a
distinctly priced service with respect to direct and indirect
costs.
2)Vaccine-Related Costs and Reimbursement . A search of the
Medicare Physician Fee Schedule indicates that Medicare
reimburses approximately $25 for initial vaccine
administration and $13 for each additional vaccine on the same
day. Medi-Cal currently reimburses $9 for the same service
through Fee for Service (FFS). Managed care reimbursement
varies, but is assumed to be approximately the same as the FFS
rate. Federally Qualified Health Centers (FQHCs) who offer
childhood vaccines are reimbursed according to a
facility-specific, cost-based global rate which includes
vaccine administration costs.
According to the current CDC Pediatric Vaccine Price List, the
private sector cost per dose of vaccine ranges from $20 for
the DTaP (Diphtheria, Tetanus, and acellular Pertussis) to
$130 for the human papillomavirus (HPV). The entire series of
recommended vaccinations can cost nearly $1,200 for young
children plus $390 for an HPV series.
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3)National Attention to Vaccine Reimbursement . Several studies,
as well as reports by the Institute of Medicine and the
National Vaccine Advisory Committee to the CDC have
highlighted the issue of inadequate vaccine reimbursement. A
2009 study in Georgia found that on average, private pediatric
medical practices are breaking even or achieving a small gain
with privately insured patients, but that practices mostly
lose money administering vaccines to Medicaid-eligible
children. Even given low reimbursement levels, another study
indicated that large-scale withdrawal of immunization
providers does not seem to be imminent, perhaps because of the
fundamental role of vaccinations in the delivery of primary
health care for children. However, on the margins, it appears
physicians are beginning to reassess whether they will offer
certain vaccines due to costs.
4)Other Means to Improve Reimbursement . Studies and reports have
documented wide variability in what it costs practices to
immunize children. Some practices make use of group purchasing
organizations that combine buying power from multiple units,
such as hospitals and smaller pediatric practices, to obtain
better pricing for vaccines. Small practices may have trouble
negotiating better reimbursement from payers, leading some
physicians to seek economies of scale and improved negotiating
leverage through practice consolidation or membership in
physician groups. Improved practice management, including
appropriate billing and coding, and workflow optimization, is
also used. Anecdotally, national attention and advocacy of
physician associations has also put pressure on health plans
and insurers to improve reimbursement.
5)Interaction with Reforms in the Affordable Care Act (ACA) .
The ACA creates new state-run health insurance exchanges that
will likely provide coverage to millions of Californians
beginning in 2014, and requires that health plans in the
individual and small group market cover certain categories of
benefits, called essential health benefits (EHBs). The federal
Secretary of Health and Human Services (HSS) is expected to
propose regulations that will further define EHBs.
Pre-regulatory guidance from HHS suggests the federal
government intends to allow the state to designate EHBs
through selection of a benchmark plan. AB 1453 (Monning),
pending on the Assembly Floor, and SB 951 (Ed Hernández),
pending referral in the Assembly, have been introduced this
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year to select the EHB benchmark plan.
The ACA specifies that if states require plans in the exchange
to offer additional benefits that go beyond the defined EHBs,
then states must pay to defray the additional cost of those
mandates. Recommended vaccines are included in EHBs, but
federal law does not mandate specific payment levels.
Therefore, a risk exists that the state would have to defray
costs associated with this mandate.
6)Opposition . Health plans and insurers oppose this measure.
They indicate they generally do not pay directly for the costs
of a physician's overhead and administrative costs, and that
these expenses are part of the overall negotiated rate. They
argue this bill would result in a cumbersome and inefficient
manual process for reimbursement. They also contend it upends
capitation, a key feature of managed care that promotes
efficiency, by carving out and rate-setting for a specific
service.
7)Previous Legislation . AB 2093 (V. Manuel Pérez) of 2010, was
similar to this bill, but exempted Medi-Cal and Healthy
Families. 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."
AB 1201 (V. Manuel Pérez), 2009, was substantially similar to
the provisions of this bill. AB 1201 died on the Suspense
File of this committee.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081