Maintaining a vaccine inventory incurs costs, whether the vaccine is publically or privately purchased. These vaccine related costs to the physician practice are traditionally covered by payers (i.e., patients, third party payers) as consumers of the vaccine product and immunization service. Because vaccine product is not traditionally billed in a VFC or state supplied vaccine environment, these costs must be covered with enhanced payment for immunization administration or other arrangement.
Personnel costs for ordering and inventory: Medical office staff (clinical and administrative) time to monitor vaccine stock; place orders; prepare reports as required; review safe storage procedures are practice expenses that are not included in the practice expense component for immunization administration RVUs.
Storage costs: Vaccines must be stored at very specific temperature ranges and, therefore, require special monitoring and storage equipment. The practice expense component of the total immunization administration code pays for part of the vaccine storage costs; however, there are certain expenses that are not included that must be compensated: freezer(s), freezer lock(s), freezer alarm system(s), and generators for continued electrical supply (all of which are depreciated).
Insurance against loss of the vaccine: Professional liability malpractice insurance does not cover vaccine product, so additional insurance coverage is needed by the practice. This is especially important as states implement recovery programs if a practice can no longer use their vaccine stock due to disasters, equipment failure, etc.
Recovery of costs attributable to uncontrollable circumstances: If practices are held accountable for lost vaccine, this could include situations of drawing up the vaccine and having the patient/family reconsider and refuse or a loss of dose that may occur in attempting to vaccinate an uncooperative/combative patient.
Federal or state-specific requirements: In an environment where vaccine is supplied, there are frequently additional inventory and reporting requirements, which adds staff time that must be compensated appropriately.
Pediatricians must receive adequate payment to cover the total direct and indirect expenses of the vaccine product and the immunization administration service. To account for the indirect (overhead) vaccine expenses, the AAP recommends vaccine payments to be at least 125% of the vaccine cost as reported by the Centers for Centers for Disease Control (CDC) vaccine price list for the private sector. One method to ensure payment of vaccine related expenses in a VFC or state supplied vaccine program would be to enhance payment of the Medicare RBRVS physician fee schedule rate for each immunization administration code. For state supplied vaccines, the payment would cover the total relative value of the immunization administration plus the additional overhead costs of the vaccine product. At a minimum, this rate would be at least 100% of the Medicare RBRVS physician fee schedule rate for each immunization administration code plus an additional percentage to cover the additional overhead costs of the vaccine product An alternative to this method may be paying on the reported vaccine code a surcharge that reflects the overhead expenses of the vaccine (but not the acquisition cost since the vaccine is state supplied) with separate payment for the immunization administration.